Q1 2025 Haverty Furniture Companies Inc Earnings Call

Operator: https://www.youtube.com.ac Greetings and welcome to Haverty's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to have released first quarter 2025 earnings conference call at.

Speaker Change: At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Richard Hare.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Richard Hare: It is now my pleasure to introduce your host, Richard Hare, Chief Financial Officer. Thank you, sir. You may begin. Thank you, Operator, and good morning. During this conference call, we'll make forward-looking statements which are subject to risk and uncertainty. Actual results may differ materially from those made or implied in such statements, which speak only as the date they are made, and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the SEC.

Speaker Change: Chief Financial Officer. Thank you, Sir you may begin.

Richard Hare: Thank you operator and good morning. During this conference call, we'll make forward looking statements, which are subject to risks and uncertainties.

Richard Hare: Actual results may differ materially from those made or implied in such statements, which speak only as the date they are made.

Richard Hare: We undertake no obligation to publicly update or revise.

Richard Hare: Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the SEC.

Steve Burdette: Our President and CEO, Steve Burdette, will provide additional commentary about our business. Good morning. Thank you for joining our 2025 first quarter conference call. While the first quarter has felt more like a rollercoaster ride with the ups and downs, we are very satisfied with our results. Our Q1 sales were $181.6 million, which was down 1.3%, with comps down 4.8%. Total written sales were down 2.6%, with comps down 6.3%. Gross margins remain strong for the quarter, coming in at 61.2% compared to 60.3%. Our pre-tax profits for the quarter were $5.3 million or 2.9% operating margin compared with $3.2 million or 1.7% operating margin in Q1 2024.

Richard Hare: Our president and CEO, Steve Burdette will provide additional commentary about our business.

Richard Hare: Good morning, Thank you for joining our 2021st quarter Conference call.

Richard Hare: While the first quarter has felt more like a roller coaster ride with the ups and downs, we're very very satisfied with our results.

Richard Hare: Our Q1 sales were $181 6 million, which was down one 3% with comps down four 8%.

Richard Hare: Total written sales were down two 6% with comps down six 3%.

Gross margins remained strong for the quarter coming in at 61, 2% compared to 63%.

Richard Hare: Our pre tax profits for the quarter were $5 3 million or two 9% operating margin compared with $3 2 million or one 7% operating margin in Q1 2020 for.

Steve Burdette: Richard will provide additional details later on this call. Despite the housing market continuing to operate at 30-year lows, Fueled by affordability issues, inflated interest rates, and declining consumer confidence, the quarter's written sales began positive. However, by mid-January, our business faced disruptions from several winter storms over the next 30 days, impacting several markets throughout our footprint.

Richard Hare: Richard will provide additional details later on this call.

Richard Hare: Despite the housing market continuing to operate at 30 year lows.

Richard Hare: Fueled by affordability issues inflated interest rates and declining consumer confidence the quarter's written sales began positively.

Richard Hare: However by mid January our business faced disruptions from several winter storms over the next 30 days.

Richard Hare: Impacting several markets throughout our footprint.

Steve Burdette: The presidential inauguration on January 20th shifted the mood from optimism to cautious concern due to the magnitude of executive orders coming from the White House and the potential tariff discussion. Sales for our biggest event of the quarter, President's Day, were disappointing, down roughly 10% over the two-week period. However, we saw a bounce back in written sales to roughly flat after President's Day until the end of March. While our traffic did soften over the quarter, it remained positive in the low single digits. Conversion rates continue to stabilize with some improvement compared to last year. Our average ticket rose by approximately 4% to just over $3,300.

The presidential inauguration on January 20th shifted the mood from optimism cautious concern due to the magnitude of executive orders coming from the White house and the potential tariff discussion.

Richard Hare: Sales for our biggest event of the quarter President's day were disappointing down roughly 10% over the two week period.

Richard Hare: However, we saw a bounce back in written sales to roughly flat after Presidents' day until the end of March.

Richard Hare: While our traffic did soften over the quarter. It remained positive in the low single digits.

Richard Hare: Conversion rates continued to stabilize with some improvement compared to last year.

Richard Hare: Our average ticket rose by approximately 4% in just over $3300. Our design business continued to improve to approximately 33% of our business or 15 plus percent of our ticket driven by our special order business.

Steve Burdette: Our design business continued to improve to approximately 33% of our business, or 15 plus percent of our tickets, driven by our special order business. Our designer average ticket grew to over $7,400, which was up over 9%. The merchandising team is continuing to push new products to our floors, creating excitement for the sales and design teams, as well as our customers. Motion Furniture with Zero Gravity Recline and Triple Power, Stationary Upholstery with Color Options, and Bedrooms and More Contemporary Designs with Upholstered Beds and Sleek, Clean Lines. While our upholstery, bedroom, and mattress categories are performing in line with our business, we have seen some weakness in our dining and occasional categories.

