Upholstery, retail group boost sales at La-Z-Boy

Larry Thomas -- Furniture Today, August 27, 2012

MONROE, Mich. - Driven by its upholstery and retail segments, La-Z-Boy said sales rose 7.6% in the quarter ended July 28.
     The company said upholstery sales were 9.5% higher than in the same quarter a year ago, while its company-owned La-Z-Boy Furniture Galleries stores recorded a 17% increase in delivered sales.
     Case goods sales, meanwhile, rose 1.4%.
     Total sales for the quarter - the first quarter of the company's fiscal year - were $301.5 million, up from $280.1 million in the same period a year earlier.
     Net income was $4.4 million or 8 cents per share. That was well below the $45.5 million or 85 cents per share posted in the same quarter last year, but the prior year period included a gain of $43.4 million or 81 cents per share because of a reduction in valuation reserves against the company's deferred tax assets.
     The company said upholstery sales were $238.2 million, up from $217.5 million in the same quarter last year, and the segment's operating margin was 6.5% - an improvement from 5.1% a year ago.
     Sales at the company-owned stores totaled $57.1 million, up from $48.8 million in the same quarter a year ago. The retail segment also reduced its operating loss to $1.99 million from $3.38 million in the comparable quarter. It marked the 14th consecutive quarter of improved operating performance.
     "We continue to increase our average ticket performance, leading to higher margins, while increasing our close ratio, and these factors drove our performance in the segment," said Kurt Darrow, chairman, president and CEO.
     Since the quarter ended, the company announced it plans to acquire nine La-Z-Boy Furniture Galleries stores in the Cincinnati, Dayton and Columbus, Ohio, markets for $18 million. The transaction, which will boost the company-owned store count to 94, is expected to close in October.
     At the end of the quarter, there were 312 freestanding La-Z-Boy retail stores. Darrow said the entire store network had a 9.2% jump in same-store written sales for the quarter.
     "We are pleased with our results for the quarter, particularly given the seasonal impact the summer period has on our industry," said Darrow. "As we expected, the pace of delivered sales in our upholstery and retail segments flowed through to delivered sales this quarter."
     He said the upholstery segment is continuing to show increased sales of stationary furniture, in addition to its iconic recliners, while the case goods segment is having greater growth in occasional.