Haverty Furniture's Q1 2025: Navigating Tariff Challenges and Strategic Contradictions

Tariff impact and mitigation, promotional strategy, inventory management strategy, and store expansion and tariff impact are the key contradictions discussed in Haverty Furniture Companies' latest 2025Q1 earnings call.



Sales Performance and Impact of External Factors:
- Haverty Furniture reported Q1 sales of $181.6 million, down 1.3%, with comps down 4.8%.
- This decline was influenced by housing affordability issues, high interest rates, and declining consumer confidence, along with disruptions from winter storms and the impact of tariff discussions.

Gross Margin and Profitability Improvement:
- Gross margins improved to 61.2% compared to 60.3%, leading to a pre-tax profit of $5.3 million and a 2.9% operating margin.
- The increase in gross margins was due to favorable product selection and merchandise mix.

Inventory Management Strategy:
- Inventories increased by $5 million, or about 6% since year-end 2024, with plans to continue increasing by $3 million to $5 million in Q2.
- The strategy aims to improve customer service and mitigate supply chain disruptions related to tariffs.

New Store Openings and Expansion Strategy:
- Haverty plans to open five new stores a year, with openings in Houston and Daytona Beach, and relocations planned for Houston and Waco.
- The cautious approach is due to current market conditions and lease expiration factors.

Tariff Impact and Supply Chain Uncertainty:
- Haverty is monitoring the impact of tariffs, with minimal expected consumer impact due to supplier support and strategic inventory management.
- The company awaits clarity from the administration to minimize supply chain and consumer disruptions.