La-Z-Boy Sales Down 2.3" in First Quarter

August 16, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on August 2006 La-Z-Boy Inc. reported sales of $419.3 million for its first quarter of fiscal 2007, which ended July 29, a 2.3 percent decline from the same period last year, the company announced.

First-quarter net income for the period was $2.3 million, or $0.04 per share, compared to $3.2 million, or $0.06 per share, in the first fiscal quarter last year.

“We are encouraged by our ability to generate improved operating margins at the wholesale level on relatively flat volume during what is our historically slowest quarter due to seasonality factors,” said Kurt Darrow, president and chief operating officer. “While the environment continues to be challenging, we remain focused on our strategic objective of differentiating our brand through quality, style and service while offering customers choice, customization and quick delivery.

Additionally, growing and improving the performance of our proprietary store system is paramount to our longer term positioning in the marketplace.”

First-quarter upholstery sales were flat compared with the prior-year period, while the operating margin improved year over year from 4.9 percent to 5.8 percent. The La-Z-Boy branded business and England continued to outperform the smaller upholstery companies.

Case goods sales of $78.3 million were down 15.6 percent from last year’s first quarter, reflecting the difficult retail environment. The segment’s operating margin, at 3.8 percent, was relatively flat compared with last year’s margin of 3.9 percent on significantly lower volume.

Darrow said that the previously announced sale of the American of Martinsville contract company for $33.2 million resulted in a $1.3 million gain net of tax. Cash from the sale was used mostly for debt reduction.

For the quarter, the La-Z-Boy Furniture Galleries store system, which includes both company-owned and independent-licensed stores, opened one new store, relocated and/or remodeled six and closed four, bringing the total store count to 334, of which 159 are in the New Generation format.

“We are on track to open approximately 50 New Generation stores in fiscal 2007 and will add five new stores to the system in the second quarter, relocate or convert nine and close four,” Darrow said.

System-wide, for the second calendar quarter, including company-owned and independent- licensed stores, same-store written sales, which the company tracks as an indicator of retail activity, were down 5.5 percent and total sales, which includes new stores, decreased 2.7 percent.