Richard Hare: Our designer average average ticket grew to over $7400, which was up over 9%.

Richard Hare: The merchandising team is continuing to push new products to our floors, creating excitement for the sales and design teams as well as our customers.

Speaker Change: Motion furniture with zero gravity, recline, and triple power stationary upholstery with color options and bedrooms, and more contemporary designs with upholstery upholstered beds and sleek clean lines.

Speaker Change: While our upholstery bedroom and mattress categories are performing in line with our business, we have seen some weakness in our dining and occasional categories.

Steve Burdette: As mentioned in our last call, we will begin rolling out our new point of purchase and tagging program later this quarter. This initiative will improve the in-store customer's experience by centralizing our special order fabrics to improve the ease of choice and introducing a new tagging system that visually provides our customers with more choices that are not shown on the floor. Also, it simplifies for our sales and design consultants, the available configurations by collection. We aim to complete this rollout by Labor Day.

Speaker Change: As mentioned in our last call, we will begin rolling out our new point of purchase and tagging program later this quarter.

Speaker Change: This initiative will improve the in store customer experience are centralizing, our special order fabrics to improve the ease of choice and introducing a new tagging system that visually provides our customers with more choices that are not shown on the floors.

Speaker Change: So it simplifies for our sales and design consultants the available configurations back collection, we aim to complete this rollout by labor day.

Speaker Change: Yeah.

Steve Burdette: Our merchants have been working very closely with our suppliers to address the ongoing tariff issue. The 90-day reprieve on April 9th was very helpful from the percentages that were first being floated out. Resolving the tariff issues beyond the 90-day period will enable us to make longer-term decisions around our pricing and supply chain. Our suppliers have been great partners, helping us navigate through these difficult times of uncertainty. Due to their partnership, we were able to keep our inventories moving without any disruption. We will see price increases for products from Vietnam, Cambodia, India, Indonesia, and Europe due to the tariffs.

Speaker Change: Our merchants have been working very closely with our suppliers to address the ongoing tariff issue.

Speaker Change: The 90 day reprieve on April 9th was very helpful from the percentages that were first being floated out.

Speaker Change: <unk> the tariff issues beyond the 90 day period will enable us to make longer term decisions around our pricing and supply chain.

Speaker Change: Our suppliers have been great partners, helping us navigate through these difficult times of uncertainty.

Speaker Change: Due to their partnership we were able to keep our inventories moving without any disruption.

We will see price increases for products from Vietnam, Cambodia, India, Indonesia in Europe due to the tariffs however.

Steve Burdette: However, these increases will be minimal due to our suppliers' support. Also, there will be pricing impacts on our domestic upholstery suppliers who source parts and fabric from China. The majority of our products from Mexico will not see any price increases as this product is exempt from tariffs under the USMCA agreement implemented in 2020. We have halted most direct shipments from China due to the tariffs which would be applied to our products at an additional 145%. We expect this to cause some temporary supply disruptions for these suppliers as they look to move production to Vietnam, Cambodia, or Mexico.

Speaker Change: However, these increases will be minimal due to our supplier support.

Speaker Change: Also there'll be pricing impacts on our the most domestic upholstery suppliers, who source parts in fabric from China.

Speaker Change: The majority of our products from Mexico will not see any price increases as this product is exempt from tariffs under the U S. MCA agreement implemented in 2020.

Speaker Change: We have halted most direct shipments from China due to the tariffs, which would be applied to our products at an additional 145%.

Speaker Change: We expect this to cause some temporary supply disruptions for these suppliers as they look to move production to Vietnam, Cambodia or Mexico.

Steve Burdette: Currently, approximately 15% of our total purchases come directly out of China, mainly in motion and stationary leather.

Speaker Change: Currently approximately 15% of our total purchases come directly out of China, mainly in motion and stationary leather.

Speaker Change: What will happen after the 90 days expires in early July as a guessing game right now, making supply chain planning very difficult we.

Steve Burdette: What will happen after the 90 days expires in early July is a guessing game right now, making supply chain planning very difficult. We need the administration to provide clarity around these tariffs to prevent further disruption for the consumer.

Speaker Change: We need the administration to provide clarity around these tariffs to prevent further disruption for the consumer.

Speaker Change: Okay.

Steve Burdette: Our supply chain team started executing our strategy to increase inventories of best-selling products during Q1. Inventories have risen approximately $5 million, or about 6% since year-end 2024. And our expectations are that they will continue to rise another $3-5 million in Q2. Our initial expectations to increase inventories was focused on providing faster service to our customers as we felt we became too dependent on just-in-time inventory with our suppliers. However, we have inadvertently pushed the impact of the tariffs out into the latter part of Q2 or early Q3 because most of this inventory increase will be tariff-free.

