La-Z-Boy 1Q sales slip 2.3%, earnings drop 28.5%
By Larry Thomas -- Furniture Today, August 20, 2006
Monroe, Mich. — Soft retail business conditions continued to plague La-Z-Boy as the No. 3 furniture manufacturer and importer saw sales slide 2.3% in its first quarter.
Sales from its upholstery and company-owned retail store segments declined slightly, while sales in the ailing case goods segment fell sharply.
Net income sunk 28.5% to $2.3 million, or 4 cents per share.
"We have seen weakness across the board in the furniture business," said Kurt Darrow, president and CEO. "But we are confident we will be well positioned when the softness in our industry dissipates."
Total sales for the quarter ended July 29 were $418.9 million, compared with $428.9 million in last year's first fiscal quarter.
Upholstery sales were essentially flat at $303.1 million, while case goods sales fell 15.6% to $78.3 million.
Sales at the 68 company-owned La-Z-Boy Furniture Galleries stores slid to $52.2 million, down from $52.7 million in the comparable period last year.
The stores also incurred an operating loss of $7.7 million. In last year's first quarter, the loss came to $5.4 million.
Darrow noted that operating margins improved slightly in the upholstery segment and remained steady for the case goods segment, despite significantly lower volume. This indicates the company's restructuring efforts are working, he said.
"While we are pleased with our progress in our upholstery and case goods divisions from a margin perspective, we continue to be concerned about top-line growth given the challenging retail climate," said Darrow.
The quarterly results included figures from the company's American of Martinsville contract furniture business. That unit was sold last month to Hancock Park Associates, a Los Angeles private equity firm, for $33.2 million.
| 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 7/29 | 2006 | 2005 | Change |
| (a) Includes net income from discontinued operations of $1.3 million in the 2006 quarter and $731,000 in the 2005 quarter. The 2006 quarter also includes a $120,000 income tax benefit. (b) Based on average shares outstanding of 52 million in the 2006 quarter and 52.2 million in the 2005 quarter. |
|||
| Sales | $418,865,000 | $428,875,000 | (2.3%) |
| Operating income | 2,830,000 | 6,709,000 | (57.8%) |
| Net income (a) | 2,295,000 | 3,208,000 | (28.5%) |
| Earnings per share (b) | 0.04 | 0.06 | (33.3%) |
-
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