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Upholstery, retail power La-Z-Boy to 3% gain

Monroe, Mich. - La-Z-Boy said its sales rose 3% in the quarter ended Jan. 25 as its upholstery and retail segments reported solid results.
The company said severe winter weather in the Northeast and Midwest did hurt sales, production and deliveries, but said the longer term business outlook remains positive.
     "We believe the fundamental pace of our business and ability to improve our profitability on sales growth remains steady and unchanged," said Kurt Darrow, chairman, president and CEO.
     Income from continuing operations rose 2.5% to $17.2 million or 32 cents per share.
    Net sales for the quarter - the third quarter of La-Z-Boy's fiscal year - totaled $350.4 million. That's up from $340.2 million in the comparable quarter the previous year.
     The company said wholesale upholstery sales rose 3.4% to $280.3 million, while wholesale case goods sales fell 9.1% to $29.6 million.
     "Growth for our stationary product category remains at a faster pace than our core recliner business, although we experienced a solid increase in recliner sales this quarter, as well as sales of our power offering," said Darrow.
     He said the company continues to benefit from its "Live Life Comfortably" advertising campaign featuring Brooke Shields, and should also see a boost from the new Urban Attitudes collection, which is being shipped to retailers for the first time this month.
     Sales at company-owned stores, meanwhile, rose 10.2% to $80.2 million, and the retail segment posted an operating profit of $3.1 million.
     "Our retail segment continues to strengthen its performance and recorded its 20th consecutive quarterly improvement over prior-year results," Darrow said, noting that the improvement occurred despite the winter weather issues.
     At the end of the quarter, there were 100 company-owned and 212 licensed La-Z-Boy Furniture Galleries stores. Same-store written sales for the entire store network rose 3.6% during the quarter.
     Darrow said the company is continuing to focus on its 4-4-5 retail strategy, which calls for 400 stores averaging $4 million annually in five years.
     He said 20 to 25 store projects, which include new stores, remodels and relocations, will be completed by the end of the fiscal year in April, and an additional 30 to 35 projects will be completed in the next fiscal year.
     "Moving forward, we are confident we have the right plan in place to grow the company through our 4-4-5 store strategy while enjoying the benefits of our lean manufacturing," said Darrow. "At the same time, our integrated retail model is delivering results and our sales, merchandising and marketing teams are driving market share gains."
     For the nine months ended Jan. 25, sales totaled $1.02 billion, an increase of 7.6% from $945.8 million in the comparable period.
Income from continuing operations came to $43.7 million or 81 cents per share. That's up from $27.6 million or 51 cents per share in the comparable period.
The figures don't include results from La-Z-Boy's Bauhaus USA upholstery unit. The company announced recently it has signed an agreement to sell the unit to an investor group led by Bauhaus President Britt Allred.

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 1/25

2014

2013

Change

Sales

$350,375,000

$340,211,000

3.0%

Operating income

25,449,000

22,812,000

11.6%

Net income

16,483,000

17,064,000

(3.4%)

Earnings per share (a)

0.31

0.32

(3.1%)

9 months ended 1/25

2014

2013

Change

Sales

$1,017,692,000

$945,848,000

7.6%

Operating income

65,914,000

40,699,000

62.0%

Net income

42,817,000

28,081,000

52.5%

Earnings per share (a)

0.80

0.52

53.8%

(a) Includes loss of 1 cent per share in 2014 and income of 1 cent per share in 2013 from Bauhaus USA, which

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