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La-Z-Boy posts 6.4% sales gain, positive earnings in first quarter

Same-store sales jump 9.7% at La-Z-Boy Furniture Galleries

Jay McIntosh -- Furniture Today, August 24, 2011

MONROE, Mich. — La-Z-Boy reported a 6.4% sales gain in its fiscal first quarter ended July 30 and positive earnings compared with a loss a year ago.

Net income was huge at $45.5 million or 85 cents per share, but $43.4 million or 81 cents per share was attributed to a reduction in the value of deferred tax assets. Even without the accounting move, however, the positive earnings of about $2.1 million were an improvement on a $216,000 loss in the same period a year earlier.

Adjusted earnings were 3 cents per share, which missed Wall Street analysts' estimates of 6 cents per share, according to Thomson Reuters I/B/E/S.

Same-store written sales in all 306 La-Z-Boy Furniture Galleries stores, company and dealer owned, increased 9.7% in the quarter.

Delivered sales in the company-owned segment surged 38.3% to $48.8 million, largely because of the February acquisition of 15 Southern California stores. However, the company also reported a 10.4% gain at the core 68 stores included in last year's first quarter.

La-Z-Boy also improved its profit picture by trimming the net loss margin in the retail segment to 6.9% from 13.9% in the 2010 quarter.

Total company sales in the quarter were $280.1 million. In its wholesale segments, upholstery segment sales rose 7.7% to $217.5 million and case goods fell 7.4% to $34.1 million. The operating margin was 5.1% in upholstery compared with 5% a year ago, while the case goods operating margin fell to 1.6% from 4.3%.

"With the summer period being seasonally the most challenging for the industry, we were pleased with the sales increase we experienced in both our upholstery and retail segments, particularly in light of ongoing macroeconomic challenges," said Kurt Darrow, president and CEO.

"Importantly, we continued to improve performance in our company-owned retail segment and remain encouraged by the increase in same-store sales for the La-Z-Boy Furniture Galleries store network. As we move into what is historically a stronger fall selling season, we believe we are well positioned to improve our overall performance as we leverage our operating structure while building the company's market share," he said.

Darrow added that the company remains pleased with its marketing program featuring Brooke Shields, "which we believe is driving a more qualified consumer to our stores." He also said the Mexico cut-and-sew operation continues to deliver savings to the upholstery segment.

He noted that the case goods volume decline was against a quarter a year ago when the company had a strong introduction of the Nickelodeon youth collection by Lea. The case goods segment also continues to face challenges in the current economy because of the higher price structure of the category, compared with upholstery, Darrow said.

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La-Z-Boy sales up 6.4% in Q1

Sep 3, 2011

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