Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Haverty's Second Quarter 2013 Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, August 1, 2013. I will now turn the conference over to our host, Dennis Fink, Executive Vice President and CFO. Please go ahead.

Thank you, operator. Good morning, everybody. During this conference, we'll make forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties, as detailed in the company’s reports filed with the SEC. Our President, CEO and Chairman, Clarence Smith, will now give you an update.

Thank you, Dennis. Good morning. We appreciate you joining our second quarter conference call. We're pleased to report our 2013 second quarter earnings per share of $0.21 versus $0.11 for the same period last year. As we released earlier, net sales increased 12.9% and comparable store sales were up 11.2%, the seventh consecutive quarter of positive same-store sales. For the first half of 2013, comparable stores were up 11.3%. During the second quarter, our average ticket continue to grow, up 7.7%, on top of a double-digit increase last year. And we experienced an increase in our store traffic for the first time in 7 quarters. The successful execution of a multiyear strategy of upgrading our merchandise and stores, aligned with the more electronic and digitally focused creative marketing program, has helped us reach our target customer more effectively and gain market share. We believe that with the combined synergies of these efforts, we're just beginning to realize the returns on these investments. The sustained increases in home sales and prices in our markets are also an important driver of retail home furnishings in this year. We expect this trend will continue to help us increase our sales. We're continuing to invest in our best stores and in our strongest markets. We're actively investigating and negotiating for locations and opportunities to relocate a few stores and enter new markets that we conserve from our distribution footprint. In the first half of this year, we closed 3 stores with expiring leases in Roanoke, Virginia; Jackson, Mississippi; and Clearwater, Florida. Because of these closings, we expect to end the year with retail square footage to be down about 2%. We do expect to see a more normal increase in the low-single digits in 2014 and new retail square footage growth. We currently have…

Thank you, Clarence. The financial highlights were covered pretty well in our earnings release last night. I'll only repeat one of the points made there. In the Expectations section of the press release, we did mention that our fixed and discretionary-type expenses within SG&A usually grow between 3% to 5% a year, so looking forward into 2014 and beyond, it's important to understand and expect that there will be some increases in that category related to expansion, inflation, advertising, which is of course discretionary, and other expense items. So as you're modeling out, you need to take that into account. A couple of other points to bring up that wasn't in the press release. The actual 6 months' sales in total, the written and delivered sales were approximately equal in terms of percentage increase. They were both up approximately 13.5% for the first half in total. So there were some differences in those percentage increases by quarter, but for the 6 months, they're both up around 13.5% on a written basis and a delivered basis. And that is in total. The other thing to mention is that there will be square footage decreases for the third and fourth quarter this year. We will have square footage decrease -- weighted average square footage decrease -- of about 1% in the third quarter and about 2% in the fourth quarter. And what that means really is that it's likely that our total sales will be lower than our comp store sales percent increase. So you would project the comp store increase and would have to add a percentage, for instance, in the third quarter to get to the expected total sales. And in the fourth quarter, you would have expectation of 2% lower average square footage, so the total sales would be lower than comps by about 2%. For the full year, it's roughly flat weighted average square footage. And so, all things being equal, comps and total sales percentage increases would be about the same. Next year, we have, as Clarence mentioned, several stores -- 3 replacement stores and possibly 3 new stores. The new stores would be back-end weighted, maybe one at midyear and the other 2 would be very late in the year. Such that our expectations for weighted average square footage increase next year would be about 7/10 of 1%. And the first quarter, we'd be lower square footage, about 1.5%. And by the third and fourth quarter, we'd be closer to up 2 point -- 2% each of those quarters. So again, as you just look at comps versus total sales, you should take that into account. Finally, just mentioning this -- the share count is looked at going forward. Typically, we grow about 1.5% a year in share count. And that also should be factored in as people are making projections for multiple years in the future. That's my only comments. At this point, operator, we'd be glad to take questions from the audience.

[Operator Instructions] Our first question comes from Todd Schwartzman from Sidoti. Todd A. Schwartzman - Sidoti & Company, LLC: How much -- I wonder if you could talk about the average ticket increase. How much of -- how much pricing was there? What was the growth in units? How much of product mix contribute to that? And also maybe if you could discuss within that context, the attachment rates of accessories, so to accompany a furniture purchase.

