Haverty Furniture Companies (NYSE:HVT) reported higher third-quarter sales and earnings, helped by tariff refunds and larger customer purchases, even as store traffic fell and operating costs rose.
Net sales increased 4.5% to $203.2 million, while comparable-store sales rose 4.1%. Net income climbed to $6.3 million, or $0.39 per diluted share, from $4.7 million, or $0.28 per share, a year earlier. Total written sales increased 2.8%, and written comparable sales rose 2.3%.
President and CEO Steve Burdette said quarterly traffic declined by a mid-single-digit percentage, but conversion rates held steady and the average ticket increased 7.4%. He attributed most of the ticket increase to pricing, adding that units per ticket were generally flat.
Tariff Refunds Lift Margins
Gross margin expanded to 62.3% from 60.3% a year earlier. Excluding approximately $3.2 million in tariff refunds recognized during the quarter, gross margin was 60.7%, Chief Financial Officer Richard Hare said. Excluding both the refunds and LIFO expenses, adjusted gross margin was 61.3%, compared with 60.6% a year earlier.
Without the refunds’ impact on the income statement, quarterly net income would have been $4 million, or $0.25 per diluted share, Hare said. Through September, the company had received approximately $5.4 million in tariff refunds related to its direct and indirect import programs.
Selling, general and administrative expenses rose 6% to $119 million, or 58.6% of sales, from 57.8% a year earlier. Hare cited higher commission-based compensation, third-party credit costs, stock-based compensation, incentive compensation and group insurance costs. He said about $2 million of the administrative expense increase related to accelerated vesting of stock awards and should not recur in the near term.
Cost Pressures and Inventory
Burdette said higher fuel prices were raising container, transportation, home delivery and material costs. The company also faces rising health insurance and credit costs, he said, making it harder to offset expense increases through sales volume.
Havertys continues to offer no-interest financing promotions, including 48- and 60-month terms during promotional periods. To control costs outside those periods, it is raising the purchase thresholds at which certain offers can be used. Burdette said the company is making selective retail price changes but is not currently considering higher delivery fees.
Inventory fell to $86.7 million at the end of the quarter from $100.5 million at the end of the second quarter. Burdette said the company’s efforts to control inventory had gone too far and that it expects to finish the year with $90 million to $100 million, depending on product flow and sales.
He also noted longer lead times amid container availability, customs inspections and labor concerns in Vietnam, though he said the impact on the company’s supply chain has been minimal so far. Havertys is monitoring potential tariff changes and would make targeted pricing adjustments if necessary, he said.
Design Business and Store Expansion
The company’s design business grew 4% and represented 34.6% of its business during the quarter, with its average ticket up 7.2%. Custom orders increased 16.9% and accounted for 31.4% of upholstery business. Written e-commerce sales grew by a double-digit percentage for another quarter, Burdette said.
Havertys ended the quarter with 129 stores and expects to finish the year with 133. Its Fredericksburg, Virginia, location opened during the quarter and is exceeding traffic and volume expectations, Burdette said. The company plans five fourth-quarter openings and one closure for a relocation, including an entry into Pennsylvania with a Pittsburgh store.
Burdette said political advertising disrupted the company’s marketing plans during the midterm election season. He told analysts that Havertys had seen some advertising displacement around July 4 but could not yet quantify the effect around Labor Day. He declined to discuss October sales and said the company would continue to promote aggressively through the remainder of the fourth quarter.
2026 Outlook
Havertys raised its full-year gross margin guidance to 61.3% to 61.5% because of the tariff refunds. Its outlook includes tariffs in effect as of November 4 but excludes potential future refunds on indirectly sourced products.
The company maintained its forecast for fixed and discretionary SG&A expenses at $307 million to $309 million and raised its estimate for variable SG&A costs to 19.2% to 19.4%, citing higher fuel-related delivery and transportation costs and third-party credit costs. Planned capital expenditures remain $34 million.
Havertys ended the quarter with $120.3 million in cash and equivalents and no funded debt. It did not repurchase shares during the quarter and had approximately $16.8 million remaining under its buyback authorization.
About Haverty Furniture Companies (NYSE:HVT)
Haverty Furniture Companies, Inc is a specialty home-furnishings retailer that sells furniture and related products for living rooms, bedrooms, dining rooms, home offices and other areas of the home. Its merchandise includes sofas, chairs, tables, beds, mattresses, case goods, rugs, lighting and home accessories, with products offered through its retail stores and website.
Founded in Atlanta in 1885 by James Joseph Haverty, the company has grown from a regional furniture business into a multi-state retailer.
