La-Z-Boy Q3 Sales Rise 8.4%

February 22, 2012  by in UnCategorized   

By Home Furnishings Business in Financial Reports on February 23, 2012

La-Z-Boy (NYSE: LZB) reported sales rose 8.4 percent--led by 10.7 percent growth in upholstery--to $316.5 million in its fiscal 2012 third quarter.

Net income for the period ended Jan. 28 jumped 50 percent to $15 million compared with third-quarter 2011. Almost a third of that income was due to a reduction of certain valuation reserves against the company's deferred tax assets, minor discrete tax adjustments, and anti-dumping duties.

"Our results for the quarter demonstrate we are successfully executing against our strategy to drive volume, retail profitability and conversion," said President and CEO Kurt L. Darrow. "During the period, we experienced sales increases in our upholstery and retail segments, achieved the twelfth consecutive quarter of performance improvement in our retail segment, posted an 8.6 percent same-store sales increase for the La-Z-Boy Furniture Galleries store system, and generated a 70 percent improvement in operating income. While still facing macroeconomic challenges, we believe the strength of our brand, store system and marketing campaign, combined with a lean and efficient cost structure, will continue to fuel improved overall corporate performance going forward."

For the quarter, La-Z-Boy's retail segment had delivered sales of $58.4 million, up 32.3 percent compared with the third quarter of last year. The delivered sales increase for the 67 stores included in last year's third quarter was 6.7 percent. The additional sales increase was mainly associated with our February 2011 acquisition of 15 stores in Southern California. The retail group posted an operating loss of $0.6 million, with an operating margin of (1.1 percent), compared with an operating loss of $2.8 million, or an operating margin of (6.2 percent) in last year's third quarter.  

"Our retail performance indicates we are on a solid path toward profitability as we continue to improve the results of the segment each quarter," Darrow said. "Once profitable, the value of the blended wholesale/retail margin inherent in the integrated retail model, will be clearly evident. During the quarter, we improved our average ticket through an increase in items per ticket as well as dollars per item. Importantly, our team continues to ensure consumers have a professional shopping experience and receive personalized service.  During the quarter, we continued to strengthen our merchandising strategies which helped to drive a 2.2 percentage point increase in the gross margin."

At the end of the third quarter, the La-Z-Boy Furniture Galleries store system included 309 stand-alone stores.

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