La-Z-Boy has slow 4Q, sobering forecast
By Larry Thomas -- Furniture Today, June 1, 2003
Monroe, Mich. — Industry stalwart La-Z-Boy reported lower sales for the fourth quarter of its fiscal year, and said the first quarter of the current year won't show any improvement.
Much of the decline can be attributed to its case goods segment, where sales were off 10%, but the company's core upholstery business also was off 7% in the quarter ended April 26. And same-store sales at La-Z-Boy Furniture Galleries stores — most of which are independently owned — were down 6.3% for the quarter.
"This was a difficult quarter for the industry and for our company," said Jerry Kiser, president and chief executive officer. "And business continues to be erratic, choppy and unpredictable."
In a conference call with securities analysts, Kiser said several La-Z-Boy plants will have more than the traditional one- to two-week summer shutdown, and said some case goods plants could be closed permanently as more production is shifted to offshore factories.
"We anticipate announcing a further consolidation of our case goods facilities in a few weeks," he said, declining to be more specific.
Kiser said the company imported about 30% of its case goods during the just-concluded fiscal year and predicted that will rise to about 40% in the current year.
In the fourth quarter, the company said total sales declined 9.4% to $540.3 million but net income rose 1% to 25.1 million, or 45 cents per share.
For the fiscal year, sales of $2.1 billion were down 2% from the fiscal year ended April 27, 2002. Net income was $36.3 million, or 63 cents per share, compared with $61.8 million, or $1.01 per share, in the previous year.
For the full year, upholstery sales remained positive, rising 4%, excluding the divested Hickory Mark brand. Case goods sales were down 10%, excluding the divested Pilliod division.
Kiser told analysts he expects sales and earnings to decline significantly in the current quarter, but added that the company is suspending its practice of making specific sales and earnings estimates because of the unstable business climate. He said earnings guidance "is an exercise in futility" in the current climate, but said the company would resume the estimates "when there is additional clarity in the marketplace."
La-Z-Boy's stable of case goods producers includes American Drew, American of Martinsville, Hammary, Kincaid, Lea and Pennsylvania House.
Kiser said the April market introductions of American Drew's Bob Mackie Two, Pennsylvania House's New Standards, and Kincaid's addition to its Laura Ashley line were well received by dealers, but those collections won't arrive on retail floors until fall.
"We feel the case goods segment of our business is poised for a substantial rebound ... when the economy decides to cooperate," he told analysts.
| La-Z-Boy | |||
|---|---|---|---|
| Owns Alexvale, Bauhaus, England, Hammary, Kincaid, Centurion, Clayton Marcus, Sam Moore, American Drew, American of Martinsville, Lea and Pennsylvania House. | |||
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 4/26 | 2003 | 2002 | Change |
| (a) Based on average shares outstanding of 55.6 million in the 2003 quarter, 57.4 million in the 2003 year and 61.6 million in the 2002 periods. (b) Includes a $59.8 million extraordinary charge, the cumulative effect of an accounting change. (c) Includes an $11.7 million pretax loss on the divestiture of Pilliod. | |||
| Sales | $540,329,000 | $596,062,000 | (9.4%) |
| Operating income | 43,190,000 | 42,448,000 | 1.7% |
| Net income | 25,109,000 | 24,866,000 | 1.0% |
| Earnings per share (a) | 0.45 | 0.41 | 9.8% |
| Year ended 4/26 | 2003 | 2002 | Change |
| Sales | $2,111,830,000 | $2,153,952,000 | (2.0%) |
| Operating income | 162,874,000 | 108,389,000 | 50.3% |
| Net income | (b)36,316,000 | (c)61,751,000 | (41.2%) |
| Earnings per share (a) | 0.63 | 1.01 | (37.6%) |
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La-Z-Boy reverses loss
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La-Z-Boy links $5.8M net loss to writeoffs
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