La-Z-Boy posts $9.9M loss
By Larry Thomas -- Furniture Today, November 18, 2007
Monroe, Mich. — Continuing to feel the effects of the industrywide slump, La-Z-Boy posted a net loss of $9.9 million in its second quarter on an 11.9% decline in sales.
Much of the loss was due to a variety of one-time charges, the largest a $5.8 million writedown of goodwill for its company-owned stores in southeastern Florida.
The loss for the quarter ended Oct. 27 was equal to 19 cents per share. In the same period in 2006, the company recorded a profit of $1.95 million or 4 cents per share.
Sales for the most recent quarter totaled $365.4 million, compared with $414.6 million in last year's second fiscal quarter.
"While we are disappointed that, due to industry headwinds, the improvements we have made in our business model are not clearly evident in our results, we posted reasonable operating margins in each of our wholesale businesses on significantly lower volume," said Kurt Darrow, president and CEO.
La-Z-Boy's upholstery segment, its largest business unit, recorded sales of $269.7 million, a drop of 11.4% from the same period last year. The unit's operating margin, however, jumped 0.5% to 7.1% due to increased capacity utilization and the conversion to a cellular production process.
Sales in the case goods segment were $58.9 million, down 20.6% from last year's second fiscal quarter. The operating margin decreased to 6.1% from 8.4% in the same period a year ago.
Sales at its 70 company-owned stores were off 12% to $46.2 million, and the stores recorded an operating loss of $9.37 million. In the same quarter last year, the operating loss was $16.6 million.
During the second quarter, the company also recorded pretax losses of $5.8 million on the sale of Clayton Marcus and $600,000 on the sale of Pennsylvania House. In addition, the company wrote down an additional $3 million for the value of its remaining Pennsylvania House inventory.
Sales for the six months ended June 27 totaled $709.8 million, a decline of 12.2% from the first six months of the previous fiscal year.
The company recorded a six-month net loss of $18.6 million or 36 cents per share. In the first half of the previous fiscal year, La-Z-Boy had net income of $4.25 million or 8 cents per share.
| La-Z-Boy | |||
|---|---|---|---|
| Owns American Drew, Bauhaus, England, Hammary, Kincaid and Lea | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 10/27 | 2007 | 2006 | Change |
| (a) Includes a $5.8 million pretax charge in the 2007 quarter and six months for the writedown of intangibles. Includes pretax restructuring charges of $449,000 in the 2007 quarter, $1.6 million in the 2007 six months, and $2.3 million in the 2006 quarter and six months. Also includes net losses from discontinued operations of $6.3 million in the 2007 quarter, $6.4 million in the 2007 six months, $1.3 million in the 2006 quarter and $139,000 in the 2006 six months. |
|||
| Sales | $365,434,000 | $414,614,000 | (11.9%) |
| Operating income | 678,000 | 8,376,000 | (91.9%) |
| Net income (a) | (9,934,000) | 1,954,000 | |
| Earnings per share | (0.19) | 0.04 | |
| 6 months ended 10/27 | 2007 | 2006 | Change |
| Sales | $709,830,000 | $808,537,000 | (12.2%) |
| Operating income | (8,577,000) | 11,608,000 | |
| Net income (a) | (18,628,000) | 4,249,000 | |
| Earnings per share | (0.36) | 0.08 | |
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