Havertys Furniture (HVT) Q3 2026 earnings review
Havertys sales keep rising, but underlying profit falls on costs
Havertys Furniture grew sales for afourth straight quarter, but a one-time tariff refund accounted for all of its profit growth. Chief executive Steven G. Burdette highlighted comparable-store sales rising 4% and reported profit per share jumping to $0.39, yet excluding the $3 million refund, profit per share fell to $0.25 from $0.28 a year ago. Customer order growth also cooled to 3%, and the retailer raised its full-year cost forecast for delivery and customer financing.
| Comparable-store sales | +4.1% written orders +2.3% from a year ago |
|---|---|
| Profit per share, excluding tariff refunds | $0.25 $0.28 a year ago (reported: $0.39) |
| Gross margin, excluding tariff refunds | 60.7% 60.3% a year ago (reported: 62.3%) |
| Full-year variable SG&A outlook | Raised 0.5 pts now 19.2–19.4% of sales (higher cost) |
⚖️ Verdict: 🔴 Bearish
The story got worse because rising operating costs and slower order growth outweighed steady product margins. Management had to raise its full-year variable expense forecast by half a percentage point after delivery and financing fees failed to drop in the third quarter, while a jump in administrative pay pushed underlying profit below last year's level. One bright spot: product margins excluding tariff refunds still edged up, beating what the prior full-year plan pointed to.
The question now is whether the third-quarter order slowdown to 3% marks fading customer demand or just a tough comparison against last year's 10% jump. If demand is holding up, order growth will rebound in the fourth quarter against an easier 3% prior-year base; if shoppers are pulling back, mild revenue growth will not cover the higher cost base. Fourth-quarter written orders and variable expenses will settle it.
🐂 Bull Case
Underlying Product Margins Held Up Against Freight Costs
Havertys imports furniture and absorbs shipping rates in its cost of goods sold, the direct cost of buying and bringing in merchandise. Even after stripping out $3.2 million in government refunds for invalidated International Emergency Economic Powers Act (IEEPA) tariffs, gross margin rose 0.4 percentage points from a year ago to 60.7%.
Also excluding Last-In, First-Out (LIFO) inventory accounting adjustments, the margin rose 0.7 percentage points to 61.3%. That beats the 59.7% to 60.6% second-half range the prior full-year plan pointed to by our math. Higher shipping container and diesel costs did not dent product markups, and the outlook still "excludes future IEEPA tariff refunds that may be received for indirectly sourced products".
What to watch: fourth-quarter gross margin excluding tariff refunds. By our math, the new full-year outlook leaves about 60.5% for the fourth quarter, which will show whether holiday promotions give back those merchandise gains.
Five Fourth-Quarter Openings Will Expand the Chain
After holding its store count at 129 for over a year by matching openings with closures, the furniture retailer is expanding its footprint again. Chief executive Steven G. Burdette said the team is "energized by our five store openings in the fourth quarter, highlighted by our entry into Pittsburgh, Pennsylvania, our 18th state".
The company ended September with 130 showrooms, up one from June, and kept its year-end target of 133 stores. Because five openings land in the final three months of 2026, Havertys has been paying pre-opening rent and payroll this year while the new showrooms will bring in almost all of their sales in 2027.
What to watch: the gap between total sales growth and comparable-store sales growth in early 2027. A wider positive spread will show that the new showrooms are adding revenue on top of existing stores.
Positives this quarter didn't test
Four standing drivers had either limited updates in the third-quarter release or paused after earlier gains, leaving their next real tests for the full-year report.
- In-home design service: designers accounted for 34.6% of customer orders, up 0.4 percentage points from a year ago but down from 36.5% in the second quarter; the average designer order size was not in the release.
- Average order size (ticket): nine-month average ticket reached $3,838, up 11% from a year ago, and sales per square foot rose 8.5% to $178, though third-quarter standalone figures were not printed.
- Share buybacks: nine-month repurchases stayed at $16.6 million (723,000 shares), meaning Havertys bought no stock in the third quarter by our math while holding $127 million in cash and no debt; a new board authorization would restart it.
- AI tools in delivery and chat: not mentioned in the release; future call commentary on delivery efficiency will test whether these tools lower costs.
🐻 Bear Case
A One-Time Tariff Refund Carried the Profit
Havertys led its release with diluted earnings per share rising from $0.28 to $0.39, a 39% increase from a year ago. However, that profit increase came entirely from a $3.2 million one-time refund of invalidated IEEPA import tariffs recorded in cost of goods sold during the quarter.
- Profit per share excluding tariff refunds: $0.25, down 11% from $0.28 a year ago
- Net income excluding tariff refunds: $4.0 million, down 15% from $4.7 million a year ago
- Operating margin excluding tariff refunds: 2.2% of sales by our math, down 0.6 percentage points
- Fixed and discretionary overhead: $79.8 million, or 39.3% of sales, up $3.9 million from a year ago
Underlying profit fell because overhead grew faster than the 4.5% sales increase. Administrative costs jumped $4.1 million, which the company said came from "stock-based compensation expense subject to accelerated recognition during the quarter", higher performance bonuses, and group insurance. Without the tariff refund, the 4.1% comparable-store sales gain was not enough to cover rising overhead.
What to watch: fourth-quarter profit per share excluding tariff refunds, and whether administrative costs drop back once the accelerated stock compensation charge passes.