Speaker Change: Our supply chain team started executing our strategy to increase inventories of best selling products during Q1.

Speaker Change: Inventories have risen approximately $5 million or about 6% since year end 2024, and our expectations are that they will continue to rise another $3 million to $5 million in Q2.

Speaker Change: Our initial expectations to increase inventories was focused on providing faster service to our customers as we felt we became too dependent on just in time inventory with our suppliers. However, we have inadvertently pushed the impact of the tariffs out until the latter part of Q2 or early Q3 across most of this inventory increase.

Speaker Change: We'll be tariff free.

Speaker Change: Our merchants have proactively collaborating with our marketing and store operations teams to test more impactful promotions within our stores during Q1.

Steve Burdette: Our merchants have proactively collaborated with the marketing and store operation teams to test more impactful promotions within our stores during Q1. We mark the kickoff of our 140th anniversary by sending a private email to our current email subscribers. Expressing gratitude for their loyal support by presenting them with a special savings offer. This initiative was extremely successful, generating over $8 million in revenue in Q1. Our credit costs remain well controlled. We are implementing additional promotional strategies and credit offerings to increase the savings story in our marketing and stores, further enhancing the purchasing decisions of our customers.

Speaker Change: We mark the kickoff of a 140th anniversary by sending a private email to our current email subscribers expressing gratitude for their loyal support by presenting them with a special savings up.

Speaker Change: This initiative was extremely successful generating over $8 million in revenue in Q1.

Speaker Change: Our credit costs remain well controlled.

Speaker Change: We are implementing additional promotional strategies and credit offerings to increase the savings story in our marketing and stores further enhancing the purchasing decisions of our customers.

Speaker Change: We continue our push to open five new stores, a year, but we'll be cautious in our approach based on current conditions.

Steve Burdette: We continue our push to open five new stores a year, but we'll be cautious in our approach based on current conditions. We are relocating our Daytona store due to a lease expiration. Our real estate team has secured an old Bed, Bath & Beyond location, which opens tomorrow, enabling us to remain in the same area to serve our customers. Also, we are planning our third store in Houston to open in the Valley Ranch area of Northeast Houston in Lake Q3. Additionally, we are looking to open two more stores in the Houston market in mid to late 2026, giving us five stores in the Houston area, moving us closer to our goal of having six plus stores to properly serve the market.

Speaker Change: We are relocating our Daytona store due to a lease exploration.

Speaker Change: Our real estate team has secured an old bed Bath <unk> beyond location, which opens tomorrow, enabling us to remain in the same area to serve our customers.

Speaker Change: Also we are planning our third store in Houston to open in the Valley Ranch area of northeast Houston in late Q3.

Speaker Change: Additionally, we are looking to open two more stores in the Houston market in mid to late 2026, giving us five stores in the Houston area moving us closer to our goal of having six plus stores to properly serve the market.

Speaker Change: We have decided to close two stores this year a.

Steve Burdette: We have decided to close two stores this year. Our Buckhead store in the Atlanta, Georgia market on June 30th and our Waco, Texas store on September 30th. Our decisions regarding closures are always based on lease expirations and the store's long-term profitability.

Speaker Change: Our buckhead store in the Atlanta, Georgia market on June 30, and our Waco, Texas store on September 30.

Speaker Change: Our decisions regarding closures are always based on lease explorations in the stores long term profitability.

Steve Burdette: While we have several stores that are in the LOI phase in existing markets, we are unable to provide any further updates at this time. Our goals remain to leverage our current distribution network as we grow the company during these very uncertain times. Our distribution, home delivery, and customer service teams continue to furnish happiness to our customers. Our regret-free experience is an integral part of our service that we provide to our customers. We are able to flex the staffing in these areas of our business with the current business trends due to the natural turnover, which has allowed us to maintain nice controls over our expenses.

Speaker Change: While we have several stores that are several stores that are in the LOI phase in existing markets. We are unable to provide any further updates at this time.

Speaker Change: Our goals remain to leverage our current distribution network as we grow the company during these very uncertain times.

Speaker Change: Our distribution home delivery and customer service teams continue to furnish happiness to our customers.

Speaker Change: Ah regret free experience as an integral part of our service that we provide to our customers.

Speaker Change: We are able to flex the staffing in these areas of our business with the current business trends due to the natural turnover, which has allowed us to maintain nice controls over our expenses.

