Haverty Furniture Companies, Inc. (NYSE: HVT) delivered a standout second quarter 2026, with earnings per share doubling year-over-year to $0.32 from $0.16, driven by an 8% increase in comparable store sales marking the fourth consecutive quarter of positive comps. Net sales rose 7.7% to $194.9 million, while total written sales surged 12.6% with comparable written sales up 12.3%. The premium home furnishings retailer’s gross margin expanded 60 basis points to 61.4%, reflecting favorable product mix and tariff refund benefits.
Key Financial Highlights
- Earnings Per Share: $0.32 vs $0.16 in Q2 2025
- Net Sales: $194.9 million (+7.7% YoY)
- Comparable Store Sales: +8% (4th straight quarter of growth)
- Gross Margin: 61.4% (+60 bps YoY)
- Pretax Income: $7.4 million (3.8% of sales) vs $4.3 million (2.4%)
- Average Ticket: Rose 14% to over $3,800
- Design Average Ticket: Up 15.7% to over $8,800
Design Business Drives Premiumization
The design segment continues to be Haverty’s primary growth engine, now accounting for 36.5% of total business. Custom special orders surged 23.6%, demonstrating the company’s successful pivot toward higher-margin, personalized home furnishings. Every merchandise category posted gains, with double-digit increases in upholstery, bedroom, dining, and occasional furniture, while mattresses and decor grew at mid-single-digit rates.
Inventory Management and Store Expansion
Management reduced inventories from $106.9 million at Q1-end to $100.5 million at Q2-end, improving inventory turns while maintaining product availability. The company expects Q3 inventories around $95 million. Havertys opened two new locations in St. Louis, MO and Nashville, TN during Q2, both exceeding traffic and volume expectations. Six additional stores are planned for H2 2026, including entry into Pennsylvania (18th state) and expansion in Texas and Georgia. Year-end store count is projected at 133.
Tariff Dynamics and Cost Pressures
New Section 301 tariffs (10% and 12.5%) replaced previous Section 122 tariffs on July 24, while Section 232 tariffs on upholstered wood furniture remain at 25%. The company received $2.1 million in IEEPA tariff refunds related to direct imports. However, three fuel-related cost pressures loom: 25-30% container rate increases from mid-August, elevated diesel fuel costs above $5/gallon impacting transportation, and upstream product input cost inflation. Management maintains full-year gross margin guidance of 60.5%-61% (excluding additional tariff refunds).
Capital Allocation and 2026 Guidance
- Share Repurchases: 723,000 shares bought for $16.6M YTD (including 600,000 shares in June via private negotiation)
- Dividends: $10.6 million paid YTD
- CapEx: ~$34 million planned (stores/remodels $27.7M, distribution $3.2M, IT $3.1M)
- SG&A Guidance: Fixed/discretionary $307-309M; variable 18.7%-18.9% of sales
- Effective Tax Rate: Expected ~26%
- Credit Facility: Expanded to $100 million from $80 million
Market Context and Investment Thesis
Haverty’s performance underscores resilience in the premium home furnishings segment despite macroeconomic headwinds. The company’s design-led strategy, inventory discipline, and store expansion in underpenetrated markets position it well for continued market share gains. The affordable luxury consumer remains robust, and AI integration across operations (home delivery, customer chat, designer communications) provides an emerging competitive advantage. However, investors should monitor fuel cost pass-through, tariff refund uncertainty on indirect imports, and the execution risk of six H2 store openings.
FAQ
1. Why did Haverty’s earnings per share double in Q2 2026?
EPS doubled due to 7.7% net sales growth, 60 bps gross margin expansion from favorable mix and tariff refunds, and SG&A leverage (58% of sales vs 59.3% prior year). The design segment’s 23.6% custom order growth drove higher average tickets.
2. What is Haverty’s outlook for inventory levels and store growth?
Management targets Q3 inventories around $95 million (down from $100.5M in Q2) and plans six new store openings in H2 2026, including entry into Pennsylvania and expansion in Texas/Georgia. Year-end store count expected at 133.
3. How are tariffs impacting Haverty’s margins and guidance?
New Section 301 tariffs (10-12.5%) and existing 25% Section 232 tariffs create cost pressures. The company received $2.1M in direct import tariff refunds (Q2) and expects potential indirect refunds of ±$1-1.5M. Full-year gross margin guidance remains 60.5%-61% excluding additional refunds.