Delivery and Financing Costs Forced an Outlook Cut
Havertys runs its own delivery trucks and pays fees to outside banks so customers can finance furniture over 60 months without interest. It groups those costs with sales commissions as variable selling, general and administrative (SG&A) expenses. Last quarter's full-year plan required those costs to drop below 18.6% of sales in the second half by our math.
Instead, variable SG&A stayed at 19.3% of sales in the third quarter, up 0.6 percentage points from 18.7% a year ago. Selling expenses rose $1.8 million on higher commissions and financing fees. Because the hoped-for second-half delivery savings did not appear, the company raised its full-year variable expense forecast by half a percentage point to 19.2%–19.4% of sales "due to higher delivery, transportation, and third-party credit costs".
What to watch: variable SG&A as a share of sales in the fourth quarter, when holiday deliveries peak. A reading above 19.3% would show that financing and delivery costs are still climbing.
Customer Order Growth Slowed From 13% to 3%
"Our team delivered another quarter of growth, extending our positive momentum in written and delivered comp-store sales against tougher year-over-year comparisons," Burdette said. Written business tracks customer orders when placed, while delivered sales count revenue when furniture reaches the home.
Total written orders grew 2.8% from a year ago (2.3% at comparable stores), down from 12.6% in the second quarter. Delivered sales grew 4.5% (4.1% at comparable stores), down from 7.7% last quarter and well below the low-double-digit growth that second-quarter orders normally produce. Part of the slowdown comes from comparing against last year's strong third quarter, when written orders jumped 10.0%, but orders are now growing slower than deliveries.
What to watch: fourth-quarter comparable-store written orders. Because last year's fourth-quarter orders grew only 3.2%, an easier comparison will show whether customer demand is holding up or stalling.
👓 Other Themes
Housing and Interest Rates Still Weigh on Demand
Furniture demand depends heavily on home sales and borrowing costs. Burdette said the company operated while "navigating a soft housing market, higher fuel prices, higher interest rates, continued geopolitical issues, and rising input costs." Those pressures keep customer financing expensive for Havertys to subsidize and limit how many shoppers visit showrooms without promotional credit offers.
💲 Other KPIs
Merchandise inventories fell 13.8% from last quarter and 6.2% from a year ago, finishing below the $90.3 million to $99.8 million range management targeted in August. Working down the extra stock built earlier in the year generated $9.5 million of operating cash over the first nine months.
Customer deposits — cash collected up front for undelivered furniture orders — rose $2.9 million from last quarter and 5.4% from a year ago. That year-over-year growth slowed from 10.1% in the second quarter as new written order growth cooled, giving the fourth quarter a smaller backlog tailwind.
By our math from nine-month and first-half figures, the retailer generated $21.2 million in free cash flow in the third quarter, bringing the nine-month total to $29.4 million. Inventory reductions funded $9.8 million of third-quarter capital spending on new showrooms while keeping the cash balance at $127.0 million.
🔮 Guidance
Raised. The middle of the full-year range moved up 0.65 percentage points to 61.4% after Havertys booked $4.7 million of nine-month tariff refunds. By our math, against 61.7% for the first nine months, the plan leaves about 60.5% for the fourth quarter, down from 62.3% in the third quarter as direct tariff refunds end.
Raised (higher cost). The middle of the expense range moved up 0.5 percentage points to 19.3% of sales, matching the 19.3% recorded over the first nine months. It is the second cost increase this year after +0.1 points in the second quarter. By our math, the outlook implies fourth-quarter variable costs stay near 19.3% rather than dropping as previously planned.
Unchanged. The full-year overhead plan stays at $308.0 million at the middle of the range, up 3.5% from 2025. By our math, subtracting $230.3 million spent in the first nine months leaves $77.7 million for the fourth quarter, down from $79.8 million in the third quarter but up 4.6% from a year ago as five new stores open.
Unchanged. Full-year capital spending remains planned at $34.0 million, up 73% from $19.7 million in 2025 to fund new showrooms and store remodels. By our math, after $23.0 million spent in the first nine months, the plan leaves $11.0 million for the fourth quarter as the company finishes its five store openings.
Unchanged. The company still expects a 26.0% full-year tax rate excluding discrete items, matching the 26.0% effective rate recorded in the third quarter.
❓ Key Questions
Why did second-quarter written orders not turn into third-quarter deliveries?
Written orders grew 12.6% in the second quarter, but delivered sales grew only 4.5% in the third quarter while customer deposits rose $2.9 million. Did delivery wait times lengthen on custom furniture, or did order cancellations rise?
How large was the one-time stock compensation charge in overhead?
Administrative expenses jumped $4.1 million in the third quarter, partly from accelerated stock-based compensation recognition. Still holding the full-year fixed SG&A outlook implies fourth-quarter overhead drops by $2.1 million despite five store openings.
What were the third-quarter average ticket and design ticket?
The release gave nine-month average ticket ($3,838) and design's share of orders (34.6%, down from 36.5% last quarter), but omitted third-quarter standalone ticket and design order size. Did price increases finish lapping during the quarter?
Will the board authorize new share buybacks after the pause?
Havertys bought no shares in the third quarter after spending $16.6 million in the first half, which nearly exhausted its prior authorization. With $127 million in cash and no debt, will the board approve a new program?