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La-Z-Boy profits nearly double in quarter as sales rise 5%

MONROE, Mich. — La-Z-Boy said sales in its fiscal second quarter were 5% ahead of the same quarter last year, but profits nearly doubled due to improved performances by all three of its business segments.

Net income for the quarter ended Oct. 29 totaled $7.87 million or 15 cents per share. That compares with $3.95 million or 7 cents per share in last year's fiscal second quarter.

Sales totaled $307.7 million, up from $293 million a year ago.

The company said upholstery sales were up 7.3% to $241.4 million, while delivered sales at company-owned retail stores leaped 34.3% to $52.7 million.

The retail sales gain was due largely to the February acquisition of 15 stores in Southern California, but delivered sales at the 68 La-Z-Boy Furniture Galleries stores included in last year's second quarter report were up 5.9%.

Same-store written sales at the 309 company-owned and independent La-Z-Boy stores rose 9.2% in the quarter, and were up 9.3% for the calendar year ended Oct. 31, the company said.

"While macroeconomic headwinds continue to prevail, we are encouraged by our results and believe we are gaining market share, particularly in our upholstery segment," said Kurt Darrow, chairman, president and CEO. "For the quarter, we experienced a sales increase in our upholstery and retail segments, improved our overall gross margin, increased same-store sales for the La-Z-Boy Furniture Galleries store network and recorded the 11th consecutive quarterly improvement in the operating performance of our retail segment compared with the prior year."

Case goods sales fell 9% to $35.9 million, but the segment's operating income jumped 42.6%.

Darrow said the company was able to control operating costs through widespread use of its cellular manufacturing platform, as well as its cut-and-sew factory in Mexico.

He also said the company's national advertising campaign featuring Brooke Shields is continuing to drive a more qualified consumer to La-Z-Boy dealers.

"The success of our marketing campaign, strong product values and our lean operating platform are driving the company's performance and we believe we have the ability to continue to strengthen our results as our volume grows," Darrow said.

For the six months ended Oct. 29, sales totaled $587.8 million, up 5.7% from $556.3 million in the same period last year.

Six-month profits totaled $53.4 million or $1 per share, including an income tax benefit of $37.7 million. That compares with $3.73 million, or 7 cents per share, in the same period in 2010.

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