La-Z-Boy posts loss
By Larry Thomas -- Furniture Today, February 23, 2009
Monroe, Mich. — Monroe, Mich.— La-Z-Boy reported a net loss of $64.4 million in the quarter ended Jan. 24 as sales fell 22.6%.
Much of the loss was attributed to several one-time, non-cash charges — the largest of which was a $46 million writedown of the valuations of its goodwill and trade name.
However, the company's sales also were pounded by continuing weak demand for its upholstery and case goods products. Same-store written sales at its branded La-Z-Boy Furniture Galleries stores — both company owned and independently licensed operations — tumbled 12.4%.
"The macroeconomic challenges pervasive throughout our industry are magnified in our retail operation," said Kurt Darrow, president and CEO.
Companywide sales for the most recent period, the third quarter of La-Z-Boy's fiscal year, totaled $288.6 million. That's down from $373.1 million in the quarter ended Jan. 26, 2008.
Wholesale sales in the upholstery segment were off 30%, while case goods sales were down 20%.
The most recent quarter's loss, which equals $1.25 per share, reversed a profit of $9.5 million, or 18 cents per share, in the comparable quarter last year.
In addition to the writedown of its goodwill and trade name valuations, the company recorded a $7.04 million asset impairment charge and a $9.4 million bad debt charge related to its stores.
Since November, Darrow said 15 La-Z-Boy stores, most of them independently owned, have been closed or are conducting going-out-of-business sales. Another 10 probably will close before the company's fiscal year ends in April, he said.
He said the company will continue to aggressively manage its costs. He noted that employment has decreased by 24% in the past year and said the company paid down $27.8 million in debt during the most recent quarter.
The board of directors also voted to suspend the quarterly dividend on its common stock.
"Going forward, we will require minimal near-term capital expenditures, which will improve our cash flow," said Darrow.
For the first nine months of the fiscal year, sales fell 13% to $942.2 million.
The nine-month net loss totaled $126.7 million or $2.46 per share.
La-Z-Boy
Owns American Drew, Bauhaus, England, Hammary, Kincaid and Lea
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
| (a) Includes writedown of long-lived assets of $7 million in the 2009 quarter and nine months; writedown of intangibles of $46 million in the 2009 quarter, $47.7 million in the 2009 nine months and $5.8 million in the 2008 nine months; and restructuring charges of $741,000 in the 2009 quarter, $877,000 in the 2008 quarter, $2.2 million in the 2009 nine months and $2.4 million in the 2008 nine months. Also includes net income from the Continued Dumping and Subsidy Offset Act of $8.1 million in the 2009 quarter and nine months and $7.1 million in the 2008 quarter and nine months. Also includes net income from discontinued operations of $384,000 in the 2008 quarter and net loss from discontinued operations of $6.1 million in the 2008 nine months. |
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| Quarter ended 1/24 | 2009 | 2008 | Change |
| Sales | $288,576,000 | $373,081,000 | (22.7%) |
| Operating income | (12,872,000) | 3,331,000 | — |
| Net income (a) | (64,382,000) | 9,512,000 | — |
| Earnings per share | (1.25) | 0.18 | — |
| 9 months ended 1/24 | 2009 | 2008 | Change |
| Sales | $942,176,000 | $1,082,911,000 | (13.0%) |
| Operating income | (30,848,000) | (5,246,000) | — |
| Net income (a) | (126,670,000) | (9,117,000) | — |
| Earnings per share | (2.46) | (0.18) | — |
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La-Z-Boy posts $64.4 million loss
Feb 18, 2009
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