Haverty (HVT) Board Approves New Share Buyback Program

The board of Haverty Furniture Companies Inc. (NYSE:HVT) recently approved a new authorization of up to $10 million under its stock repurchase program. The company has approximately $0.2 million remaining for purchases under a previously approved authorization.

A new share repurchase authorization indicates that the company has a strong balance sheet and is cash rich to invest in the business and return value to its shareholders.

The Atlanta-based company has paid a cash dividend each year since 1935. On May 10, the company’s board declared a cash dividend of the two classes of $1 par value common stock of the company at a rate of 10 cents per share on the common stock and 9.5 cents per share on the Class A common stock. The dividend will be paid on Jun 9, 2016 to holders of record as on May 25, 2016.

Earlier this month, Haverty reported first quarter 2016 results, wherein both earnings and revenues missed the Zacks Consensus Estimate, possibly due to an uncertain economic scenario.

The residential furniture and accessories retailer posted earnings of 21 cents, which declined 22.2% year over year. Revenues of $194.5 million however increased 1.7% from the prior year quarter, owing to comparable store sales gain. Haverty’s comp growth of 1.7% in the first quarter was better than growth of 1.4% in the preceding quarterowing to enhanced online experience, better display for mobile devices and improved furnishing categories.

However, the company is witnessing sluggishness in the consumer spending environment, which has led to a highly promotional competitive environment in retail.

Comparable store sales increased 0.9% in the first quarter, as against a decline of 0.9% in the fourth quarter. Comps increased on the back of higher average tickets due to custom order capabilities and free in-home design service.

This home furnishing retailer also reported a 1.3% decrease in total written sales for the first quarter of 2016 and a 2.2% decrease in written comparable store sales on a year-over-year basis. The decrease can be attributed to uncertain macro-economic environment. In addition, Haverty’s stores remained closed for Easter, which occurred in March this year, versus April last year, which led to a negative impact of around 1.4%.

While we remain encouraged by the solid fundamentals of the company, its strong cash position and its solid store expansion plans to strengthen its presence in key markets with additional or repositioned stores, difficult market conditions are expected to remain a concern.

Haverty has a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Some better-ranked stocks in the home furnishing industry include Ethan Allen Interiors Inc. (NYSE:ETH) and Fortune Brands Home & Security, Inc. (NYSE:FBHS) , both with a Zacks Rank #2 (Buy). Another stock worth considering in the broader retail sector is The Children's Place, Inc. (NASDAQ:PLCE) , which sports a Zacks Rank #1 (Strong Buy).