HAVERTY FURNITURE COMPANIES INC

Unless otherwise indicated by the context, we use the terms “Havertys,” “we,” “our,” or “us” when referring to the consolidated operations of Haverty Furniture Companies, Inc. and subsidiary.

Overview

Havertys is a specialty retailer of residential furniture and accessories. Our founder, J.J. Haverty began the business in 1885 in Atlanta, Georgia with one store and made deliveries using horse-drawn wagons. The Company grew to 18 stores and was incorporated in September 1929. Anticipating further growth, the Company accessed additional capital through its initial public offering in October 1929.

Havertys has grown to 129 stores in 17 states in the Southern and Midwest regions of the U.S. All of our retail locations are operated using the Havertys name, and we do not franchise our stores. Our brand recognition is very high in the markets we serve, and consumer surveys indicate Havertys is associated with a high level of quality, fashion, value, and service.

Customers

Havertys customers are typically well-educated women in middle to upper-middle income households. They generally own homes in the suburbs, and their diverse personalities are reflected in their unique sense of style. These consumers research and shop online and in-store, often engaging friends or family members in the purchasing process. They are discerning buyers, desiring furnishings that fit their style, but never sacrifice quality or value. Our marketing, merchandising, stores, online presence, and customer service are targeted to attract and meet the needs of our distinctive customers.

We have a seasoned, commissioned-based sales team serving our customers. Their product knowledge is important in helping customers evaluate Havertys' merchandise compared to our competitors. We also offer a free in-home design service to customers who want an in-depth personalized experience. The average sales ticket for a customer who has a designer visit their home is generally twice that of our average in-store sales ticket. Approximately 33.6%of our written sales in 2024 resulted from consultations with our in-home designers.

Stores

As of December 31, 2024, we operated 129 stores serving 92 cities in 17 states with approximately 4.5 million retail square feet. Our stores range in size from 15,000 to 60,000 selling square feet, with the average being approximately 35,000 square feet. We strive to have our stores reflect the distinctive style and comfort consumers expect to find when purchasing their home furnishings. The store’s location and curb appeal are important to the middle to upper-middle income consumer that we target, and attractive facades complement the quality and style of our merchandise. Interior details are also important for a pleasant and inviting shopping experience. We are very intentional in having open shopping spaces and our disciplined merchandise display ensures uniformity of presentations in-store, online and in our advertising.

During 2024 we developed a program to improve the in-store experience. These changes focused on:

•more visually appealing signage,

•tagging strategies,

•new fixtures to centrally locate custom fabrics,

•optimized floor presentation of our mattress selection, and

•equipment for the design center to personalize our customer's shopping experience.

We expect the program to be implemented over three years and will begin introducing these changes to our larger stores in 2025.

Our goal, subject to market conditions and identifying suitable sites, is to open an average of net five new stores per year. We select new locations using demographic and market characteristics and sales potential. These locations are primarily in the form of former "big box" retail sites in the 25,000 to 35,000 square feet size range that we lease with an initial term of years and options to renew. Newly constructed sites are typically leased, though there are occasional opportunities to own the store. We continually analyze opportunities for potential relocations within markets and close retail locations that are underperforming or no longer consistent with our brand positioning. For leased locations we generally continue to operate the store until our lease expires. During 2024 we opened the first of our stores in Houston, TX, the largest market we did not serve within our existing distribution system. We currently have no plans to add stores outside our distribution footprint.

The following outlines the change in our selling square footage for each of the three years ended December 31 (square footage in thousands):

The following table summarizes our store activity in 2024 and current plans for 2025.

Online Presence

We consider our website an extension of our brick-and-mortar locations and not a separate segment of our business. Most customers will use the internet for inspiration and as a start to their shopping process to view products and prices. Our website features a variety of helpful tools including a design center with a 3-D room planner, upholstery customization, and inspired accessories. Product reviews written by our customers are also available, which many consumers find helpful in the decision-making process.

The next stop in the purchase journey for most consumers is a visit to a store to touch, sit, and see merchandise in person. Our sales consultants use online tools to further engage our customers while they are in the store. Customers may make their purchase in the store or opt to return home and finalize their decisions, place their orders online and schedule delivery. We limit internet sales of our furniture to within our delivery network, and internet sales of a selection of our accessories to within the continental United States. Our total sales completed online for 2024 were approximately 3.0% of our total 2024 business.