A couple of things there. First of all, I think the average ticket has been driven as much as anything by the upholstery, special order upholstery, that's a big part of our growth there. The accessory attachment is higher than it was, but I think where we're really gaining there is when we get into the customer's home. And we've been pushing that. I mentioned it in 32 stores where we're getting in the customer's home, we're adding more of the accessory items, the total look. And accessories, as a category, is still around 3% of our business, so it's not a major part of our business. We think there's some great opportunities there. But I'll let Dennis answer some of those questions that you had on the technical part.

Yes, it's -- as Clarence said, it's a combination of a number of items and the price points of those items. We are -- I'd say more often than not, it's more items on the ticket. But there is also the trade-up in, certainly, in price point that we've made. But I think -- does that answer question or...? Todd A. Schwartzman - Sidoti & Company, LLC: Yes, yes, it does. It does. And so the increase in the use of designers for in-home design service, is that the biggest factor in the increase in custom upholstery? Or where does that stand in the pecking order?

It is a part of it. It's a part of it. We're only serving 32 stores now, so it's a new program. It is successful. We're happy with it. We're going to expand it. So it's not the biggest part of it. I think the main thing is we're offering a better product. It's -- it is at a better -- higher price point. We're offering more custom choice, special order capabilities for our customers -- the average customer that comes in and they're taking advantage of it. So the decorators are a factor and will be more of a factor going forward, but are not the primary factor right now. Todd A. Schwartzman - Sidoti & Company, LLC: And with the decorators, Clarence, have you given any thought to perhaps increase the number per store in some of your better performing stores rather than rolling it out to 1 per store per market?

Yes, right. Absolutely. And we're -- we've started in our biggest stores and our best stores, and we're expanding it to new markets right now. So yes, we're adding -- certainly, let's just say, Atlanta, Dallas, we're adding more people in those markets and DC than we would be in Anniston, Alabama. So we're going where the customer and where the opportunity is the most. And those are our best markets. Todd A. Schwartzman - Sidoti & Company, LLC: So for a 12,000 or 15,000 square foot store in one of those top markets, what do you think is the optimal number?

Well, we don't have stores that small so -- our stores average about 30,000 square feet. I mean -- and right now, you -- in a good market, you should have one in every store but we don't have that now. So -- and if it's a bigger store, like one of our top stores, we may have a couple. Again, it's a new program. We started about a year ago, and it's moving as rapidly as it makes sense for us to roll that out now. Todd A. Schwartzman - Sidoti & Company, LLC: Okay. Dennis, I know you spoke to the comps earlier. I'm not sure if you discussed the difference between Q1 and Q2 with regard to the increase in average ticket. So forgive me if I missed that. But the implied growth year-over-year in average ticket seems to be greater -- have been greater in Q1 than in Q2. Is there anything going on there that we should know about?

No, it's -- you're correct. It was greater. I'll tell you one thing, looking back, the growth in the average ticket in the first quarter of 2012 was very modest, and the average ticket started growing double digit in the second quarter last year. So I guess you could say technically there, it was a harder comparison in the second quarter, when I look at it that way. Todd A. Schwartzman - Sidoti & Company, LLC: That makes sense. And lastly, with advertising spend going forward, can you give some color there on your plans or maybe if not quantify, just kind of give us a sense of where you go from here with the company having gone upstream a little bit with respect to the consumer?

I think we'll be a little more efficient with our advertising. I don't see us increasing our percentage. In fact, it may come down. When we go into new markets, you certainly have to spend a little bit more. But I mentioned our focus on television and on Internet interactive advertising, that is more of a focus today that it was 6 months ago and will continue to be because that's how we reach our customers we think the best. So print is going to be less a factor next year than it is this year. And -- but as far as the percent, I think we'll be pretty steady with that. I don't think that will be a significant change as far as the total percent of advertising dollars as a percent. Todd A. Schwartzman - Sidoti & Company, LLC: As a percent of sales?

Right.

Our next question comes from Brad Thomas from KeyBanc Capital Markets.

This is actually Jason on for Brad. You had mentioned that your sales quarter-to-date are running up. I think it's just shy of about 10%. What are the comparisons like as you move through the rest of the third quarter?

