La-Z-Boy Reports Year-End, 1st Quarter Results

June 6, 2006  by in UnCategorized   

By Home Furnishings Business in Case Goods on June 2006 La-Z-Boy today reported a net loss of $10.3 million on sales of $508.4 million for the fourth quarter ended April 29.

The loss was attributed to a $23 million write down of intangible assets related to the consolidation of its upholstery operations.

For the year, net sales were $1.92 billion, down 6.4 percent from the prior year. The company posted a loss of $3 million for the year, compared to $37.2 million during fiscal 2005.

Kurt Darrow, president and chief executive officer, said the company’s upholstery operations hit an 8.9 percent margin and the case goods side of the business hit a 4.5 percent margin. Upholstery sales for the quarter were $361.6 million, a 12.5 percent decrease from the same period in 2005. Sales from the case goods segment were $113.4 million, down 8.2 percent from the comparable quarter last year.

“For the full year, our top line was impacted by two factors: supply chain challenges in the first half of the year when the hurricanes caused an industrywide shortage of foam and disrupted our operations; and macroeconomic issues which caused inconsistent demand in retail,” Darrow said. “From an operating margin perspective, although softness at retail persists, we gained traction in the second half of the fiscal year when many of the supply chain issues were behind us.”

Darrow said the company made progress in modifying its business model and the results are “coming to fruition.” He also said the company will focus on its retail side of the business with its network of La-Z-Boy Furniture Galleries.

For the quarter, sales from the company’s retail segment were $54.1 million, up 9.6 percent from the same quarter last year due to stores the company acquired. Sales for the year hit $213.4 million, an increase of 23.3 percent from fiscal 2005.

La-Z-Boy currently has 337 stores in its retail system, and the company owns 63. Darrow said the company plans to open seven new company owned stores and remodel and relocate 11 stores which will increase the number of its stores in the new footprint from 28 to 46.

“Retail remains an important element of our core strategy, and it will play an integral and additive role in our future, substantially impacting the earnings power of the company,” Darrow said.