Steve Burdette: The issues facing us today... Housing affordability, high interest rates. Tariffs, Market Volatility, Inflation Concerns, and Recession Fears are something we have experienced many times in our 140 year history. We are well positioned to grow from these challenges due to our strong brand, debt-free balance sheet, consistency in our operations, integrity, customer focus, and our people.

Speaker Change: The issues facing us today.

Speaker Change: Housing affordability high.

Speaker Change: High interest rates.

Speaker Change: Tariffs market volatility inflation concerns and recession fears.

Speaker Change: We have experienced many times in our 140 year history.

Speaker Change: We are well positioned to grow the from these challenges due to our strong brand debt free balance sheet consistency in our operations integrity customer focus and our people I will now turn the call over to Richard.

Richard Hare: I will now turn the call over to Richard. Thanks, Steve. In the first quarter of 2025, we reported net sales of $181.6 million, a 1.3% decrease over the prior quarter. Comparable store sales were down 4.8% over the prior year period. Our gross profit margin increased 90 basis points to 61.2% from 60.3%. This increase was due to product selection and merchandise. SG&A expenses decreased $2.2 million, or 1.9%, to $107.2 million. As a percentage of sales, these costs approximated 59%, down from 59.4% in the prior year quarter. We experienced decreased selling costs, advertising, warehouse, and delivery expenses during the quarter.

Richard Hare: Thanks, Steve in the first quarter of 2025, we reported net sales of $181 6 million a one 3% decrease over the prior year quarter comparable store sales were down four 8% over the prior year period.

Our gross profit margin increased 90 basis points to 61, 2% from 63%.

Richard Hare: The increase was due to product selection and merchandise mix.

Richard Hare: SG&A expenses decreased $2 2 million or one 9% to $107 2 million as a percentage of sales these costs approximated 59% down from 59, 4% in the prior year quarter.

Richard Hare: We experienced decreased selling cost advertising warehouse and delivery expenses during the quarter.

Richard Hare: Income before income taxes increased $2 1 million to $5 3 million. Our tax expense was one 5 million for the first quarter of 2025, which resulted in an effective tax rate of 28, 6% compared to an effective tax rate of 25, 1% in the prior year quarter.

Richard Hare: Income before income taxes increased $2.1M to $5.3M. Our tax expense was $1.5M for the first quarter of 2025, which resulted in an effective tax rate of 28.6% compared to an effective tax rate of 25.1% in the prior quarter. The primary difference in the effective rate and the statutory rate is due to the expected state income taxes and non-deductible items for the year.

Richard Hare: The primary difference in the effective rate and stuff in the statutory rate is due to the expected state income taxes and nondeductible items.

Richard Hare: For the year.

Richard Hare: Net income for the first quarter of 2025 was $3.8 million or $0.23 per diluted share on our common stock compared to net income of $2.4 million or $0.14 per share in the comparable quarter last year.

Richard Hare: Net income for the first quarter of 2025 was $3 8 million or 23 per diluted share on our common stock compared net income of $2 4 million or 14.

Richard Hare: Our share in the comparable quarter last year.

Richard Hare: Now turning over to our balance sheet at the end of the first quarter, our inventories were $88.7 million, which was up $5.3 million from December 31, 2024, and down $3.4 million versus Q1 2024 balance. At the end of the fourth quarter, our customer deposits were $42.8 million, which was up $2 million from the December 31, 2024 balance and up $1.8 million versus the Q1, 2024 balance. We ended the quarter with $111.9 million of cash and cash equivalents, and we have no funded debt on our balance sheet at the end of Q1 2025.

Now turning over to our balance sheet at the end of the first quarter. Our inventories were $88 7 million, which was up $5 3 million from December 31, 2024, and down $3 4 million versus Q1 2020 for balance.

Richard Hare: At the end of the fourth quarter, our customer deposits were $42 8 million, which was up $2 million from the December 31, 2020 for balance and up $1 8 million versus the Q1 2024 balance.

Richard Hare: We ended the quarter with.

Richard Hare: $111 $9 million of cash and cash equivalents and we have no funded debt on our balance sheet at the end of Q1 2025.

Richard Hare: Looking at some of our cash flow usage, CapEx was $6.1 million for Q1 2025, and we also paid out $5.2 million of regular dividends during that time. We purchased approximately $2 million of common shares under our share repurchase program during the first quarter of 2025, and we have approximately $6.1 million of existing authorization in our buyback program.

Richard Hare: Looking at some of our cash flow usage Capex was $6 1 million for Q1, 2025, and we also paid out $5 $2 million of regular dividends during the quarter.

Richard Hare: We purchased approximately $2 million of common shares under our share repurchase program. During the first quarter of 2025, and we have approximately $6 1 million of existing authorization in our buyback program.

