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Home furnishing retailer Haverty Q1 profits drops

May '07
HAVERTY FURNITURE COMPANIES INC reported earnings for the first quarter ended March 31, 2007. Net income for the first quarter of 2007 decreased to $0.8 million or $0.04 per diluted common share, compared to the first quarter 2006 net income of $5.1 million or $0.23 per diluted common share.

As previously reported, net sales for the first quarter of 2007 were $191.1 million, or 8.6% less than the sales in the corresponding quarter in 2006. On a comparable-store basis, sales decreased 10.4% for the quarter.

Clarence H. Smith, president and chief executive officer, said, "Our earnings for the quarter were significantly impacted by the lower sales volumes and negative comparable-store sales." We have chosen not to be overly aggressive with pricing promotions and our gross profit percentage declined very modestly. SG&A costs for the quarter were $3.4 million lower than the same quarter last year and $8.5 million lower on a consecutive quarter basis.

We continue to look for ways to improve efficiencies and scale our operations to the current sales environment."We have been carefully managing our inventory and have decreased the total on hand by $5.0 million from year-end levels in response to the slower business conditions."

The housing sector, which is tied to our industry, has been in a severe slump. It is difficult to predict when there will be sustained improvement in the sales of retail home furnishings. Our financial leverage is low, at 16% of our capital structure, which puts us in a good position to weather this storm until there is a positive change in the economic climate.

"We have a new store opening this month in Huntsville, Alabama, a new market for us and an area expected to continue its economic growth. The opportunities for store locations are likely to rise sharply as weak retailers are unable to withstand a prolonged decline in business."

The company will sponsor a conference call Thursday, May 3, 2007 at 10:00 a.m. Eastern Daylight Time to review the first quarter. Listen-only access to the call is available via the web at company website.

Haverty Furniture Companies Inc

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