Good question. I'll first mention the comparison to last year. And last year, we had 11% increase in the first 30 days on a delivered basis and about a 10% increase in written sales in that period. So as you compare what we announced to last year, those are the 2 numbers, which were, frankly, pretty much in line with what we just announced. And for the other 2 months of the quarter, let me refer back -- or excuse me, for the other 2 -- the full quarter of third and fourth quarter, we had -- it looks like the increase was a little stronger last year. Written was probably about -- looks like at an average probably 15% and delivered was probably 13% or something like that. So it's a little harder comparison in August and September, so for the rest of the quarter.

All right. And then it seems like your -- you mentioned that written and delivered should be about equal. It looks like it slipped in the first 2 quarters. How do you look at that comparison between the written and delivered in the second half?

Well, it is dependent of course on the kind of orders. The more custom orders we get, the bigger the -- or the longer the lead time is to fill it. We hit our targets. But if we're 6 to 8 weeks on some custom order, and the custom order grows, a lot of times then the product with it ships at the same time or delivers at the same time. So the whole backlog grows. The other thing is that, obviously, as sales are accelerating, you first write it and then deliver it so the backlog grows. And when you -- when your sales are not accelerating, it kind of flattens out. And then if it's decelerating, of course, you'd have the delivered percentage increase as higher than the written. So we hope you don't run into any of that. But I think that in the second half for total -- in total that we would -- we'd be probably be up a similar amount, maybe slightly more in delivered than we are in written. It just remains to be seen. I don't -- it's hard to predict the actual mix and so you go through it and understand what happened.

And then what was the mix of custom in the second quarter versus last year?

Custom was -- I think we actually just typically disclose the increase that custom was about -- for the second quarter, about 22% ahead of last year. And I would go ahead and tell you, as a percent of total, upholstery, that's about 21% for the second quarter. Last year, for the full year, that was about 19% of total upholstery sales in the custom and special order category.

Right. And then you had mentioned accessories was your fastest growing. I assume that got kind of a bump from the in-home design. Do you know what accessories would've been up roughly without the in-home design? Was it pretty broad-based or is that kind of the main driver?

Well, we have a new program. So I think it was certainly a factor, but I don't have the actual number there. But I think it was a factor. It's not a big part of it right now.

[Operator Instructions] Our next question comes from Budd Bugatch from Raymond James. Thomas J. McConville - Raymond James & Associates, Inc., Research Division: It's T.J. McConville filling in for Budd. A bunch of them had been answered but on that custom choice penetration answer there, Dennis, thank you for that. And Clarence, your point to still targeting an increase. So let's talk about maybe where that penetration goes ideally in your eyes and what that means potentially for a gross margin here that we -- we've seen some pretty consistent and nice increases over the last several quarters. So how far do you have to go? And what does it mean to that line in the...

We don't see base gross margins increasing significantly from where they are. I mean they're pretty strong, and we're pleased with them. But we do see an opportunity for growth in this area and we think it's attracting -- we're attracting a better customer or a higher-ticket customer than the one we have in the past, not only with the displays and the product, but our marketing. And I think that we do want to grow this area. We work with our vendors aggressively to get quicker delivery, and we're doing a better job there. They're doing a fine job for us. And so, we think that it's an opportunity to reach this more fashion design customer, who has not been served well in the past. And we think there's some opportunities because of players who've fallen out of the market. And it's also part of an overall strategy of making sure that we're separated from the promotional players in the markets we serve. So it's starting to work. We want to continue to grow it. It's in the 20 -- early 20s percentages and I think that, that can be 30 percentage points. So we think the real opportunity is here. We're continuing to emphasize it and you'll see it in our marketing. Thomas J. McConville - Raymond James & Associates, Inc., Research Division: Okay, that's very helpful. And so, the traffic increase was very welcome news. Can you put your finger on maybe what's driving some of that as far as maybe some of the ad spend is going, Dennis and Clarence? Is it -- is there a shift in channels that's helping? Is it looking at new zip codes or MSAs that you maybe didn't look at before? What can you tell us there?

