Back to Houston and 3 more takeaways from Havertys’ investors call

ATLANTA — Houston is the largest market in Top 100 retailer Havertys’ distribution footprint in which it doesn’t have a physical presence. That’s going to change later this year, as the Atlanta-based retailer will return to Space City for the first time in decades.

That was one of several key points raised by leaders during Havertys’ first quarter earnings call with investors on May 2.

“We’re very excited to announce plans to return to Houston, Texas. Havertys left Houston more than 40 years ago, and it’s the largest market in our footprint where we do not have stores,” Clarence Smith, CEO and chairman, said. “We will open our first store in a former Bed Bath & Beyond building in The Woodlands area later this year and follow with a Baybrook Village store in Q1 2025. We expect to have more stores positioned to serve the greater Houston market in the next two years.”

While Havertys hasn’t had a recent physical presence in Houston, Smith said consumers in the area are familiar with the brand, which should make for a smooth re-introduction.

“We have delivered furniture to the northern suburbs of Houston for many years from our Austin and College Station stores,” he said. “We believe we will be well-positioned and well-received in Houston and a major strengthening of our positioning in Texas.”

More than just Houston

While the return to Houston represents a major opportunity for Havertys, Smith said there’s more growth to report, including one new state and deeper penetration in Florida. He said the retailer is on target to add five total stores this year and five next year.

“I recently attended our new store opening in Southaven, Miss., entering our 17th state and a major growth suburb of Memphis, Tenn,” Smith said. “Southaven was the first store opening of four former Bed Bath & Beyond stores, which will allow us to gain strong locations in market areas where we have not been able to find sites.”

Smith said in the next three months, Havertys will be opening stores in three markets in Florida: Destin, central to the Emerald Coast; St. Petersburg, cementing the southern coastal site of outer Tampa region; and Pembroke Pines, its southernmost store in Southeast Florida, reaching into Miami.

“All these stores are in adjacent markets and locations where we have significant brand awareness, existing distribution and experienced management in place,” Smith said. “We know these strengths, combined with excellent locations and below-market rates, are a solid foundation for success.”

Smith was asked if the growth trajectory might be accelerated beyond the planned five store gains. He said that is dependent on opportunities, and Havertys will be ready should they arise.

“It depends on the opportunity. There are going to be more opportunities and we are very good at converting existing spaces into Havertys,” he said. “There are going to be more opportunities for us and we are prepared to do it. We’ve got a team and a staff to do it and we’re good at converting. As those things happen, we’ll be ready to jump on them.”

Navigating rough waters

The furniture industry as a whole is struggling, but Smith noted that Havertys has 139 years of successfully building market share, particularly when times are rough.

He said the ebbs and flows surrounding COVID put the industry in a strange position. It pulled about two years of demand forward, immediately followed by a two-year backslide. He said supply chain issues created ripples that are still being felt in many areas.

“In the past year, we’ve seen numerous furniture failures of major manufacturers and retailers in the demand slide, and we expect to see more competitors struggle and players fail,” Smith said. “These are times when it becomes clear that this industry, closely tied to housing, cannot handle heavy debt leverage.”

Smith said while Havertys has felt the declines in sales and traffic much like its peers, it isn’t leveraged and can weather whatever storms come.

“Major debt positions and high interest rates are a fast slide to bankruptcy in the furniture world. We have zero funded debt,” he said. “We are strongly positioned in the best states and fastest-growing markets in the country. We believe we’re well-positioned to grow our market share in these important growth areas in the coming years. We’re investing in store growth and upgrading our store operating systems to better serve our customers.”

Memorial Day and messaging

Finally, as the biggest sales event of the first half of the year approaches, Havertys officials believe they’re in position to do well.

“We’re well-prepared for the Memorial Day event, the most important of the first half, with energized marketing plans and an exciting lineup of new products, excellent balanced inventories and new in-store signage,” Smith said.

President Steve Burdette said, as of April 1, Havertys engaged the services of Carmichael Lynch Media to overhaul its media approach, which will be on full display for Memorial Day. Burdette said one key piece to the method is to include more local messaging, as officials believe that is the best way to positively impact local traffic.

“Our new media approach will be fully implemented for Memorial Day, our largest promotion in the first half of the year,” Burdette said. “Additionally, we are focusing on more local store marketing efforts to help complement our paid marketing campaigns. We feel this combination of awareness-building media with community building local store efforts will positively impact traffic.”

See also:

  • Staying power: How Havertys positioned itself for decades of success
  • Havertys expands ‘Furnish Happiness’ mantra to help shelter dogs find new ‘fur-ever’ homes

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