Haverty’s (HVT) Q2 2026: Average Ticket Surges 14%, Design Drives Custom Order Expansion

2026-08-04 | By EarningsIQ Research

Haverty’s delivered a standout Q2, propelled by a 14% jump in average ticket and robust design-led sales, while maintaining disciplined inventory and margin control despite rising fuel and credit costs. Strategic investments in AI, store expansion, and targeted marketing are positioning the business for continued growth, even as cost pressures and tariff uncertainty linger. Investors should watch for the impact of new store openings and evolving tariff refunds on margin execution in the second half.

Summary

• Design-Led Sales Expansion: Custom special order and design business outpaced overall growth, lifting average ticket and mix.
• Margin Resilience Amid Cost Pressures: Gross margin held strong despite fuel, freight, and credit cost inflation.
• Store Growth and AI Investment: Accelerated new store openings and expanded AI usage support future productivity and reach.

Business Overview

Haverty’s is a leading specialty retailer of residential furniture and accessories operating 129 stores across 17 states at quarter-end. The company generates revenue through in-store and e-commerce sales of furniture, bedding, and home décor, with major segments including upholstery, bedroom, dining, occasional, mattresses, and design services. Core revenue levers include custom special orders, in-house design consultation, and a growing digital channel, supported by a vertically integrated supply chain and proprietary delivery network.

Performance Analysis

Haverty’s posted a strong Q2, with net sales up 7.7% and comparable store sales up 8% year-over-year, marking the fourth consecutive quarter of positive written and delivered comps. Written sales surged 12.6%, driven by double-digit growth every month, and delivered sales momentum accelerated from 4% in April to 11% in June. The standout metric was the 14% increase in average ticket to over $3,800, powered by a 15.7% rise in design average ticket and a 23.6% jump in custom special order business, which now comprises over a third of total sales.

All merchandise categories contributed, with double-digit gains in upholstery, bedroom, dining, and occasional, and mid-single-digit growth in mattresses and décor. Gross margin expanded by 60 basis points to 61.4%, aided by tariff refunds and disciplined inventory management, while SG&A leverage improved as expense growth trailed sales. Inventory was reduced by $6.4 million sequentially, supporting healthy turns and positioning for upcoming promotional periods. Cash remained robust with no funded debt, and share buybacks continued, including a sizable negotiated repurchase in June.

• Design and Custom Orders Outperform: Design business accounted for 36.5% of sales, fueling higher tickets and mix shift.
• Inventory Optimization: Sequential inventory reduction supports working capital efficiency and responsiveness to demand.
• Cost Inflation Monitored: Higher fuel, freight, and credit costs are being actively managed, with tariff refunds partially offsetting headwinds.

Haverty’s is executing on both top-line growth and operational discipline, with margin preservation and inventory agility central to its model as it enters a seasonally important second half.

Executive Commentary

Strategic Positioning

1. Design Services as a Differentiator

Haverty’s is leveraging its in-house design program to drive higher average tickets and customer engagement. Only the high-teens percent of customers currently use design services, but management sees potential to raise this above 25%, representing a significant untapped revenue lever. The design-led model supports mix shift to higher-margin, custom orders and strengthens brand loyalty.

2. Store Network Expansion

The company is accelerating its physical footprint, with two new stores opened in Q2 and six more planned for the second half, including entry into its 18th state. This expansion is weighted to growth markets in Texas, Georgia, and Pennsylvania, and is supported by ongoing evaluation of underperforming locations to optimize capital allocation.

3. AI and Digital Transformation

AI adoption is broadening beyond marketing and supply chain into customer-facing and operational areas such as home delivery, chat, and sales communication. Management views AI as a future differentiator, improving productivity and customer experience while supporting organic traffic and e-commerce sales, which grew double digits in Q2.

4. Margin and Cost Management

Active management of fuel, freight, and credit cost inflation is a central focus, with tariff refunds and selective pricing actions providing flexibility. Inventory discipline and SG&A leverage are being maintained even as new store costs ramp in the second half.

