The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“Form 10-K”). Forward-Looking Statements and Risk Factors Statements in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the schedules hereto that are not purely historical facts or that necessarily depend on future events, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology including “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers, and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company's current assumptions, expectations, and projections about future events. Past performance is not a guarantee of future results or returns and no representation or warranty is made regarding future performance. Forward-looking statements are by nature inherently uncertain and involve known and unknown risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. These risks and uncertainties include, but are not limited to: •competition from national, regional and local retailers of home furnishings; •our ability to anticipate changes in consumer preferences; •our ability to maintain and enhance our brand; •our ability to successfully implement our growth and other strategies; •our ability to locate our stores in suitable locations to attract customers; •importing a substantial portion of our merchandise from foreign sources (including the impact of tariffs); •our dependence on third-party producers to meet our requirements; •significant fluctuations and volatility in the cost of raw materials and components; •risks in our supply chain, including price, availability and quality of raw materials and components utilized in the products we sell and our ability to forecast our supply chain needs; •a failure by our vendors to meet our quality control standards or comply with changes to the legislative or regulatory framework regarding product safety; •our reliance on third-party transportation vendors for product shipments from our suppliers; •damage to one of our distribution centers; •our reliance on information technology and any disruptions in our IT systems; •the vulnerability of our information technology infrastructure to cyber-attacks, breaches and other disruptions; •the effects of labor disruptions or labor shortages; and our ability to attract and retain key employees; •the rise of oil and gasoline prices; •increased transportation costs; •changes in economic conditions such as consumer disposable income, fuel prices, inflation rates, recession and fears of recession, unemployment rates, interest rates, tax rates, consumer confidence, and changing government policies, laws and regulations; •certain risks may not be fully covered by insurance; •failure to protect our intellectual property; •our ability to comply with all applicable laws and regulations; •pending or unforeseen litigation; •natural disasters, public health events, geopolitical instability or other disruptive events; and •other risks and uncertainties as may be detailed from time to time in our public announcements and Securities and Exchange Commission filings. 13 Further information on the risks and uncertainties that could cause our actual results to differ from these forward-looking statements are described in "Item 1A. Risk Factors" of our Form 10-K for 2025 and in the subsequent reports we file with the Securities and Exchange Commission. Consequently, all forward-looking statements in this report are qualified by the factors, risks and uncertainties contained therein. All forward‑looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report except as required by law. We intend for any forward-looking statements to be covered by, and we claim the protection under, the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Industry Overview The retail residential furniture industry is influenced by the overall strength of the economy, new and existing home sales, consumer confidence, spending on large ticket items, interest rates, and the availability of credit. The industry continues to face headwinds from rising consumer debt, constrained housing inventory, tight access to home mortgage credit, and ongoing economic uncertainty driven by changes in tariff policy and geopolitical tensions, including rising oil and raw material prices. Throughout 2025, the U.S. presidential administration announced new and modified tariffs on imported goods, including those sourced from China, Vietnam, and other key manufacturing regions. In response, several affected countries implemented retaliatory tariffs, adding economic uncertainty and increased cost pressures across the industry. On February 20, 2026, tariffs that had been imposed under the International Emergency Economic Powers Act ("IEEPA tariffs") were invalidated following a ruling by the U.S. Supreme Court, adding further uncertainty to the trade environment. On February 24, 2026, the administration imposed a 10% tariff under Section 122 of the Trade Act of 1974 impacting nearly all goods imported into the United States. By law, the Section 122 tariffs may only be in place for 150 days, resulting in their expiration on July 24, 2026. On July 24, 2026, new tariffs ranging from 10% to 12.5% on imports from approximately 60 countries took effect under Section 301 of the Trade Act of 1974. These tariffs apply to goods from countries from which the Company sources its merchandise, including Vietnam. To address refunds related to the invalidated IEEPA tariffs, on April 20, 2026, U.S. Customs and Border Protection ("CBP") launched the Consolidated Administration and Processing of Entries ("CAPE") system to process refund claims. The Company submitted refund claims for direct vendor purchases