Haverty Furniture Down to Strong Sell on Sluggish Q2 Results
Zacks Investment Research downgraded Haverty Furniture Companies Inc. (HVT) to a Zacks Rank #5 (Strong Sell) on Aug 23 after the company reported not-so-great second quarter 2014 results.
Why the Downgrade?
On Jul 30, this home furnishing retailer reported its second quarter results and posted earnings of per share of 22 cents, which missed the Zacks Consensus Estimate by a penny. Earnings were also flat from the prior-year quarter, as increase in operating costs overshadowed the year-over-year sales increase in the quarter.
Sales increased only 2.4% to $175.1 million and missed the Zacks Consensus Estimate of $176 million by a slight margin due to a slowdown in traffic. Sales growth rate was also weaker than the prior-year growth rate of 12.9%. Comparable store sales were up 3.2% in the second quarter, against 11.2% growth last year, possibly due to a slow recovery in the housing market.
Selling, general and administrative costs ratio increased 70 basis points to 49.3% in the quarter, primarily due to increases in warehouse and delivery costs, selling expenses such as commissions, and advertising, offset by reductions in administrative expenses.
The company still believes that the gradual housing market recovery will help increase sales and market share by the end of 2014. Haverty also has strong store expansion plans for 2014 to strengthen its presence in key markets with additional or repositioned stores. It is also working on its website which would feature additional shopping tools.
However, the firms are not so positive about the company’s numbers in the upcoming quarters. Estimates for the third quarter declined 7.1% and that for full year 2014 went down 4.5% over the last 30 days.
Other Stocks to Consider
Better-ranked stocks in the home furnishing industry include Mattress Firm Holding Corp. (MFRM) and Williams-Sonoma Inc. (WSM). While Mattress Firm sports a Zacks Rank #1 (Strong Buy), Williams-Sonoma holds a Zacks Rank #2 (Buy).
Read the Full Research Report on HVT
Read the Full Research Report on MFRM
Read the Full Research Report on WSM
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