Haverty Furniture Companies, Inc. Class A Small-Cap Virtual Conference

Sure. I can kick us off here, Anthony. Thanks, everyone, for joining the chat today. We are a 141-year-old company. We've been around a long time. We've seen a lot of different economic cycles. We are headquartered in Atlanta, Georgia. We are the oldest public company in Atlanta, so that's older than Delta, older than Coca-Cola. We've been around a while. We are a retailer of residential furniture and accessories, and we currently have 130 stores in 17 states. In the fourth quarter, we're going to be entering our 18th state, which is going to be in Pittsburgh, Pennsylvania. We're excited about that heading into the end of the year. Our store base is in the South to Midwestern regions, and we have three large distribution centers. We have one in Florida, Georgia, and also Texas.

Our goal is to open five new stores a year in that distribution footprint. A quick background on our customer profile. We're selling to the women. The women are usually outfitting the homes and coming up with all the décor. Those are our target. They are living in the suburbs. They're married with children. They have large single-family homes, and they also have household incomes of $150,000 or more. If we're talking about the K-shaped economy that's been top of mind this past year or so, we're talking about the upper end of that K. We have a better end customer. They're paying attention to the stock market, they're in the stock market, and they're doing pretty well right now. We offer a free design service, and that is something that we think differentiates us from our lower-end competitors.

We also feel like we offer a better value than our higher-end competitors who may also offer design. That's one thing that we're very proud about. We also offer a regret-free experience. When a customer comes and shops at Haverty's, they don't have to worry about dealing with any fine prints or anything like that. If they are not happy with the product, we are going to make sure that we take care of that customer so they can shop with us with confidence because they know that we're going to make sure we take care of them on that.

Yeah, Anthony. When we look at it from a demand perspective, traffic stayed fairly positive, still in the low single digits, but it was positive. We talked about Q1, we were down, but Q1 was impacted by a couple events. One, the Ukraine war breakout that happened at the end of February, and then we had a big weather event in Q1 that really basically was bookended on two weekends, and in between was a major weather event. Without that, we would've been positive in Q1, and so we felt good. Traffic is looking good moving forward with it. Conversion rates have maintained and been stable. But the real winner for us is average ticket. It's a home run. It grew double digits, 15%, roughly. I think one was 14.7 overall, one was over 15 on the design side.

Our average ticket's $8,800 on design, and so that is the real win. Design is driving our business. It was almost 36.5%, so that was our real big win for us in helping to differentiate us for the quarter, and where we see ourselves going forward. Where are we positioned right now? As we look at it, if you look at the pyramid, we consider ourselves in the upper side, upper middle of the pyramid. Above us, you got an Arhaus and a Restoration Hardware, a Room & Board. Below us, you got a Rooms To Go, an IKEA, a Bob's Discount Furniture, an Ashley that operate down. Then in that middle tier, you've got other competitors such as a Pottery Barn, a Crate & Barrel. You've got a La-Z-Boy, an Ethan Allen, a Bassett Furniture Industries.

All of those that I mentioned in the middle tier and up offer a design of some type. We feel like we do it differently. We have one per store. We compare ourselves to a La-Z-Boy. We feel like our product assortment is broader. We have case goods. We have a full assortment of that, mattresses, as well as the upholstery, motion, and all the things that go with it, where their stores tend to be more focused on the motion, the stationary. They do have some dining, et cetera, and occasional. A Bassett Furniture Industries is a smaller footprint, offering all assortment, but a smaller footprint. Mainly, their sales are more designer-oriented inside their stores. Ethan Allen, of course, is all design, smaller stores. They're moving to smaller footprints.

Crate & Barrel and Pottery Barn are more of a department store kind of feel as you walk through. We feel like we sit uniquely in between there, and that we offer a real value for our customers and a real choice for them to choose. So we see that as a competitive advantage for us. As I said, the design is a real big plus for us, and we see big opportunity with that.

Yeah. When you have double-digit growth, every category's up. But certainly our main upholstery occasional were certainly strong. What we're really glad to see is continued strength in the bedroom and dining room area as well. All four of those were up well in double digits. Mattresses were kind of a single-digit increase in decor, which is a little less, even though accessories, the designers do sell and tag that well. But they did not perform quite as well. They're still single digit, don't get me wrong. They're still positive increases, but not where we were looking to go. If you look at opportunities in categories, obviously outdoor is an opportunity. That's one we certainly know. It's the biggest category that we participate with it with an online assortment, but it's a very limited assortment. We know that's a huge opportunity for us, especially with our design business.

That's just another room and extension of the house that is outdoor, or sunrooms, in some cases, that we could be getting. That's certainly going to be a focus of ours as we move forward with it. Then, of course, we measure attachment rates on everything we do, whether it's mattresses to bedrooms, whether it's top of bed spreads to bedroom sets, what are we doing, how are we performing accessories to the actual sale, chairs, accent chairs to the upholstery. We look at those, and our merchants are constantly looking at that and ways that we can offer and increase that for the consumer.

Yeah. Definitely pricing has been the biggest driver of that. There's no question about it. That's helping us, and that has moved the needle more than anything else. But what we have seen, and we've talked about this over the last two quarters, is that with that increase, we have an increase in units. Not at the same rate, don't get me wrong, it's not a one-for-one, but our increase in units was in low single digits, and that was nice to see that turn and transition. We'll have to continue to watch it as we move forward. We know, as we've talked, we're going up against tougher comps, as now we're starting to go up against our increases from having four quarters in a row. We'll have to kind of measure that and see where it takes us going forward.