La-Z-Boy Loses $200,000 in First Quarter

August 17, 2010  by in UnCategorized   

By Home Furnishings Business in Financial Reports on August 18, 2010 La-Z-Boy Inc. (NYSE: LZB) reported a loss of $200,000 for the first quarter of 2011 ended July 24, compared to a profit of $2 million during the same quarter last year.

Net sales for the quarter were $263.3 million, flat when compared with sales from the same quarter last year.

Kurt Darrow, president and chief executive officer, said the company's financial results were impacted by higher raw material costs, supply chain disruptions, storms that delayed shipping from its Mexican operations and inefficiencies in Mexico as the company moved all of its cut-and-sew operations from the U.S. He said most of those issues have now abated and are not expected to impact the company for the rest of the year.

"Historically, with our first quarter seasonally our slowest period of the year, the mix of one-time external factors exacerbated the pressure on sales and earnings for the quarter," Darrow said. "We believe this is not representative of La-Z-Boy's performance going forward as we have a lean and efficient operating structure and are moving into what is typically a stronger selling season."

Sales in the company's upholstery segment for the quarter climbed 2.7 percent to $201.9 million, compared to $196.7 million during the first quarter of last year.

Sales in the case goods segment for the quarter increased 2.7 percent to $36.8 million from $35.9 million during the same quarter last year.

"As we anticipated, the changes we made to our cost structure last year are now flowing through to the bottom line," Darrow said. "Moving forward we will continue to identify further cost-savings initiatives throughout the business. Our team is working to strengthen our product offering and marketing strategies by focusing on key product categories within each brand."

For the company's retail segment, sales were down 1.8 percent to $35.3 million in the quarter. The retail group posted an operating loss for the quarter.

"We continued to strengthen the performance of our retail segment," Darrow said. "Combined with our improving trend in gross margin, we will continue to work to ensure our cost and selling structures remain lean in what continues to be a challenging sales environment. In the meantime, we are maintaining our marketing momentum to drive traffic to our stores and our sales team remains focused on increasing its close ratios and the average ticket."

Looking forward, Darrow expects the company to make progress despite low consumer confidence and high unemployment rates due in part to changes implemented in La-Z-Boy's operating structure.

"Our lean, efficient operations and strong network of branded distribution position us well in the current business environment," he said. "Going forward, we will continue to manage costs relative to volume levels and are focused on improving the performance of all three business segments, particularly as cost-savings initiatives, including efficiencies from the Mexico cut-and-sew center, accelerate throughout the year. Our first quarter is historically our lowest level of sales and operating profit and is therefore not indicative of the potential for full-year results."

Read the entire release on the La-Z-Boy Web site.