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Haverty Furniture Companies (NYSE: HVT) reported higher first-quarter sales and earnings, with comparable sales remaining positive for a third consecutive quarter. Management also highlighted stronger average tickets, growth in design services and an expanded store pipeline for 2026.
President and CEO Steve Burdette said first-quarter net sales rose 4.1% to $189.1 million, while comparable sales increased 4.3%. Total written sales increased 6.4%, and comparable written sales rose 7%.
Pretax income was $6 million, representing a 3.2% operating margin, compared with $5.3 million and a 2.9% operating margin in the prior-year quarter. Earnings were $0.26 per share, up from $0.23 per share a year earlier.
“We are excited to report another increase in both written and delivered comp sales for Q1, marking our third consecutive quarter of positive comps,” Burdette said.
Burdette said written sales benefited from a strong two-week period leading into Presidents’ Day weekend, when sales were up 8.3%. Traffic was down in the low single digits during the quarter, despite weather disruptions in January and the start of what Burdette referred to as Operation Epic Fury in March.
The company’s average ticket increased 11.9% to approximately $3,700. Haverty’s design business accounted for 35.3% of total business in the quarter and rose 6.3%. The design average ticket increased 11.7% to about $8,300.
Custom special order business rose 10.1% and represented 34.5% of upholstered business, which Burdette attributed to continued success in design. He said Haverty offers more than 1,000 fabric choices across styles, patterns and colors, and that merchandising has become more nimble in assortment planning to get newer products onto store floors faster.
By category, occasional furniture was up double digits, upholstery and dining room rose in the mid-single digits, mattresses increased in the low single digits, bedrooms were flat and accessories were down slightly.
Executive Vice President and CFO Richard Hare said gross profit margin improved 30 basis points to 61.5% from 61.2% in the year-ago period. Excluding a $524,000 LIFO expense in the first quarter of 2026 and a $24,000 LIFO expense in the prior-year quarter, adjusted gross profit margin increased 60 basis points to 61.8% from 61.2%.
Selling, general and administrative expenses rose $4.1 million, or 3.8%, to $111.3 million. As a percentage of sales, SG&A was 58.9%, down slightly from 59% in the prior-year quarter. Hare said the company saw higher selling, occupancy and administrative costs.
Net income was $4.3 million, compared with $3.8 million a year earlier. Haverty ended the quarter with $107.5 million in cash and cash equivalents and no funded debt.
The company spent $7 million on capital expenditures, paid $5.3 million in regular dividends and repurchased $2 million of common stock at an average price of $21.97. Hare said Haverty had approximately $16.4 million remaining under its share repurchase authorization.
Inventory rose to $106.9 million, up $10.7 million from Dec. 31, 2025, and up $18.2 million from the prior-year quarter. Burdette said the increase was planned and reflected new product introductions, efforts to keep bestsellers in stock and orders pulled forward ahead of Chinese New Year. He said the company expects inventory to fall below $100 million by the end of the second quarter.
Management said Haverty expects to begin seeing the effects of the administration’s reduced Section 122 tariffs in the second quarter, with further changes expected in early third quarter as those tariffs approach expiration in mid-July. Hare said the company’s 2026 guidance reflects tariffs in effect as of May 5, 2026, and that Haverty is monitoring developments to manage exposure and limit impact.
Burdette said rising oil prices tied to Operation Epic Fury would affect the business in the second quarter through vendor input costs, fuel surcharges on container shipping, dedicated fleet fuel expenses and home delivery fuel costs. He said those costs are included in the company’s margin and expense guidance.
Haverty reaffirmed its 2026 gross margin outlook of 60.5% to 61%. Hare said expected impacts from product, freight and LIFO expenses are included in that range. The company also maintained its outlook for fixed and discretionary SG&A expenses of $307 million to $309 million and variable SG&A costs of 18.6% to 18.8%.
In response to an analyst question, Hare said tariff refunds were not included in the guidance and would be “incremental potentially” if received. He also said the company expects some leverage in delivery and transportation costs in the second half of the year, helping offset higher fuel and financing expenses.
Haverty ended the quarter with 128 stores. Burdette said the company opened a store in Fenton, Missouri, on April 3, its second location in the St. Louis market, and that the store was off to a fast start, with April traffic in the top tier of the company’s stores. A fourth Nashville-area store in Mount Juliet was scheduled to open May 8.
The company also plans stores in Pittsburgh and two Houston locations for the fourth quarter of 2026 and first quarter of 2027. Burdette said Haverty signed three additional leases expected to open this year: a Fredericksburg, Virginia, location acquired from the American Signature bankruptcy; a relocation of the Snellville store in East Atlanta with a roughly 50% larger footprint; and a McKinney store in northeast Dallas in a former furniture store building.
Haverty scaled back planned remodels from four stores to two to focus on new locations in the second half of the year. It also plans to close stores in San Angelo, Texas, in June and College Station, Texas, in August. Burdette said those markets no longer fit the company’s long-term growth strategy due to demographic shifts, weak housing growth or the investment required.
During the question-and-answer portion of the call, Hare said written business was up nearly 9% in January and rose in the mid-single digits in February and March. He added that about half of the $4.1 million increase in SG&A related to selling costs, with 60% of that tied to third-party credit costs as the company used more 60-month, no-interest financing.
Burdette said Haverty has not seen a major change in consumer behavior since it began using 60-month financing more aggressively around Labor Day, and that larger tickets are driving more usage of the more expensive financing options.
Asked about the outlook for positive comparable sales in the back half of the year, Burdette said management remains optimistic despite headwinds, citing the company’s resilient customer, store growth plans and continued arrival of new products.
“We feel like we’re positioned in the right place,” Burdette said. “We feel optimistic about it, even with all the headwinds that we’ve got out there in front of us.”
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