through CAPE that were received in June 2026. We continue to actively monitor tariff developments and assess their potential impact on our business. Business Overview Havertys is a leading specialty retailer of residential furniture and accessories, founded in 1885 in Atlanta, Georgia. As of June 30, 2026, we operated 129 stores in 17 states throughout the Southern and Midwestern regions of the U.S. Our products are selected to appeal to a middle to upper-middle income consumer across a variety of styles. We have a seasoned, commission-based sales team, and offer free design services to customers seeking a more in-depth personalized experience. Unlike many competitors, we do not outsource delivery; instead, our Havertys delivery team ensures a seamless and professional delivery experience, which includes a detailed inspection of the product prior to delivery, as well as placement and assembly of the furniture in the customer's home. We are recognized in our markets for offering high-quality, fashionable products and delivering exceptional customer service. Net Sales Our sales are generated by customer purchases of merchandise and related fees, net of expected returns and sales tax. We record our sales when merchandise is delivered to the customer. Comparable-store or “comp-store” sales is a measure which indicates the performance of our existing stores and website by comparing the growth in sales in store and online for a particular month over the corresponding month in the prior year. Stores are considered non-comparable if they were not open during the corresponding month in the prior year or if the selling square footage has been changed significantly. The method we use to compute comp-store sales may not be the same method used by other retailers. 14 We also track “written sales” and “written comp-store sales,” which represent customer orders prior to delivery. As a retailer, comp-store sales and written comp-store sales are an indicator of relative customer spending and store performance. Comp-store sales, total written sales and written comp-store sales are intended only as supplemental information and none are substitutes for net sales presented in accordance with U.S. GAAP. The following table outlines the changes in our sales and comp-store sales for the periods indicated. 2026 2025 Net Sales Comp-Store Sales Net Sales Comp-Store Sales Period Total Dollars % Change $ Change % Change $ Change Total Dollars % Change $ Change % Change $ Change Q1 $ 189.1 4.1 % $ 7.5 4.3 % $ 7.7 $ 181.6 (1.3) % $ (2.4) (4.8) % $ (8.8) Q2 $ 194.9 7.7 % $ 13.9 8.0 % $ 14.2 $ 181.0 1.3 % $ 2.4 (2.3) % $ (4.0) YTD Q2 $ 384.0 5.9 % $ 21.4 6.2 % $ 22.0 $ 362.6 — % $ — (3.5) % $ (12.8) In the second quarter of 2026, net sales increased $13.9 million, or 7.7%, compared to the same period in 2025. This growth was achieved despite continued pressure from a soft housing market which creates a challenging demand environment for the home furnishings industry. Comp-store sales increased $14.2 million, or 8.0%, in the second quarter of 2026 compared to the same period in 2025. Written business for the second quarter of 2026 was up 12.6% and comp-store written business was up 12.3% compared to the second quarter of 2025. For the six month period ended June 30, 2026, net sales increased $21.4 million, or 5.9% compared to the prior year comparable period. Comp-store sales increased $22.0 million or 6.2%, in the first six months ended June 30, 2026 compared to the same period in 2025. Written business for the first six months of 2026 increased 9.5% and comp-store written business increased 9.6% compared to the same prior year period. Our free in-home design service continues to provide strong customer engagement. Design consultants helped drive 36.5% of our total written business for the second quarter of 2026, compared to 33.4% of total written business for the same period in 2025, with a higher average written ticket of $8,835, compared to $7,631 for the same period in 2025. For the six months ended June 30, 2026, design consultants contributed to 35.9% of our total written business, with an average written ticket of $8,573, compared to 33.3% and an average written ticket of $7,525 for the same prior year period. Gross Profit Gross profit margin for the second quarter of 2026 was 61.4%, up 60 basis points from 60.8% in the prior-year comparable period. For the six months ended June 30, 2026, gross profit margin was 61.4% up 40 basis points compared to 61.0% for the same period in 2025. The gross margin improvement in both periods was driven by product selection, merchandise pricing and mix, and the receipt of $1.5 million in IEEPA tariff refunds in June 2026. Substantially all of our occupancy and home delivery costs are included in selling, general and administrative expenses (“SG&A”), as are a portion of our warehousing expenses. Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold. Selling, General and Administrative Expenses SG&A expenses as a percentage of sales for the second quarter of 2026 were 58.0% compared to 59.3% for the same period in 2025. The decrease as a percentage of sales was primarily due to improved leveraging of fixed and discretionary expenses on higher sales volume. SG&A expenses increased $5.8 million, or 5.4%, primarily due to higher selling and administrative costs. Selling expenses increased $3.1 million due to higher third-party credit costs and sales commissions, consistent with the increase in net sales. Administrative expenses increased $2.8 million, due to higher salaries, performance-based incentive compensation and related benefits. 