La-Z-Boy reverses loss
By Larry Thomas -- Furniture Today, February 24, 2008
Monroe, Mich. — La-Z-Boy earned a profit in its fiscal third quarter, reversing a loss from last year, but the company's board voted to slash its quarterly stock dividend due to continued weakness in the housing and home furnishings markets.
That weakness resulted in a 7.8% sales decline in the quarter ended Jan. 26 as the company experienced shortfalls in its upholstery, case goods and retail business segments.
But La-Z-Boy posted a profit of $9.5 million, compared with a net loss of $7.8 million in last year's third fiscal quarter.
"Our industry continues to face challenges across the board," said Kurt Darrow, president and CEO. "We are determined to strengthen La-Z-Boy's positioning in the marketplace so that we emerge from this period as a stronger entity than ever before."
The most recent quarter included income of about $7.1 million, or 9 cents per share, from antidumping duties the U.S. government collects on imported Chinese wood bedroom furniture. Last year's third quarter included one-time charges of 29 cents per share from a writedown of the value of intangible assets.
Sales in the most recent quarter totaled $373.1 million.
Directors voted to cut the dividend from 12 cents to 4 cents per share in order to pay down debt and plow more cash back into the business.
"The board believes this redeployment of cash into the business to transform the company will ultimately provide a better return for shareholders," directors said in a statement.
Upholstery sales in the third quarter declined 3.8% from a year earlier, while case goods sales were down 16.6% and sales at company-owned retail stores slid 18.4%.
For the first nine months of La-Z-Boy's fiscal year, total sales were down 10.8% to $1.08 billion.
The company recorded a nine-month net loss of $9.1 million, compared with a loss of $3.6 million a year earlier.
During a conference call with securities analysts, Darrow acknowledged that La-Z-Boy's 70 company-owned retail stores continue to hamper the company's performance, but said improving their operations "remains the number one priority for the management team."
The stores recorded an operating loss of $8.5 million in the quarter and had a nine-month loss of $27.7 million.
"We ... are analyzing every aspect of our company-owned retail segment to ensure that we improve its performance even during this difficult time frame," said Darrow.
| 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 1/26 | 2008 | 2007 | Change |
| (a) Includes pretax restructuring charges of $235,000 in the 2008 quarter, $2.9 million in the 2007 quarter, $4.9 million in the 2008 nine months and $4.7 million in the 2007 nine months, and a pretax expense for writedown of intangibles of $5.8 million in the 2008 nine months. Also includes income from antidumping duties of $7.1 million in the 2008 quarter and nine months and $3.4 million in the 2007 quarter and nine months. |
|||
| Sales | $373,081,000 | $404,845,000 | (7.8%) |
| Operating income | 3,331,000 | 12,310,000 | (72.9%) |
| Net income (a) | 9,512,000 | (7,821,000) | — |
| Earnings per share | 0.18 | (0.15) | — |
| 9 months ended 1/26 | 2008 | 2007 | Change |
| Sales | $1,082,911,000 | $1,213,382,000 | (10.8%) |
| Operating income | (5,246,000) | 23,918,000 | — |
| Net income (a) | (9,117,000) | (3,572,000) | — |
| Earnings per share | (0.18) | (0.07) | — |
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La-Z-Boy reverses loss, but sales decline 7.8%
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