Haverty Furniture Companies, Inc. Q1 FY2026 earnings call

• Business trends: Traffic down low single digits despite weather disruptions, special order business up.
• Product updates: Merchandising team more nimble in assortment planning, introducing new products.
• Inventory plans: Inventory increase planned for new products, best sellers in stock, pull forward of orders ahead of Chinese New Year, expected to drop below 100M by end of Q2.
• Tariff impact: Will see effects of reduced Section 122 tariffs in Q2, but further changes expected in Q3.
• Marketing: Leveraging AI, connected TV, social media, etc., to optimize media placement.
• Store activity: Opened Fenton, Missouri store, to open fourth in Nashville, signed three additional leases, closing two stores in Texas.
• Team performance: Distribution, home delivery, and customer service teams outperforming.

For the quarter, occasional was up double digits, Upholstery and dining room were up mid single digits. Mattresses were up low single digits. Bedrooms were flat and accessories were down slightly. Special order business rose 10.1% to 34.5% of our upholstered business. Inventories increased 10.7 million to 106.9 million during the quarter, expected to drop below 100 million by end of Q2.

• 2026 gross margins expected to remain between 60.5 and 61%.
• Fixed and discretionary SG&A expenses for 2026 expected to remain in $307 to $309 million range.
• Variable type SG&A costs for 2026 expected to remain in range of 18.6 to 18.8%.
• Planned capital expenditures for 2026 is $34 million, increase from previous guidance.
• Anticipated effective tax rate in 2026 remains 26%.

• Rising oil prices impacting vendor input costs, fuel surcharges, etc., affecting margins and expenses.
• Uncertainty of tariff percentages changing as Section 122 tariffs expire in mid-July.
• Stores in San Angelo and College Station, Texas closing due to demographic shifts, weak housing growth, etc., not fitting long-term growth strategies.

Q: Speak about consumer demand trends, financing options and store openings.

A: Written business trend: Jan up high single digits, Feb-March mid-single digits, quarter up 6.4%. Financing costs: G&A up over $4M, half related to selling costs, 60% of selling costs related to third-party credit costs. Store openings: 8 openings planned, one pushed to early 2027, net 4 store growth for year.

Q: Highlight specific new product introductions.

A: Nimbler with product assortment, being fresh with lineup, quicker with lineups, small steps in categories like bar stools, accent chairs.

Q: Offset factors for maintaining SG&A expense guidance despite headwinds.

A: Expect leveraging of delivery and transportation costs in back half of year, advertising, occupancy costs, depreciation already baked in, margin guidance baked in cushion.