Richard Hare: Our earnings release lists out several additional forward-looking statements indicating our future expectations of certain financial metrics. I'll highlight a few, but please refer to our press release for additional commentary. Our 2025 guidance includes tariffs currently in effect as of April 30, and does not include the effect of additional proposed tariffs that have been paused by the Trump administration. We expect our gross margins for 2025 to be between 60 and 60.5%. We anticipate gross profit margins will be impacted by our current estimates of product and freight costs. Our fixed and discretionary type SG&A expenses for 2025 are expected to be in the $291 to $293 million range.

Richard Hare: Our earnings release list out several additional forward looking statements, indicating our future expectations of certain financial metrics.

Richard Hare: Highlights a few but please refer to our press release for additional commentary.

Richard Hare: Our 2025 guidance includes tariffs currently in effect as of April 30, 30, excuse me at April 30th.

Richard Hare: And does not include the effect of additional proposed tariffs that have been paused by the Trump administration.

Richard Hare: We expect our gross margins for 2025 to be between 60 and 65%.

Richard Hare: We anticipate gross profit margins will be impacted by our current estimates of product and freight costs.

Richard Hare: Our fixed and discretionary type SG&A expenses for 2025 are expected to be in the $2 91 to $2 $93 million range.

Richard Hare: which is an increase over the prior year resulting primarily from our store growth and inflation. The variable type costs within SG&A for 2025 are expected to be in the range of 18.6 to 19%. We anticipate continued reductions in third-party credit costs and warehousing delivery. Our planned capex for 2025 has been reduced to $24 million. Anticipated new or replacement stores, remodels, and expansions account for $19.6 million. Investments in our distribution network are expected to be $1.8 million. And investments in our information technology are expected to be approximately $2.6 million. Our anticipated effective tax rate for 2025 is expected to be 26.5%.

Richard Hare: Which is an increase over the prior year, resulting primarily from our store growth and inflation.

Richard Hare: The variable type costs within SG&A for 2025 are expected to be in the range of 18, 6% to 19%.

Richard Hare: We anticipate continued reductions in third party credit costs and warehouse and delivery expenses.

Our planned Capex for 2025 has been reduced to $24 million anticipated, new or replacement stores Remodels and expansions account for $19 6 million investments in our distribution network are expected to be $1 8 million and investments in our information technology are expected to be approximately.

Richard Hare: $2 6 million.

Richard Hare: Our anticipated effective tax rate for 2025 is expected to be 26, 5%.

Richard Hare: This projection excludes the impact from vesting of stock awards and any potential new tax legislation.

Richard Hare: This projection excludes the impact from vesting of stock awards, and any potential new tax legislation.

Speaker Change: This completes my commentary on the first quarter to quarter financial results operator, we would like to open the call up for questions at this time.

Richard Hare: This completes my commentary on the first quarter financial results.

Operator: Operator, we would like to open the call up for questions at this time. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2.

Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment please while we poll for questions.

Speaker Change: One moment, please while we poll for questions.

Anthony: Our first question comes from Anthony <unk> with Sidoti <unk> Co. Please proceed with your question.

Anthony Lebiedzinski: Our first question comes from Anthony Lebiedzinski with Sidoti & Co. Please proceed with your question. Good morning, everyone, and thank you for taking the questions and certainly nice to see the better than expected Q1 results here. Good morning, guys. So thanks for providing the information about the monthly trends, how that progressed. Any way to put a number as far as the impact of the winter storms? And just also curious whether you saw any notable changes in terms of...

Good morning, everyone and thank you for taking the questions and the southern asked to see the better than expected Q1 results Hey, good morning, guys.

Speaker Change: So yes, thanks for providing the information about the monthly.

Anthony: Trends how that progressed.

Anthony: Any way to put a number as far as like as far as the impact of the winter storms.

Anthony: And just also curious whether you saw any notable changes in terms of.

Steve Burdette: The Geographic Composition of Your Written Comps Let me start off, Anthony, good morning, with our written business trends by month and then see if we can give some additional commentary. But January, we were down almost 2% in written business. Then February, we were down on the same day of the week basis about 5%. And then we were flat in March. So pretty good improvement in March for the quarter being down about 2.6%.

Anthony: The geographic composition of your written comps.

Anthony: So let me start off Anthony good morning, with our rig business trends by month, and then Steve can give some additional commentary, but January we were down almost 2% and <unk> business.

Anthony: Then in February we were down on a same store same day, a week basis about 5% and then we were flat in March both pretty good improvements there March.

Anthony: For the quarter being down about two 6%, yes, Anthony we don't quantify that we usually don't talk about weather, but it was just an inordinate amount of someone I think it was about four to five different storms that impacted us.

