Haverty Furniture Companies, Inc.

Good day and welcome to the Haverty's Third Quarter 2020 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Richard Hare, Chief Financial Officer. 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 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 and Exchange Commission. Our President, Chief Executive Officer, 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 third quarter conference call. As we reported earlier, our delivered comparable store sales were up 4%, with very strong written comparable sales up 22.6%, the largest increase in at least 50 years. We've been significantly benefiting from the nesting and homebody economy, where so many of our customers are focusing on improving their home, the place where they're spending much of their time. We're pleased to report a record quarterly net profit of $18.3 million, with $0.97 earnings per share compared to $6.1 million and $0.31 per share last year. The major contributing factors are strong gross margins of 2.7% and SG&A 3.7% lower. We had lower advertising expense and lower operating costs across almost all categories. While we're seeing pressure to increase personnel costs in warehouse and distribution, We're committed to holding our costs in the coming quarters in most of our SG&A categories. The gross margin improvement was due to fewer markdowns, less discounting, and a higher mix of special order products. Our merchants and stores have done an excellent job in improving our gross margins, and we believe this trend will continue. We have a key objective to maintain high single-digit pre-tax operating income in the quarters ahead. During this pandemic, we've seen the increasing importance of convenience to our customers. Our internet sales are a highest producing store at 3.9% of sales, up over 80%. Buy online, pick up in store is currently running at 15%, up triple over past years. We're investing in improving the efficiency and ease of use of our website and increasing the use of digital and social media to best reach our targeted customers. We're dedicated to making it as easy as possible for our customers to interact with us any way she wants. A recent driver of our business is what I call a triple-double. This has never been achieved since we began measuring. However, in several periods and weekends over the past two months, we've experienced a triple-double of a double-digit increase in traffic, closing rate, and average ticket. While this is highly unusual as it is in basketball, it's a strong indicator of the powerful trends in our business that we've seen. We've seen balanced growth across our regions with especially strong performance from our larger markets. It's very rewarding to see our big horses kicking in with strong sales growth. We feel we're very well positioned in some of the strongest markets in the country, with excellent growth potential. In today's digital and virtual world, we believe that Haverty's emphasis on a strong combination of high personal touch with our H design combined with the state-of-the-art technology helps to create a strong trust in the Haverty's brand. We believe that our 135 years of helping our customers' vision of their home come true is a foundation that our customers rely on. especially in difficult times. The unified operating system that we have deployed, whether in-store or online, allows for better visibility for our customers and for our operating and supply chain teams. We believe that we're in better position than most of our competition in being able to provide accurate product information and reliable delivery because of the strong systems and the excellent relationships with our suppliers. However, we know that we must change with the world or go by the wayside, which has recently impacted many retailers. We believe in staying in front of the changes and play a part in the inevitable disruption that our industry is experiencing. We will thrive in the disruption. We're very thankful for all our team members who are working directly with our customers every day in their homes and in our stores. We greatly appreciate their continued efforts and dedication. We're also appreciative of all our team members who support those on the front. We're all part of Team Haverty's and are coming together to serve our customer. Tomorrow, we are celebrating our first Founders Day, October 30th, on JJ Haverty's birthday. While the celebration is in memory of JJ Haverty, it's dedicated to our valued team members who are building Haverty's for the next 135 years. And we thank them for the tremendously hard work and dedication to Haverty's, our customers, and to each other. We are certainly quite blessed to be in the business of serving homes in the best part of the country during a pandemic. We're dedicated to building our business by being the best and justifying our customers' loyalty today and in the years ahead. I'll turn the call back over now to Richard.