Let me just mention the channels. We brought on a new advertising agency, Bernstein-Rein, a little over 1 year ago. And they have helped us look at trying to reach this customer differently. So we are -- we're advertising differently. We're on different stations and different programs. We're using the digital-format Internet advertising differently. We cut back on ROP. I mean that's frankly a nonfactor anymore. And there's less print, so I think we're just reaching this customer better. I think the quality of our advertising is better. I think our stores match our advertising and our Internet site better than they did in the past, and so it's all aligned to reach this customer a little better and she's targeted to be the right one for us, and it seems to be working. Dennis, do want to add...

I'll just -- retailers, in general, as you listen to different conference calls and articles -- read articles, the challenge is traffic. Because there's so much more omni-channel shopping. What happens is I think store visits probably, overall, are just off. People are able to be pre-shop and make their decision or have a leaning towards what they want and understand the variety of what's available without getting physically inside all the stores. So longer term, it's pretty hard to increase traffic. We're hoping that and targeting that people coming in are more predisposed to buy, and we look for higher average ticket and a higher closing rate on the people that do come in the store because they've already gone down part of the decision trail. So I think keeping traffic from falling is the challenge for most retailers. Thomas J. McConville - Raymond James & Associates, Inc., Research Division: That's very helpful. And so, the customer demographics that you're seeing now, with all the changes you've made to the merchandising and some of the channels and what we just talked about, how has that evolved? And what's the average customer age or income? Or what's the difference in what they're looking at and buying?

We spend a lot of effort on studying the customer. We've got a number of projects under way to get more data on that. I can't give you much more detail than what we've done in the past. We are in the midst of several deep dives and to understand that customer, and we will be investing more in research in the next year to find out more about ourself. I think, clearly, she's inclined to spend more than the customer we were advertising for in the past. We're not as much price point driven as we were in our past advertising, and we're trying to get across the message that she can make her vision of her home a reality through Haverty's. So we're trying to emphasize that passion message and I think that, that is what's attracting that type of customer. Thomas J. McConville - Raymond James & Associates, Inc., Research Division: Okay. Clearly, that's working, Dennis. Last one for me is on credit penetration and availability, Dennis, if you don't mind, what it was in the quarter? What are you seeing as far as approval or disapproval rates or turndowns, if you will?

Yes, the -- I think to follow up on your other question, too, is the -- we're really not targeting based on income but on -- I think, on average, the income level of our customers and the creditworthiness is -- has gone up. It's usually, over the years, been very good and it's gone -- probably gone up a little. So it's -- a little more than 1/3 of our business is credit. And the turndown rates are really the lowest ever. Frankly, I mean the very most of the people who choose to buy -- we do have a little better product, a little more quality, a little higher price in some respects, but very competitive. But we do -- when people choose to -- really, the mindset being that they want the best they can get and it fits them the most, those people usually have a little better credit. And we're just seeing -- we're seeing real good results with credit -- both credit line availability and with the percentage of people that are approved.

We have a follow-up question from Todd Schwartzman from Sidoti. Todd A. Schwartzman - Sidoti & Company, LLC: Just a quick one. What did web traffic look like, web visitors in the quarter?

It was actually off a little bit, and we're doing -- we are adjusting some things to make that a little stronger. We've done several initiatives under way. Todd A. Schwartzman - Sidoti & Company, LLC: Going forward, do you look at the relationship between physical foot traffic and web visits as an inverse one? Or is too -- still too early to really discern that?

As I recall, Dennis, the web traffic for the first time is higher than our store traffic. And so however, it's a pretty good indicator. We know that, for instance, going into holiday weekend, if the web traffic is up, then business will most likely be up. It's a very good indicator. Dennis referred the fact that we're down some last -- for that quarter. We had some -- we had a few technical issues, which I think we've corrected, which have helped us and I think that will improve for this quarter.

Yes, I think web traffic is superimportant and it will be going up more than store traffic. And that the ideas -- again, that the people coming in to the store have a good idea what they want and have already shopped around. And the time in the store, perhaps, as well as the closing rate should be going up. Todd A. Schwartzman - Sidoti & Company, LLC: As far as its usefulness as a leading indicator, does it help you see out days or weeks? Or is the visibility something greater than that?

I'd say it's days and weeks.

Yes. Good indicators for the weekend are people.

There are no further questions at this time. Please continue.

Well, I want to thank everyone for joining our call and for your interest in Haverty's.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.