La-Z-Boy sales rise 4.8% in quarter but profits decline 15.9%
Larry Thomas -- Furniture Today, November 29, 2012
MONROE, Mich. - Aided by a national advertising campaign that helped drive a double-digit same-store sales increase at its retail store network, La-Z-Boy said sales rose 4.8% in the quarter ended Oct. 27.
The company said sales jumped 7.5% in its upholstery segment and rose 16.1% at its 97 company-owned stores. Sales in the case goods segment were down 3.9%.
In addition, same-store written sales for the entire La-Z-Boy Furniture Galleries retail store network were up 13.3%.
"During the quarter, our overall sales performance outpaced industry trends," said Kurt Darrow, chairman, president and CEO. "We remain focused on driving growth and increased profitability and, with an eye on the future, continued to make strategic investments this quarter."
Total sales for the period - the second quarter of La-Z-Boy's fiscal year - were $322.3 million. That was up from $307.7 million in last year's second fiscal quarter.
Profits, however, slid 15.9% to $6.62 million or 12 cents per share. The quarter included a restructuring charge of 3 cents per share, increased spending on marketing and store openings and remodeling, and higher incentive compensation stemming from improved sales and operating results.
In the same quarter last year, profits totaled $7.87 million or 15 cents per share.
La-Z-Boy's stock price was down about 7% in early trading today. The Associated Press reported that the company missed the earnings projection of 20 cents per share, excluding one-time items, of analysts polled by FactSet, and fell about $3 million short in revenue expectations.
Darrow said he believes the national advertising, which features actress Brooke Shields, is continuing to deliver strong results.
"We continue to be pleased with the effectiveness of our brand advertising campaign," he said. "Not only is it driving a more qualified customer to the store network, but we are growing our stationary line of furniture at a faster rate that our core recliner business, which is one of the key objectives of the campaign."
On the wholesale side of the business, the company said upholstery sales rose to $259.5 million from $241.4 million in last year's second fiscal quarter, while case goods sales fell to $34.5 million from $35.9 million in the same period last year.
Sales jumped to $61.2 million from $52.7 million at company-owned stores, including nine newly acquired units in the Dayton, Cincinnati and Columbus, Ohio, markets.
La-Z-Boy said its company-owned stores had an operating loss of $575,000, which represented the 15th consecutive quarter of improved operating results for its retail segment.
"Assuming business conditions remain at current levels, we believe our retail segment will be profitable for the second half of the fiscal year," said Darrow.
For the six months ended Oct. 27, companywide sales rose 6.1% to $623.8 million. Net income was $11.02 million or 20 cents per share.
In the first half of the previous fiscal year, net income was $53.4 million, or $1 per share. The previous period included a $37.7 million income tax benefit and $322,000 in income from antidumping duties.
Additionally, La-Z-Boy said its board of directors reinstated a quarterly cash dividend of 4 cents per share. It is payable Dec. 20 to stockholders of record Dec. 10. The company last paid a dividend in December 2008.
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