La-Z-Boy sales down
By Larry Thomas -- Furniture Today, June 11, 2006
Monroe, Mich. — La-Z-Boy said sales slipped 10.1% in its fourth quarter amid inconsistent retail activity. For the year, sales were off 6.4% to $1.92 billion.
The major upholstery maker and operator of company- and dealer-owned dedicated stores reported a net loss of $10.3 million, or 20 cents per share, in the fourth quarter. The figure included a restructuring credit of $1.8 million and a $22.7 million write-down of goodwill at its Bauhaus upholstery unit, whose sales and earnings plummeted due to department store consolidation.
For the 52-week year ended April 29, La-Z-Boy recorded a net loss of $3 million, or 6 cents per share. That compares with a profit of $37.2 million, or 71 cents per share, in the previous 53-week fiscal year.
Sales for the 13 weeks ended April 29 totaled $508.4 million, compared with $565.6 million in last year's fourth quarter, which included 14 weeks.
Upholstery sales slid 12.5% to $361.6 million in the latest quarter, hurt by weakness in products that don't carry the La-Z-Boy name. Case goods sales, meanwhile, were off 8.2% to $113.4 million.
President and CEO Kurt Darrow said full-year sales were affected by the industrywide foam shortage last fall, and inconsistent retail demand throughout the period. "Although softness at retail persists, we gained traction in the second half of the fiscal year when many of the supply chain issues were behind us," he said.
The 63 company-owned La-Z-Boy Furniture Galleries stores recorded an operating loss of $26 million for the year, due largely to a number of underperforming stores in key markets the company has acquired in recent months.
In a conference call with securities analysts, Darrow said that once a number of operational issues are resolved, the units will perform better.
"The time it is taking to build the business is longer than we'd like, but it will deliver results once it is completed, and it will significantly change the earnings power of this company," he said.
Only 28 of the company-owned stores have been converted to the network's New Generations format, but the number will be 46 by the end of the current fiscal year. Darrow said the new format typically boosts sales per square foot by 20% to 25%.
A total of 337 Furniture Galleries stores were in operation at the end of the latest fiscal year.
| La-Z-Boy | |||
|---|---|---|---|
| Owns Alexvale, American Drew, American of Martinsville, Bauhaus, Clayton Marcus, England, Hammary, Kincaid, Lea, Pennsylvania House and Sam Moore | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 4/29 (a) | 2006 | 2005 | Change |
| (a) The 2006 periods are 13 weeks and 52 weeks; the 2005 periods are 14 weeks and 53 weeks. (b) Includes pretax restructuring credits of $1.8 million in the 2006 quarter and $3.1 million in the 2005 quarter. The 2006 quarter also includes a $22.7 million pretax charge for the write-down of intangibles and the 2005 quarter also includes $1 million in net income from discontinued operations and a $1.4 million extraordinary gain. (c) Includes pretax restructuring charges of $6.6 million in the 2006 year and $10.3 million in the 2005 year. The 2006 year also includes a $22.7 million pretax charge for the write-down of intangibles and the 2005 year also includes $2 million in net income from discontinued operations and a $2.1 million extraordinary gain. |
|||
| Sales | $508,362,000 | $565,555,000 | (10.1%) |
| Operating income | 20,879,000 | 29,561,000 | (29.4%) |
| Net income (b) | (10,270,000) | 20,756,000 | — |
| Earnings per share | (0.20) | 0.40 | — |
| Year ended 4/29 (a) | 2006 | 2005 | Change |
| Sales | $1,916,777,000 | $2,048,381,000 | (6.4%) |
| Operating income | 48,464,000 | 73,945,000 | (34.5%) |
| Net income (c) | (3,041,000) | 37,185,000 | — |
| Earnings per share | (0.06) | 0.71 | — |
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