La-Z-Boy Reports 12.6 Percent 1st Quarter Sales Decline

August 14, 2007  by in UnCategorized   

By Home Furnishings Business in Case Goods on August 2007 La-Z-Boy, Monroe, Mich., reported a 12.6 percent decrease in net sales during its first quarter together with a loss of $8.7 million, or 17 cents per share, including a restructuring charge of 4 cents per share. Net sales totaled $344.4 million during the quarter that ended July 28.

President and CEO Kurt Darrow said the company’s performance during the quarter—which is always La-Z-Boy’s slowest period—“is not indicative of our expectations for the full year.” In addition, Darrow said order rates perked up during the third month of the reporting period, and he reiterated the company’s expectation that sales for the full year will be down 5 percent to 10 percent from last year.

Commenting on the results, Darrow said, “Against the backdrop of ongoing challenging business conditions pervasive throughout the furniture industry, our results reflect a significant drop in volume, which made it difficult to absorb our current fixed costs.”

Same-store written sales across the company’s network of 333 La-Z-Boy Furniture Galleries stores declined 7 percent, including both company-owned and licensed locations. La-Z-Boy’s announcement said its retail group posted an operating loss for the quarter due to significantly lower sales.

“We are making ongoing changes to our retail business model,” Darrow said. “We are removing significant costs through the consolidation of our warehouses and IT systems and are opening additional stores to garner better penetration in each market. However, for our performance to improve to an acceptable range, our current base of stores needs to perform at higher volume levels.”

While the company expects sales for the full year to be down by at least 5 percent, it is projecting that earnings per share will be in the range of 45 cents to 60 cents compared with 38 cents last year. The estimate for this year does not include restructuring charges, proceeds from the sale of discontinued operation or what the earnings statement termed “potential income from any anti-dumping monies.”