Haverty Furniture Companies, Inc.

Good day and welcome to the Haverty's second quarter 2020 financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Hare. Please go ahead, sir.

Thank you, operator. During this conference call, we'll make forward-looking statements which are subject to risk and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made in which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the Securities Exchange Commission. Our president, CEO, and chairman, Clarence Smith, will now give you an update on our results and provide commentary about our business.

Good morning. Thank you for joining our Q2 conference call. As we previously released, our stores and distribution teams will close the entire month of April due to COVID-19 to comply with government and CDC requirements to protect our team members and customers. Sales for the quarter were $110 million compared to $191 million in Q2 2019. We were pleased to open most of our stores May 1, operating with a limited staff. Our distribution and delivery teams began delivering later that week. We quickly realized a much stronger demand than we expected. May and June written sales were up 13.9% with comparable store written sales up 17.5%. Our delivered sales were down 13.4% for that same period because we were scrambling to build back our delivery and distribution staff and bring in oversold products from vendors who had closed also during the quarter. We now have a very strong backlog of orders. This dramatic reversal of direction was unprecedented for Haverty's and the entire industry. We found ourselves in the interesting position of not only playing defense, but now playing an aggressive offense. And we've been doing a lot over the last several months. Clearly, the importance of home is a major trend. A recent article from McKinsey used the term the homebody economy. We are in a sweet spot for now. We're working very closely with our vendors to prioritize shipments while we're having to pay increased pay for our distribution and delivery team members to handle the product. Ramping up our delivery and our receiving to match our written business is a difficult challenge. but we feel that we'll be able to service and supply our customers better than most of our competitors in the coming months. Most of our current key statistics look very good. We're seeing traffic, written average ticket, sales per square foot, closing rates, and gross margins at record levels. This is creating record sales with a significantly reduced staff and reduced store hours. Because of COVID-19, we have a challenge with our designers with home visits, but we're doing more virtual and 3D room planning and getting excellent response and feedback. This double-digit sales pace continues if the customer stays focused on making home her top priority and if we operate at higher performance levels. We know that there will be change. And because of the problems with getting product, there will be some cancellation issues. But we are in an energizing time with the possibility that we could see long-term prioritizing of home over other areas. These times have required us to change in many areas, and most of that is a good long-term adjustment. The changes we're making will be good for our future business. What we do not know is what COVID-19 will do and whether we'll have to adjust or close in the months ahead. If that happens, we will be in a much better prepared position and less impacted than we were in March and April. Our cash management and exceptionally strong balance sheet will put us in a sound position to deal with the ongoing uncertainty from COVID-19 as we strive to deliver a powerful front runner performance in our industry. We have a special opportunity that we've not seen in decades to make the kind of breakthrough that we have believed that we should be producing. We are well positioned to make that breakthrough happen. We're extremely proud of our teams in all of our regions who've continued to focus on serving our customers and delivering a resilient performance these past months. We're very encouraged by the current business conditions and optimistic these trends will continue through 2020 and into 2021. I'll turn the call back over to Richard Hare, CFO.