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Hurricane Irma Dents Haverty Furniture’s (HVT) Q3 Sales

Zacks

After witnessing sluggish growth in the second quarter, Haverty Furniture Companies Inc. HVT reported dismal sales results in the third quarter fiscal 2017 (ending Sep 30, 2017), following which shares eventually lost 10.4%. The decline was attributed to a decline in comparable store sales as well as written comparable sales, which were mainly impacted by Hurricane Irma. Haverty is scheduled to release its third-quarter results on Oct 31 after the market closes.

If we look into the third quarter of fiscal 2017 sales report, we note that sales declined 1.9% year over year to $207.6 million against 1.1% growth witnessed in the preceding quarter. Notably, positive sales growth in September was offset by negative written business, due to Irma.

Comparable store sales declined 2.9% for the third quarter, weaker than 0.2% decline witnessed in the second quarter and 1.6% in the first quarter. Total written sales for the third quarter were down 3.5% and written comparable store sales decreased 4.2% year over year, due to Irma which led to store closures. In fact, the company closed 55 stores at least for one day and ceased home deliveries in anticipation of Irma. The company had to shut 14 stores for three or more days due to power outages. Unfortunately, Haverty had to close its Florida and Eastern distribution centers and corporate offices due to disruptions caused by the hurricane.

The negative impact on third quarter total written sales and written comparable store sales because of these closures is estimated to be 1.2%.


In fact, shares of this retailer of full-service home furnishings have been underperforming the industry and the broader Retail-Wholesale sector for the last six months. The stock grew only 1.7% against the industry’s growth of 10.8% and sector’s improvement of 10.4%.

Despite sluggish written comparable sales, the Zacks Rank #3 (Hold) company, remains encouraged by new merchandises that are expected to flourish stores in the coming months. The company believes that business will benefit as housing strengthens in the region and the general economy improves. We also remain encouraged by the solid fundamentals of the company and its solid store expansion plans to strengthen its presence in key markets with additional or repositioned stores. Moreover, the company is making innovations with respect to its technology developments. Also, its shareholder-friendly moves are noteworthy.

Also, the stock exhibits a VGM Score of B, instilling confidence about its momentum. Moreover, the company has posted an average earnings surprise of 24.0% in the trailing four quarters.

Key Picks

Investors interested in the broader retail space may consider Burlington Stores Inc. BURL, Canada Goose Holdings, Inc. GOOS andThe Children's Place, Inc. PLCE. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While Burlington has long-term earnings growth of 16.2%, Children’s Place and Canada Goose have long-term growth rates of 34.1% and 9.0%, respectively.

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