Steve Burdette: Yeah, Anthony, this is Steve. We don't quantify, you know, usually we don't talk about weather, but it was just an inordinate amount of storm. I think it was about four to five different storms that impacted us. And it impacted, usually it'll impact one or two stores, they just each one tended to impact a greater quantity. We did not quantify that exactly, have an exact number on that. But certainly, that plus what, you know, as we got to the latter part after the inauguration, we started to see things slow. We were disappointed in President's Day, as we said, that that event was not and I think that the industry, the retail world was a little disappointed at that time.

Anthony: And it impacted usually that'll impact one or two stores <unk> tended to impact a greater quantity, we did not quantify that exactly I have an exact number on that.

Anthony: But certainly that plus what.

Anthony: As we get into latter part after the inauguration, we starting to see things slow we were disappointed Presidents' day as we said.

Anthony: That event was not and I think that the industry the retail where it was a little disappointed at that time, but we did we were very encouraged what we saw after the fact as Richard just said again ending the quarter out in March.

Anthony Lebiedzinski: But we did, we were very encouraged what we saw after the fact, as Richard just said, in ending the quarter out in March. Gotcha. Okay. Yeah, thanks for that.

Anthony: Got you okay, yeah, thanks for that.

Steve Burdette: And so given the increased tariffs, have you guys implemented any price increases so far this quarter in response to that? Yeah, we are. We're going to get in front of that like we did before, but it won't be across-the-board deal. It will be targeted. Our merchandising team is looking at that based on the product and the vendor and whether we're trying to maintain our good, better, best price points. But there will be price increases that will go into effect basically immediately, and then we'll kind of monitor that as we go forward. But they will be minimal, as I said.

Anthony: And so given the increased tariffs have you guys implemented any price increases so far.

Anthony: This quarter in response to that.

Anthony: Yes, we are we're going to we're going to get in front of that and like we did before but it wont be across the board deal. It will be targeted our merchandising team is looking at that based on the product and the vendor.

Anthony: And whether we're trying to maintain our good better best price points. So.

Anthony: But there will be price increases that will go into effect.

Anthony: Basically immediately.

Anthony: And then we'll kind of monitor that as we go forward, but they will be minimal as I said.

Steve Burdette: Our suppliers have worked with us, and if the tariffs stay where they are right now, I really don't see much impact to the consumer in that we will be able to navigate through this fine. tariffs go back to 40 and 50% or where they were, that'll be a different story. Okay, so it sounds like you think it's not going to have much of an impact on unit volumes, whatever price increases you'll be putting in place. We're not anticipating that. Right now, where we are. Okay.

Anthony: Our suppliers have worked with us.

Anthony: If the tariffs stay where they are right now I really don't see much impact to the consumer that we were able to to navigate through this fine.

Anthony: Tariffs go back to 40% and 50% of where they were that will be a different story.

Speaker Change: Okay. So it sounds like you think it's not going to have much of an impact on unit volumes or whatever price increases you'll you'll be putting in place.

Anthony: We're not anticipating that right now where we are.

Anthony: Okay.

Anthony: Okay and then.

Steve Burdette: And then just thinking about like, you know, what's going on here as of late here, have you seen any notable changes from the competition in your markets, just in response to everything that's going on with Concerns about the economy and also tariffs. You know, we've seen some marketing where people were trying to take advantage of the tariffs and, you know, trying to get out in front of that to push that out to the consumer, but in trying to, you know, keep the price points advertised, their price point deals. But, you know, April's not a big marketing month, especially with Easter in it, you know, overall for the industry.

Speaker Change: Just thinking about like you know what sports going on here as of late here have you seen any notable changes from the competition in your markets.

Speaker Change: In response to everything that's going on with them.

Speaker Change: Concerns about the economy and.

Speaker Change: And also Paris.

Speaker Change: We've seen some marketing where people were trying to take advantage of the tariffs.

Speaker Change: Trying to get out in front of that push that out to the consumer but in.

Speaker Change: And trying to keep the price points advertise.

Speaker Change: Their price point deals but.

Speaker Change: April is not a big marketing months.

Speaker Change: Especially with Easter in it.

Speaker Change: Overall for the industry.

Steve Burdette: But as far as President's Day itself, I mean, it was a typical, you know, pretty aggressive, you know, promotions and whether it's credit or whether it was discount percentages that our competitors were advertising.

Speaker Change: But as far as presence by itself.

Speaker Change: It was a typical pretty aggressive promotions and whether it's credit or whether it was discount percentages that are competitors who are advertising.

Speaker Change: Understood, Okay, and lastly from me as far as the reduction in Capex guidance.

Steve Burdette: Understood.

