La-Z-Boy rebounds to profit as sales rise 1.7%
By Larry Thomas -- Furniture Today, November 19, 2006
Monroe, Mich. — La-Z-Boy said sales edged up 1.7% to $440.5 million in the second fiscal quarter as sluggish business conditions continued to hamper its wholesale and retail segments.
The company did, however, reverse a net loss from the same period last year by recording net income of $1.95 million.
"We were challenged with sales volume this quarter which was reflective of recent trends in furniture demand throughout the broader industry," said Kurt Darrow, president and CEO.
Darrow said upholstery sales, which make up more than 70% of La-Z-Boy's wholesale business, rose 0.8% in the quarter ended Oct. 28. However, he said sales of La-Z-Boy branded upholstery were up in the mid-single-digits. Case goods sales were down 1%.
Sales from 68 company-owned La-Z-Boy Furniture Galleries retail stores rose 6.7%. The retail segment, however, incurred an operating loss of $8.8 million.
Darrow didn't provide same-store sales data for the company-owned stores, but said the figure was down 3.2% in the third calendar quarter for all 335 La-Z-Boy dedicated stores. Total sales for the store network, including locations open less than a year, fell 0.8% in the same period.
The most recent quarter's net income of $1.95 million or 4 cents per share compared with a loss of $6.45 million or 12 cents per share in last year's second fiscal quarter. The year-ago loss was largely due to $7.8 million in restructuring costs.
Darrow said he was especially pleased with the higher operating margins in the upholstery and case goods wholesale segments, which were achieved through improved operating efficiencies and cost controls.
"We continue to be encouraged by our ability to improve wholesale margins on essentially flat volume during what continues to be a difficult period," he said.
For the six months ended Oct. 28, sales fell 0.3% to $859.4 million. Net income totaled $4.25 million or 8 cents per share. In the same period last year, the company recorded a net loss of $3.24 million or 6 cents per share.
Darrow said La-Z-Boy is projecting that sales in the current quarter will decline in the mid-single-digits. Earnings per share should be 6 cents to 10 cents.
In the same period last year, the company had sales of $477 million and earnings of 20 cents per share.
| 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 10/28 | 2006 | 2005 | Change |
| (a) Includes pretax restructuring charges of $1.9 million in the 2006 quarter and $7.8 million in the 2005 quarter. The 2005 quarter also includes a $3.9 million income tax benefit and $464,000 in net income from discontinued operations. (b) Includes pretax restructuring charges of $1.9 million in the 2006 six months and $7.8 million in the 2005 six months and net income from discontinued operations $1.3 million in the 2006 six months and $1.2 million in the 2005 six months. The 2005 six months also includes a $2.4 million income tax benefit. |
|||
| Sales | $440,538,000 | $433,367,000 | 1.7% |
| Operating income | 5,981,000 | (160,000) | - |
| Net income (a) | 1,954,000 | (6,447,000) | - |
| Earnings per share | 0.04 | (0.12) | - |
| 6 months ended 10/28 | 2006 | 2005 | Change |
| Sales | $859,403,000 | $862,242,000 | (0.3%) |
| Operating income | 8,811,000 | 6,549,000 | 34.5% |
| Net income (b) | 4,249,000 | (3,239,000) | - |
| Earnings per share | 0.08 | (0.06) | - |
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