From the initial inspirational point in the purchase journey to providing design assistance, we continue to invest in our digital channels. We have made investments to improve the presentation and ease of navigation for our customers and information on products. We believe our significant investments in the digital channel have improved search capabilities, site functionality, and product presentation, which are each important in driving traffic, increasing conversion, and sales growth. We have added more conversion events, traffic, and conversion variables in Adobe Analytics which has allowed more refined and sophisticated A/B testing and improved insight into customer behavior. We continue to fine-tune the content management system and find opportunities to add more automation to improve the customer experience, increase sales conversion rates through our website, and increase traffic to our stores.

Enhancements to our digital properties are critical for meeting the needs of our increasingly interconnected customers. A significant portion of the traffic in our digital channels is on mobile devices. Mobile customers expect simple and relevant digital interactions. To meet these expectations, we have invested in our digital properties to improve the overall presentation and ease of navigation for the user. We have also enhanced online product landing pages by providing more information, including related products within and beyond its larger collection.

We believe our focus on improving search capabilities, website functionality, category presentation, product content, and delivery timeframe can lead to increased traffic, conversion rates and sales. We do not view the interconnected shopping experience as a specific transaction; rather, we believe it encompasses an entire journey spanning across inspiration and know-how, purchase and fulfillment, and post-purchase care and support.

Merchandise and Revenues

We develop our merchandise selection with the diverse taste of our typical “on-trend” customer in mind. A wide range of styles from traditional to contemporary are in our core assortment, and virtually all of the furniture merchandise we carry bears the Havertys brand. We also tailor our product offerings to the needs and tastes of the local markets we serve, emphasizing more “coastal,” “western” or “urban” looks as appropriate. Our custom upholstery programs and eclectic looks are an important part of our product mix and allow the on-trend consumer more self-expression.

We have avoided offering lower quality, promotional price-driven merchandise favored by many regional and national chains, which we believe would devalue the Havertys brand with the consumer. We carry nationally well-known mattress product lines such as Tempur-Pedic®, Serta®, Stearns and Foster®, Beautyrest®, and Sealy®.

Our customers use varying methods to purchase or finance their sales. As an added convenience to our customers, we offer financing by third-party finance companies. Sales financed by the third-party providers are not Havertys’ receivables; accordingly, we do not have any credit risk or servicing responsibility for these accounts, and there is no credit or collection recourse to Havertys. Slightly less than one-third of our sales are third-party-financed. The fees we pay to the third parties are included in our selling, general, and administrative expenses (“SG&A”) as a selling expense.

Suppliers and Supply Chain

We buy our merchandise from numerous foreign and domestic manufacturers and importers, the largest ten of which accounted for approximately 41.3%of our product purchases during 2024. Most of our wood products, or “case goods,” are imported from Asia. Upholstered items are largely produced domestically, with the exception of our leather products which are primarily imported from Asia or Mexico.

We purchase our furniture merchandise produced in Asia through sourcing companies and also buy direct from manufacturers. We have dedicated quality control specialists on-site during production to ensure the items meet our specifications. Our direct import team works with industry designers and manufacturers in some of the best factories throughout Asia. Approximately 20.8% of our case goods sales and 5.9% of our upholstery sales in 2024 were generated by our direct imports.

The longer lead times required for deliveries from overseas factories and the production of merchandise exclusively for Havertys makes it imperative for us to have both warehousing capabilities and end-to-end supply chain visibility. Our merchandising team provides input to the automated procurement process in an effort to maintain overall inventory levels within an appropriate range and reduce the number of written sales awaiting product delivery. We use real-time information to closely follow our import orders from the manufacturing plant through each stage of transit and using this data can more accurately set customer delivery dates prior to receipt of product.

Distribution

We believe our distribution and delivery system is one of the best in the retail furniture industry and provides us with a significant competitive advantage. Our distribution and delivery system uses a combination of three distribution centers (“DCs”) and four home delivery centers (“HDCs”). The DCs receive both domestic product and containers of imported merchandise. A warehousing management system, using radio frequency scanners, tracks each piece of inventory in real time and allows for random storage in the warehouse and efficient scheduling and changing of the workflow. The DCs are also designed to shuttle prepped merchandise up to 250 miles for next-day home deliveries and serve HDCs within a 500-mile radius. The HDCs provide service to markets within an additional 250 miles. We use third parties to handle over-the-road delivery of product from the DCs to the HDCs and market areas. We use Havertys team members for executing home delivery, and have branded this service “Top Drawer Delivery,” an important function serving as the last contact with our customers in the purchase process. Operating standards in our warehouse and delivery functions provide measurements for determining staffing needs and increasing productivity.