15 SG&A expenses as a percentage of sales for the first six months of 2026 were 58.4% compared to 59.2% for the same period in 2025, primarily due to improved leveraging of fixed and discretionary expenses on higher sales volume. SG&A expenses increased $9.9 million, or 4.6%, primarily due to increases in selling and administrative expenses. Selling expenses increased $5.5 million due to higher third-party credit costs and sales commissions, consistent with the increase in net sales. Administrative expenses increased $3.6 million due to higher salaries, performance-based incentive compensation and related benefits. We classify our SG&A expenses as either variable or fixed and discretionary. Our variable expenses include the costs in the selling and delivery categories and certain warehouse and distribution expenses, as these amounts will generally move in tandem with our level of sales. The remaining categories and expenses for occupancy, advertising, and administrative costs are classified as fixed and discretionary because these costs do not fluctuate with sales. The following table outlines our SG&A expenses by classification: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 $ % of Net Sales $ % of Net Sales $ % of Net Sales $ % of Net Sales Variable $ 37,610 19.3 % $ 33,353 18.4 % $ 73,888 19.2 % $ 67,000 18.5 % Fixed and discretionary 75,553 38.7 % 73,980 40.9 % 150,551 39.2 % 147,535 40.7 % $ 113,163 58.0 % $ 107,333 59.3 % $ 224,439 58.4 % $ 214,535 59.2 % The variable expenses in dollars were higher in the second quarter and first half of 2026 compared to the same periods in 2025, primarily driven by higher commission expense resulting from increased sales. Fixed and discretionary expenses increased in the second quarter and first half of 2026 due to increases in administrative expenses compared to the prior year comparable periods. Interest Income, Net Interest income, net of interest expense, decreased $0.6 million in the second quarter of 2026 and $0.9 million in the six months ended June 30, 2026, compared to the prior year comparable periods, primarily due to lower rates paid on cash, cash equivalents, and restricted cash equivalents. Provision for Income Taxes Our effective tax rate for the six months ended June 30, 2026 and 2025 was 28.5% and 32.8%, respectively. See Note I, “Income Taxes” of the Notes to Condensed Consolidated Financial Statements for further information about our income taxes. Liquidity and Capital Resources Cash and Cash Equivalents At June 30, 2026, we had $104.3 million in cash and cash equivalents, and $6.7 million in restricted cash equivalents. We believe that our current cash position, cash flow generated from operations, funds available from our credit agreement, and access to the long-term debt capital markets should be sufficient for our operating requirements and enable us to fund our capital expenditures, dividend payments, and lease obligations through the next several years. In addition, we believe we have the ability to obtain alternative sources of financing, if needed. Long-Term Debt In June 2026, we entered into the Sixth Amendment to our Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with Truist Bank. The Credit Agreement, which matures June 29, 2031, provides for a $100.0 million revolving credit facility. The borrowing base at June 30, 2026 was $137.4 million and the net availability was $100.0 million. Leases We lease a portion of our real estate, including our stores, distribution centers, and store support space, pursuant to operating leases. 16 Cash Flows Summary Operating Activities. Cash flow generated from operations provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, employee compensation, operations, and occupancy costs. Cash provided by or used in operating activities is also subject to changes in working capital. Working capital at any specific point in time is subject to many variables, including seasonality, inventory selection, the timing of cash receipts and payments, and vendor payment terms. Net cash provided by operating activities was $21.4 million in the first six months of 2026, compared to $13.4 million provided by operating activities during the same period in 2025. This difference resulted primarily from changes in working capital. Working capital was primarily impacted by higher customer deposits in 2026 compared to 2025, offset by a lower inventory increase and higher prepaid expenses in 2026 compared to 2025, changes in other assets and liabilities, and the timing of vendor payments and cash receipts. Investing Activities. Cash used in investing activities increased by $1.4 million in the first six months of 2026 compared to the first six months of 2025, due to higher capital expenditures. Financing Activities. Cash used in financing activities in the first six months of 2026 increased $14.9 million compared to first six months of 2025 primarily due to higher share repurchases, including a $13.9 million purchase resulting from a privately negotiated transaction. Store Plans Location or Market Opening Quarter Actual or Planned Category Alexandria, LA Q-1-26 Closure St. Louis, MO Q-2-26 Open Nashville, TN Q-2-26 Open San Angelo, TX Q-2-26 Closure Fredericksburg, VA Q-3-26 Open College Station, TX Q-3-26 Closure Dallas, TX Q-4-26 Open Houston, TX Q-4-26 Open Pittsburgh, PA Q-4-26 Open Atlanta, GA Q-4-26 Relocation Houston, TX Q-4-26 Open Critical Accounting Estimates Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. We reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented in our Form 10-K. We had no significant changes in those accounting estimates since our last annual report.