La-Z-Boy 4Q: Sales Up 9%, Profits Down

June 21, 2011  by in UnCategorized   

By Home Furnishings Business in Financial Reports on June 22, 2011

La-Z-Boy (NYSE: LZB) reported fourth-quarter 2011 sales of $338.9 million a 9.1 percent increase over the prior year period.

Net income of $10.3 million for the quarter ended April 30 was off 26.3 percent from fourth-quarter 2010. For the 53-week period fiscal 2011, sales of $1.19 billion were up only slightly from 52-week 2010's $1.18 billion. Net income for the 2011 fiscal year, $24 million, fell 26.5 percent from the prior year.

The upholstery segment's sales increased 9.8 in the fourth quarter, of which approximately 8 percentage points related to the additional week, and its operating margin was 10.3 percent versus 11.9 percent in last year's fourth quarter.

The casegoods segment's sales increased 8.6 percent in the fourth quarter, of which approximately 8 percentage points related to the additional week, and its operating margin was 5.2 percent compared with (0.6) percent in the previous year's fourth quarter.

The retail segment's fourth-quarter sales increased 48.6 percent, of which approximately 8 percentage points related to the additional week and 24 percentage points was a result of the 15 Southern California stores added to the company-owned segment in the fourth quarter. The sales increase of the core 68 stores was 16 percentage points and the segment's operating margin improved to (5.2) percent compared with (12) percent in last year's fourth quarter.

"Although the overall macroeconomic environment remains challenging, we experienced sales momentum in the fourth quarter across all three segments, particularly in our retail segment where sales increased significantly over last year's quarter, even without the additional week," said Warren, Mich.-based La-Z-Boy President and CEO Kurt Darrow. "Our upholstery group achieved a double-digit operating margin and we continue to be encouraged by the La-Z-Boy Furniture Galleries store network's same-store sales comparison of 11.8% for the quarter. Although headwinds remain throughout the industry, particularly as we go into the slower summer period, we will continue to execute against our strategic initiatives and believe we are well positioned to capture market share and grow our business profitably as the environment improves."

Looking ahead at business conditions, Darrow is "encouraged by the sales performance for the quarter in each of our three operating segments as well as our same-store sales improvement. Importantly, our efficient operating structure will allow us to show profitable conversion rates on any increase in volume. Going forward, our industry-leading brand, coupled with our network of La-Z-Boy Furniture Galleries stores and Comfort Studios, position us well to further capitalize on a strengthening of the economy, particularly as it relates to consumer confidence and housing. We believe our new brand platform will continue to drive qualified traffic to our dealer network and, importantly, we will continue to invest in our business.

"Although the spring period showed some strength, from a seasonality perspective, the industry experiences weaker demand throughout the summer period and, as a result, our plants shut down for one week of vacation and maintenance during the first quarter, which ends in July. Accordingly, our first quarter is typically the weakest in terms of sales and profits because we ship product for 12 weeks instead of the normal 13 weeks."

Click here for the complete earnings release.