5. Marketing Efficiency and Customer Mix

Efforts to attract new customers—who spend 50% more than repeat buyers—are being balanced with loyalty campaigns to retain existing clients. Marketing spend is being optimized through digital channels and direct mail, while financing offers are used strategically to drive conversion during key promotional periods.

Key Considerations

Haverty’s Q2 reflected a business firing on multiple cylinders—design mix, digital, and operational execution—while navigating a landscape of rising costs and evolving tariffs.

Key Considerations:

• Design Mix Leverage: Further penetration of design services could unlock incremental ticket and margin gains, supporting top-line growth.
• Store Expansion Risk-Reward: Aggressive new store rollout in H2 boosts growth potential but raises fixed cost exposure and execution risk.
• Tariff and Cost Volatility: Fuel, freight, and credit cost increases are being partially offset by tariff refunds, but future refund timing and amounts remain uncertain.
• AI and Digital Upside: Early AI investments are driving productivity and service gains, with potential for broader impact as adoption scales.
• Inventory and Working Capital Discipline: Inventory reductions and cash strength provide flexibility to invest and withstand shocks.

Risks

Material risks include ongoing cost inflation in fuel and freight, which could pressure margins if not offset by pricing or operational gains. Tariff refund timing and amounts are uncertain, and future changes in trade policy or supplier legal outcomes could impact results. The ramp-up of new stores increases fixed cost leverage and execution risk, particularly if demand softens. Rising credit costs and potential consumer credit tightening could also affect sales conversion and financing expense.

Forward Outlook

For Q3 2026, Haverty’s expects:

• Inventory to end near $95 million, with a 5% swing depending on product flow and sales.
• Continued gross margin guidance of 60.5% to 61%, excluding additional tariff refunds.

For full-year 2026, management maintained guidance:

• SG&A expenses of $307 to $309 million (fixed and discretionary); variable SG&A at 18.7% to 18.9% of sales.
• CapEx of $34 million, with $27.7 million for new stores and remodels.
• Anticipated effective tax rate of 26%, excluding stock award vesting and new legislation.

Management highlighted several factors that will influence results:

• Fuel and freight cost inflation expected to impact margins in H2.
• Tariff refund receipts from third-party suppliers remain a potential offset but are not yet certain.

Takeaways

Haverty’s Q2 demonstrates the power of design-led sales and disciplined execution, with the company well positioned for continued growth but facing cost and tariff-related uncertainties in the second half.

• Design and Digital Execution: The company’s ability to drive higher average tickets and double-digit e-commerce growth underpins its differentiated model and supports future margin expansion.
• Cost and Margin Management: Active navigation of fuel, freight, and credit costs, coupled with tariff refund flexibility, is critical for sustaining profitability as new store costs ramp.
• Second Half Watchpoints: Investors should monitor store rollout execution, tariff refund developments, and the impact of cost inflation on margins and cash flow.

Conclusion

Haverty’s delivered a robust Q2, with design mix, digital gains, and inventory discipline driving both top-line and margin performance. While cost pressures and tariff uncertainties persist, strategic investments in stores and AI position the company to capitalize on growth opportunities and defend margin through the balance of the year.

Industry Read-Through

Haverty’s results highlight a resilient upper-end furniture consumer and the power of design-led retailing, with custom order and higher-ticket segments driving growth even as mass-market peers face demand headwinds. The company’s disciplined inventory management and margin focus set a benchmark for specialty retailers navigating cost inflation and supply chain volatility. AI adoption and digital channel gains are likely to become table stakes across the furniture sector, while tariff and freight cost volatility remain industry-wide risks. Furniture retailers with differentiated service, strong balance sheets, and operational agility are best positioned as the sector enters a more competitive, cost-conscious environment.

HVT Consumer Discretionary Furniture Design Services AI Custom Orders Inventory Tariffs