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Shares of Haverty Furniture Companies Inc (HVT - Snapshot Report) fell 1.5% since Feb 25, despite reporting a decent fourth quarter 2013 results on Feb 24. Share price decline was prompted by a sluggish outlook for the first quarter of 2014.

This home furnishing retailer reported fourth quarter and full year 2013 results on Feb 24. Haverty, which provides home furnishings in the middle to upper-middle price range, delivered earnings of 42 cents, beating the Zacks Consensus Estimate of 39 cents by 7.7% and the prior-year earnings of 30 cents by 40% on the back of sales growth across its entire home furnishings line.

Net sales increased 7.6% year over year to $196.2 million in the fourth quarter attributable to strong comparable store sales increase of 9.5%. Continued expansion of the custom order business, free in-home design service, and higher average ticket led to sales growth in the quarter. Haverty’s sales were also boosted by the consistent rise in home sales. Sales were in line with the Zacks Consensus Estimate.

In addition, Haverty announced that total written sales for the fourth quarter of 2013 increased 6.3% and written comparable store sales increased 7.7% year over year driven by the gradual housing market recovery.

Outlook

Despite decent fourth quarter results, the company expects sluggish growth in the first quarter of 2014, primarily due to a volatile retail sales environment. For the first quarter of 2014, the company expects comparable store written business to increase approximately 3.6%, which is much lower than comp sales growth of 9.5% in the fourth quarter of 2013. The company also stated that some new headwinds are expected to impact sales in the first quarter but are expected to subside by the end of 2014.

Total written business for the first quarter is expected to increase 2.0%, down from 14% increase in the same period last year and 6.3% increase in the fourth quarter of 2013.

However, the company still believes that the housing market recovery will help increase sales and market share by the end of 2014. Haverty also has solid store expansion plans for 2014 to strengthen its presence in key markets with additional or repositioned stores.

Haverty plans to open six new locations, including three new relocations, in existing markets and complete one major expansion during 2014. The company plans to close two additional stores. At the end of 2014, the store count is expected to reach 120.

The company is encouraged about the positive customer response to its enhanced store displays and is therefore investing heavily in store improvements to better serve customers. However, sluggish growth in the upcoming quarter remains a concern.

This retailer witnessed downward estimate revisions after announcing the soft outlook for the upcoming quarter. The Zacks Consensus Estimate for 2014 declined 2.6% and that for 2015 went down 2.2% over the last 7 days. Haverty currently holds a Zacks Rank #3 (Hold).

Other Stocks to Consider

Better-ranked stocks in the wider retail sector include Famous Dave's of America Inc. (DAVE - Snapshot Report), Jack in the Box Inc. (JACK - Snapshot Report) and Brinker International, Inc. (EAT - Analyst Report). While Famous Dave’s and Jack in the Box hold a Zacks Rank #1 (Strong Buy), Brinker International holds a Zacks Rank #2 (Buy).

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