Richard Hare: And lastly for me, as far as the reduction in CapEx guidance, I think it was about $3 million less. What exactly is that for? I just wanted to get more color on that. Thank you. Yeah, so so we took out about $3 million for right now in terms of our store expansion. Steve talked about in his comments earlier, you know, we're focused on Houston. But just with the tariff uncertainty, we thought it'd be wise to just kind of hold back a little bit on on CapEx until the dust settles.

Speaker Change: I think it was about $3 million less so what exactly is that for us. It just wanted to get more color on that thank you.

Speaker Change: So we took out about $3 million for right now in terms of our store expansion, Steve talked about in his comments earlier that you were focused on Houston, but just with the tariff uncertainty we thought it would be wise to just kind of hold back a little bit on on capex until the dust settles.

Speaker Change: Understood Alright, well. Thank you very much guys and best of luck. Thank you Anthony.

Richard Hare: Understood. All right.

Anthony Lebiedzinski: Well, thank you very much guys and best of luck. Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Cristina Fernandez with Telsey. Please proceed with your question.

Cristina Fernandez: Our next question comes from Cristina Fernandez with Tags. Please proceed with your question. Hi, good morning, and congratulations on the good results for the quarter. I had a couple of questions as well. The first one is...

Cristina Fernandez: Hi, good morning, and congratulations on that.

Speaker Change: Good results for the quarter had a couple of questions as well the first one is.

Cristina Fernandez: On the tariff, I just want to confirm on the guidance that what you're assuming on the gross margin is that the tariffs that are in place now, as of yesterday, are in place for the full year, is that what you're assuming that the 10% tariff on Vietnam and a lot of the Asian countries gets. https://www.larryweaver.com and we feel comfortable with that guy. Okay, thanks. And then on the piece that's out of China, that 15% that you're currently pausing. I guess on what point do you need to make a decision whether to ship that out to other countries or place some orders just to not have big holes in your assortment as we move through the year?

Speaker Change: On the Paris, I, just wanted to confirm on the guidance that what you're assuming on the gross margin.

Speaker Change: The tariffs that are in place now as of yesterday are in place for the full year is that what you were assuming that.

Speaker Change: 10% tariff on Vietnam, and a lot of the Asian countries.

Speaker Change: That's the extent that it stays that way.

Speaker Change: That's correct.

Speaker Change: And we feel comfortable with that guidance.

Speaker Change: Okay. Thanks, and then on the.

Speaker Change: The piece that.

Speaker Change: So I know that 16% that youre currently costing.

Speaker Change: I guess, what point do you need to make a decision.

Speaker Change: To shift that.

Speaker Change: Two other countries or.

Speaker Change: Placed some orders shift.

Speaker Change: Not have big holes in your assortment as we move through the year.

Steve Burdette: Our vendors have already been in that, and we're already ahead of that in the first quarter moving in case something were to happen. So, they are securing or in the midst of securing additional production in, like I said, in either Vietnam, Cambodia, or Mexico. And some already had production there, so they've got to move what they were producing in China to those particular factories. So, that will be some of the disruption, but again, Cristina, I mentioned about our inventories increasing. We brought in a lot of inventory ahead of time on our best sellers, so we don't think that will be an impact and will allow us time or allow them time to get repositioned.

Speaker Change: Our vendors have already been in that and we're already ahead of that in the first quarter moving in case something were to happen. So.

Speaker Change: They are securing are in the midst of securing additional production.

Speaker Change: And like I said in either Vietnam, Cambodia or Mexico.

Speaker Change: Some already had production there so they're just they've got to move what they were producing in China to those.

Speaker Change: Particular factory, so that will be some of the disruption, but again Kristina I mentioned about our inventories increasing we brought in a lot of inventory ahead of time on our best sellers. So we don't think that will be an impact and will allow us time to allow them time to get repositioned.

Speaker Change: Okay. That's helpful.

Cristina Fernandez: Okay, that's helpful.

Cristina Fernandez: And then I wanted to go back to the performance on some of the big weekends. I mean, Presidente's weekend this year seems like there was some weather impact as well, but more broadly, as you look at some of the big events and weekends over the past year, you know, we definitely seen some weakness on some of the prior ones. I know a lot of players are getting very competitive and promotional from those weekends. And so do you feel like it's the consumer or perhaps that, you know, Haverty is not being as promotional as others are on those weekends and that's leading to some share losses?

Speaker Change: And then I wanted to go back to that.

Speaker Change: Four months.

Speaker Change: On some of the big weekends, I mean, Chris or Dave could you take this weekend. This year. It seems like there were some weather impacts as well, but more broadly as you look at some of the big events on weekends over the past year, we've definitely seen some weakness.

Speaker Change: Some of the tier ones I know a lot of players aren't Gary sorry competitive promotional windows, we can still do you feel like it.

