La-Z-Boy Posts Loss on Sales Decline

June 16, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on June 2008 La-Z-Boy announced late Monday that sales for its fourth quarter declined 9.8 percent to $368 million, resulting in a $4.5 million loss. In the same period of last year, the company had income of $8.4 million.

For the year, La-Z-Boy’s sales totaled $1.5 billion, which was down 10.5 percent, and the company had a loss of $7.5 million compared to income of $19.8 million a year earlier.

President and CEO Kurt Darrow said, “In an operating environment that continues to be marked by challenges, fiscal 2008 was a transitional year for La-Z-Boy. We continued our momentum in making significant changes to our business model, including rationalizing our portfolio of operating companies, transitioning our La-Z-Boy branded manufacturing facilities to cellular production, closing several upholstery facilities, launching a new comprehensive marketing campaign, consolidating our retail warehouses and IT systems and strengthening our balance sheet by reducing our debt by 31 percent. We made tough decisions during tough times, and are confident our business model has the strength and stability for us to remain an industry leader going forward.”

Darrow said it will be some time before the home furnishings economy improves, and the company expects the second half of its May-to-April fiscal year to be stronger than the first half. For the full fiscal year, the company anticipates a 3 percent to 7 percent decrease in sales, with earnings per share in the range of 15 cents to 25 cents—not including restructuring charges or similar elements.

In the quarter, the loss of 9 cents per share included a restructuring charge of 4 cents per share related to the pending closing of its upholstery facility in Tremonton, Utah, and a share charge of 7 cents related to with a make-whole provision on private placements the company refinanced in February.

For the year, the loss of 15 cents per share included a gain of 9 cents related to anti-dumping duties payments the company received. There was also a charge of 10 cents related to the closing of factories and retail outlets, as well as a 10 cent charge for a write-down of goodwill.

The company’s retail sales in its 70 stores were down 10.2 percent in the quarter and produced an operating loss. Approximately 6.5 percent of the 10.2 percent loss resulted from the company’s exit from the Pittsburgh market. Darrow said consolidations in warehouse and IT systems eliminated redundant costs.

“While we cannot control the impact the economy is having on the home furnishings market, we are working to improve our close ratio and average ticket with every customer,” Darrow said, adding that the company is examining costs while experimenting with merchanting techniques in several stores to drive sales.