La-Z-Boy profit falls 27.4%
By Larry Thomas -- Furniture Today, February 13, 2005
Monroe, Mich. — La-Z-Boy said sales were up 5.3% in its third quarter ended Jan. 22, but net income plunged 27.4% due to higher raw materials costs, restructuring charges and other increased expenses.
The big manufacturing conglomerate said sales were up in both its upholstery and case goods segments. It was the first quarter-over-quarter increase for case good in over three years s.
"Although we are not satisfied with our profitability ... we are pleased with our sales results for the quarter," said President and CEO Kurt Darrow. "This increase was in spite of a relatively weak retail climate for furniture."
In the quarter, sales came to $518.2 million, compared with $492.2 million in last year's comparable quarter. Net income totaled $11.1 million, compared with $15.3 million a year ago, including a restructuring charge of $2.3 million in the latest quarter, primarily from the December closing of its Pennsylvania House wood factory in Lewisburg, Pa. (See financial table on page 78.)
"The transition to our new case goods business model is progressing well," Darrow said of La-Z-Boy's move to more imports. "The magnitude of this progress was masked, however, by the rather significant operating losses we incurred at Pennsylvania House during the closing of the facilities at Lewisburg."
Still, case goods sales rose 3.7% to $111.9 million in the quarter, and the segment, which operated on a break-even basis in last year's third quarter, had an operating margin of 1.9%. Upholstery sales rose 2% to $393.3 million. The segment's operating margin was 6.1%.
In a conference call with analysts, Darrow said he believes operating margins can be improved to 8% to 10% in upholstery and 4% to 6% in case goods in the next nine to 12 months.
For the first nine months of La-Z-Boy's year, sales grew 4.4% to $1.52 billion from $1.45 billion a year ago. Net income for the nine months plummeted 54.7% to $16.4 million from $36.3 million in last year's comparable period.
Darrow said he believes raw materials costs, which have skyrocketed in the past year, finally have stabilized. In addition, price increases implemented by La-Z-Boy will help shore up the bottom line in the current quarter.
He said $14.8 million of the latest quarter's $26 million sales increase was due to an accounting rule that requires the company to include revenues from some troubled La-Z-Boy Furniture Galleries stores to which the company had made direct loans or lease guarantees.
Such underperforming stores, deemed "variable interest entities," should be off La-Z-Boy's books by April, Darrow said. The units will either be acquired by the company or sold to another independent operator, he said.
There currently are 328 standalone stores, 38 of which are company owned.
-
Writedown, Rising Costs Hurt Flexsteel
Feb 21, 2011 -
La-Z-Boy sales down
Aug 24, 2008 -
La-Z-Boy sales drop 6.6% in first quarter
Aug 20, 2008 -
La-Z-Boy logs $2M profit
Aug 24, 2009
Specialty retailer LoveSac introduces new store design
Belfort Furniture, Lawrance Furniture are NHFA Retailers of Year
Kincaid Furniture honors Jimmy and Rosalynn Carter for Habitat work
Omnia Furniture ends relationship with Kathy Ireland Worldwide
Singapore furniture show expecting increased turnout
Featured Company
-
Wright Labels
Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more
VIEW ALL GALLERIES
