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Larry Thomas

La-Z-Boy posts double-digit gains in 3Q

MONROE, Mich. - Buoyed by an improving housing market, a successful national advertising campaign and various operational improvements, La-Z-Boy reported double-digit increases in sales and profits for the quarter ended Jan. 26.
     The company said its upholstery segment paced the sales gains, while company owned stores marked the 16th straight quarter of yea rover- year improvements with an operating profit of $2.67 million.
     "We are definitely pleased by the momentum in our business," said Kurt Darrow, chairman, president and CEO. "For the quarter, we posted solid increases in same-store written sales for the La-Z-Boy Furniture Galleries network of stores, as well as sales increases in our upholstery and retail segments."
     Net sales for the quarter - the third quarter of the company's fiscal year - totaled $349.1 million. That was up 10.3% from $316.5 million in last year's third fiscal quarter.
     Net income totaled $17.1 million, or 32 cents per share. That was up 14.1% from $15 million, or 28 cents per share, in the same period last year. The most recent quarter included a gain of 4 cents per share on the sale of investments and a related tax benefit, while last year's third fiscal quarter included a gain of 2 cents per share for antidumping duties and a gain of 7 cents per share for a reduction of valuation reserves against deferred tax assets.
Wholesale upholstery sales climbed 12.3% to $280 million, while sales at its 97 company-owned stores jumped 24.6% to $72.8 million.
     Case goods sales fell 4.7% to $32.6 million.
     Darrow said La-Z-Boy's "Live Life Comfortably" campaign featuring Brooke Shields continues "to drive awareness, traffic and additional volume for our retail partners."
     "The campaign continues to bring attention to the vast array of stylish upholstered furniture we offer, and feedback from consumers tells us she is pleased with the value in our product," he added.
     The company-owned stores, meanwhile, had an operating profit not only for the quarter, but are operating at a profit year-to-date, said Darrow.
     "Our retail team has done excellent work over the past several years to improve the operation's performance and move it to profitability," he said. "We've reduced our cost structure, modified selling processes, revamped our distribution center strategy and improved our margins."
     For the nine months ended Jan. 26, net sales were $973 million, an increase of 7.6% from $904.3 million in the first nine months of the previous fiscal year.
     Net income was $28.1 million, or 52 cents per share. That was down from $68.4 million, or $1.28 per share, in the comparable period, which included an income tax benefit of $34.8 million.

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.

Quarter ended 1/26

2013

2012

Change

Sales

$349,148,000

$316,515,000

10.3%

Operating income

23,278,000

17,020,000

36.8%

Net income

17,064,000

14,958,000

14.1%

Earnings per share (a)

0.32

0.28

14.3%

9 months ended 1/26

2013

2012

Change

Sales

$972,990,000

$904,288,000

7.6%

Operating income

41,467,000

32,741,000

26.7%

Net income (b)

28,081,000

68,364,000

(58.9%)

Earnings per share

0.52

1.28

(59.4%)

(a) Includes gain of 7 cents per share for reduction of valuation reserves against deferred tax assets and gain of 2 cents per share for anti-dumping duties in 2012. (b) Includes income tax benefit of $34.8 million and antidumping duties of $1.74 million in 2012.

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