Haverty Furniture Companies, Inc. Q4 FY2025 earnings call

• Q4 had 2nd consecutive positive comp sales, net sales up 9.5%, written sales up 3.5%. After Thanksgiving sales up 6.2%, average ticket in design ~$8,500, overall ~$4,400+. Design business 33.3% of sales, upholstery special order up 14.8%. - Merchandising and supply chain teams partner with vendors to ensure product flow. Merchandising team challenges assortment to test new styles, etc. - Ended 2025 with 129 stores, plans for 5 new stores in 2026, entering Pennsylvania, lease negotiations on other locations. Closed Alexandria, Louisiana location in March. - Marketing plans resonate with customers, web traffic and site engagement up, written e-commerce sales up 12.3%. - Refined direct mail campaign, leveraged sales increase to slightly reduce marketing dollars as percent of net sales. - Credit costs up due to 60 months no interest promotions, but slightly down year-over-year.

For Q4 2025, net sales were $201.9 million, up 9.5% with comps up 8.2%. Total written sales up 3.5% with comps up 3.2%. Gross margins 60.4% vs 61.9% last year, with $3.9 million LIFO charges. Pretax income $10.8 million or 5.3% operating margin. For 2025 calendar year, net sales $759 million, up 5% with comps up 2.1%. Gross margins 60.7% flat with last year, $4.6 million LIFO charges. Pretax profits $26.8 million or 3.5% operating margin. Design business 33.3% of sales, upholstery special order up 14.8%. Average ticket Q4 $3,759, design average ticket $8,072. Written business 2025 up 2.8% with comps up 0.7%. Average ticket $3,530, up 4.7%, designer average ticket $7,781, up 9.7%. Category-wise, bedroom and upholstery mid-single digits up, occasional low single digits, dining, mattresses and decor flat. Inventories $96.2 million at year-end, up $12.7 million from last year.

• 2026 gross margins expected between 60.5% and 61%, impacted by product freight and LIFO expenses. - Fixed and discretionary SG&A expenses expected $307 million to $309 million, increases related to store growth and modest inflation. - Variable-type SG&A costs expected 18.6% to 18.8%. - Planned CapEx for 2026 $33.5 million, with $27.2 million for new or replacement stores, remodels and expansions, $3.2 million for distribution network, $3.1 million for IT. - Anticipated effective tax rate in 2026 26%, excluding impact from vesting of stock awards and new tax legislation. - 2026 guidance includes impact of new tariffs announced by administration, continue to monitor tariff developments.

• Tariff uncertainties: Supreme Court invalidated certain tariffs, administration announced new tariffs, 10% tariff issued through Section 122, potential for changes in tariff rates and their impact on business. - Weather events: Snow and weather in January and February are usual, but no specific recent weather events called out as impacting business. - Government shutdown: Nearly 45-day shutdown created unknowns, which could potentially impact business.

Q: Further details about same-store sales trends throughout Q4.

A: Written business up high single digits in Oct, middle single digits in Nov, down low single digits in Nov-Dec. Deliveries up 10% in Oct, mid-single digits in Nov, almost 15% in Dec.

Q: Variable SG&A expenses outlook for 2026.

A: Expected to be flat as percentage, with higher selling cost pressure, third-party credit costs, and gross profit margin guidance up due to LIFO pressure easing.

Q: Evolving tariff environment and pricing actions.

A: No immediate actions, will wait and see how tariffs play out over next few months and as inventory is worked through.

Q: Seasonality or timing of expenses related to weather events.

A: No specific call out, weather events in Jan-Feb are usual.

Q: Tariff change from 10% to 15% and inventory working through.

A: Guidance unchanged, inventory expected to be worked through first half of year, new tariff expires July 24, administration looking at other tariff alternatives.

Q: Written order trends deceleration.

A: Not concerned about traffic, traffic up double digits in Nov-Dec 2024, average ticket driven up through design.

Q: Mattress bedding refresh program.

A: Testing at some stores, more informational presentation, better for consumers and sales consultants, bedding business flat while others down in Q4.

Q: Marketing and advertising spend in 2026.

A: Anticipated to be flat with 2025