Haverty (NYSE: HVT) reported Q4 EPS of $0.45, $0.10 better than the analyst estimate of $0.35. Revenue for the quarter came in at $208.97 million versus the consensus estimate of $213.79 million.

Clarence H. Smith, chairman, president and CEO, said, “Our results reflect the impact of our efforts to more closely align gross profit margins with the quality of our Havertys branded merchandise and gains from operational efficiencies against the backdrop of difficult sales conditions.

“The fourth quarter was a challenge for our teams dealing with the tariffs placed on goods from China. We have addressed the disruption to product selection, sourcing, vendor pricing, supply chain and merchandise availability. We expect to continue to manage and work through the effect of the current 10% tariff without material impact to our business. Should the slated increase to 25% in March occur, we believe we can handle this change as well as any other company in our industry.

“We closed five locations during 2018, improving our comparable store sales results and future operating costs. In addition to strict analysis of our store base, SG&A costs are under rigorous scrutiny to ensure that we remain profitable and competitive. We made investments in our people during 2018 as we increased minimum hourly wages, made additional contributions to employees’ 401(k) savings accounts, expanded our sick leave policy and wellness program, and absorbed additional costs related to employee health care benefits.

“The current retail environment highlights the imperative of connecting and meeting the needs of the consumer. We are making continued investments in our online presence and website capabilities, and our brick-and-mortar portfolio has never been in better shape. Coupled with our sales consultants and in-home designers, we provide an exceptional start to finish shopping experience followed by first-class delivery service. Our entire team is committed to achieving profitable sales growth, efficient operations, and satisfying our customers.”

Financial Highlights

Fourth Quarter 2018 Compared to Fourth Quarter 2017

• As previously reported, net sales declined 2.8%. On a comparable store basis, sales were down 1.6%. Total written sales were down 5.2% and written comparable store sales declined 3.9% over the same period last year.
• Average written ticket increased 6.7% over last year’s quarter and custom upholstery written business increased 5.8%.
• Gross profit margin increased 73 basis points to 54.8%. The improvement was primarily from product pricing and mix.
• Selling, general and administrative costs declined $1.7 million and as a percent of sales increased 60 basis points to 48.8% from 48.2%. Fixed and discretionary expenses were relatively flat. The increases in advertising and marketing expenses of $0.6 million and warehouse costs of $0.3 million were partly offset by a $0.5 million decrease in depreciation. Variable expenses were 18.3% as a percent of sales in 2018 compared to 18.6% in 2017. The savings were driven by reductions in our selling expenses.
• Other income in 2017 includes $1.9 million in gains from insurance recoveries.
• Tax expense in 2017 includes $5.9 million for the enactment of the Tax Act, which increased our effective tax rate to 79.2% and reduced diluted earnings per share $0.27.
• During 2018, we paid a special cash dividend of $1.00 per share to common stockholders and $0.95 per share to Class A common stockholders.
• During 2018, we purchased 202,663 shares of common stock for $4.3 million.

For earnings history and earnings-related data on Haverty (HVT) click here.