Speaker Change: The consumer perhaps that.

It's not being less promotional others are.

Speaker Change: And that's leading to some share losses.

Speaker Change: I don't think the promotional activity we were last year Presidents' day 2020 forward. We were very pleased we had a very very good presence date Memorial day Labor day were disappointing July 4th was a good good promotion for us.

Steve Burdette: I don't think it's the promotional activity. We were, last year, President's Day 2024, we were very pleased. We had a very, very good President's Day. Memorial Day, Labor Day, were disappointing. July 4th was a good, good promotion for us. After Thanksgiving was good for us, and New Year's was good for us. So, I don't think that's it, but I mentioned in my commentary there that we, you know, we certainly are looking, we did some testing of things we did. And, you know, we're going to get, you know, more aggressive with our promotional activities to make sure we're there.

Speaker Change: After Thanksgiving was good for us and new year's was good for us so.

Speaker Change: I don't think thats, it, but I mentioned in my commentary there.

Speaker Change: We certainly are looking we did some testing of <unk>.

Speaker Change: Things, we did and we're going to get.

Speaker Change: More aggressive with our promotional activities to make sure. We're there and we're looking forward to memorial day, which is the biggest holiday event of the first half of the year.

Steve Burdette: And we're looking forward to Memorial Day, which is the biggest holiday event of the first half of the year.

Speaker Change: And then my last question is from the new store opening last year.

Steve Burdette: And then my last question from the new store opening last year. It seems like they're doing well based on the spread between total. written orders in the comp order. So can you talk more about how those stores are ramping up? What kind of benefit you're seeing? I think, you know, some of them have been open for six, nine months. So any color of the new stores would be helpful. Yeah, we've been very pleased overall with the new stores. You know, it allows us to leverage because we're using our current distribution. And, of course, that's a strength of ours.

Speaker Change: It seems like Theyre doing well based on the spread between total.

Speaker Change: Written orders.

Speaker Change: Tom.

Speaker Change: Can you talk more about how those stores are ramping up.

Speaker Change: Kind of benefit you're seeing.

Speaker Change: Okay.

Speaker Change: <unk> been open for six nine months, so any color would be helpful.

Speaker Change: Yes, we've been very pleased overall with the new stores.

Speaker Change: It allows us to leverage because we are using our current distribution and of course, that's a strength of ours and <unk> seen our expenses there we've been able to control it.

Steve Burdette: And you've seen our expenses there. We've been able to control it. So it's created more leverage, certainly within our distribution. We still got opportunities with them, Cristina. They're new stores. Our conversion rate, our closing rates tend to take a little bit of time to grasp with a new team, you know, as we go forward. But, you know, we certainly are pleased with where they're moving. Houston was new, you know, opening up in December and February. We need to get that store count there so we can increase our marketing. But we, you know, initial reports and initial traffic has been good.

Speaker Change: So it's created more leverage certainly within our distribution, we still got opportunities with them Cristina there new stores, our conversion rate our closing rates tend to take a little bit of time to grasp of the new team.

Speaker Change: As we go forward, but.

Speaker Change: We certainly are pleased with where Theyre moving Houston was new opening up in December and February we need to get that store count there and so we can increase our marketing.

Speaker Change: Initial reports an initial.

Speaker Change: Traffic has been good and we're pleased with where we're heading so.

Steve Burdette: And we're pleased with where we're heading. So, overall, all positive. And, you know, we're looking forward to getting that third store open in Houston in third quarter. And, of course, we're looking forward to the relocation of Daytona that happens tomorrow. But that should be, that's basically, you know, within. Right next to where we were, we just moved buildings because of lease expiration. Great. Thank you.

Speaker Change: Overall all positive.

Speaker Change: We're looking forward to getting that third store opened in Huston in third quarter and of course, we're looking forward to the relocation of Daytona that happens tomorrow.

Speaker Change: But that should be.

Speaker Change: Basically within <unk>.

Speaker Change: All right next to where we were we just moved buildings because of lease exploration.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: There are no further questions at this time I would now like to turn the floor back over to Richard <unk> for closing comments.

Operator: There are no further questions at this time.

Richard Hare: I would now like to turn the floor back over to Richard Hare for closing comments. Well, thank you for your participation in today's call, and we look forward to talking to you in the future when we release our second quarter results later this year.

Richard Hare: Well. Thank you for your participation in today's call and we look forward to talking to you in the future when we release our second quarter results later this year.

Richard Hare: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you.

Richard Hare: Yeah.

Richard Hare: Yes.

Richard Hare: Okay.

Richard Hare: Yes.

Richard Hare: Okay.

Richard Hare: [music].

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