Time between purchase and delivery averages 3 to 5 days for in-stock items and 5 to 7 weeks for special order items.

Human Capital Resources

As of December 31, 2024, Havertys’ total workforce was 2,334: 1,480 in our retail store operations, 645 in our warehouse and delivery points, 168 in our corporate operations, and 41 in our customer-service call centers. None of our team members is a party to a union contract.

Health and Safety

We care about our teammates, customers, and the communities we serve. We believe a hazard-free environment is a critical enabler for the success of our business. We have a strong safety program that focuses on implementing policies and training programs to ensure our team members can leave their job and return home safely every day.

Culture and Engagement

Integrity and teamwork are two of our core values. These drive our approach in our everyday operations with our customers, suppliers and teammates and we believe that the best results happen when we work together. At Havertys, we see strength in America’s many faces, cultures, and colors. Each person offers a unique point of view and presents a fresh perspective integral to supporting innovation. We are committed to differing perspectives across all levels of our workforce to improve our business and reflect the vibrant and thriving diversity of the communities in which we live and work.

We periodically conduct an Employee Engagement Survey (the “Survey”) as a means of measuring employee engagement and satisfaction and offering employees the chance to feel heard.

Retention and Development

Our compensation programs are designed to attract, retain, and motivate team members to achieve superior results. Havertys’ total compensation for teammates comprises a variety of components, including competitive pay consistent with positions, skill levels, experience, and knowledge. We also offer competitive benefits, including access to healthcare plans, financial and physical wellness programs, paid time off, parental leave and retirement benefits.

We are committed to supporting our teammates’ continuous development of professional, technical and leadership skills through corporate training programs, access to digital learning resources and through partnerships with local technical learning institutions. In 2024, Havertys team members consumed approximately 117,000 hours of learning. We also offer the opportunity for team members to pursue degree programs, professional certificates, and individual courses in strategic fields of study through our tuition reimbursement program.

Competition

The retail sale of home furnishings is a highly fragmented and competitive business. The degree and sources of brick-and-mortar retail competition varies by geographic area. We compete with numerous individual retail furniture stores as well as national and regional chains. Retail stores opened or operated by furniture manufacturers compete with us in certain markets in an effort to control and protect the distribution prospects of their branded merchandise. Mass merchants, certain department stores, and some electronics and appliance retailers also have limited furniture product offerings. We also face competition in the e-commerce channel from internet-only retailers, start-up furniture retailers, and larger, more established retailers, including those with a brick-and-mortar presence.

We believe Havertys is uniquely positioned in the marketplace, with a targeted mix of merchandise that appeals to customers who are somewhat more affluent than those of promotional price-oriented furniture stores. Our online presence provides most elements of a seamless, interconnected approach that many of our competitors do not have or cannot replicate. We consider our custom order capabilities, free in-home design service, the tailoring of merchandise on a local market basis, and the ability to make prompt delivery of orders through maintenance of inventory to be significant competitive advantages.

Seasonality

Our business is affected by traditional retail seasonality, advertising and promotion programs, and general economic trends. We experience increased shopping activity on weekends and during traditional extended holiday periods.

Trademarks and Domain Names

We have registered our various logos, trademarks, and service marks. We believe that our trademark position is adequately protected in all markets in which we do business. In addition, we have registered and maintain numerous internet domain names including “havertys.com.” Collectively, the logos, trademarks, service marks and domain names that we hold are of material importance to us.

Available Information

Our internet website address is www.havertys.com. Information about us is within this 2024 Form 10-K, and on our Investor Relations website atwww.ir.havertys.com. This website contains additional information about us, including our corporate governance principles and practices and financial and other information. We are not including this or any other information on our website as a part of, nor incorporating it by reference into, this 2024 Form 10-K or any of our other filings with the Securities and Exchange Commission ("SEC").

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on our website at www.ir.havertys.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The SEC also maintains a website that contains our SEC filings at www.sec.gov.