2nd Quarter Sales Fall 9.2% for La-Z-Boy

November 18, 2008  by in UnCategorized   

By Home Furnishings Business in Upholstery on November 2008 La-Z-Boy Inc., Monroe, Mich., reported on Tuesday that its second-quarter fiscal 2009 sales fell 9.2 percent from the same period last year to $331.9 million. La-Z-Boy lost $53.7 million for the period ended Oct. 25, compared with loss of $9.9 million in the prior-year quarter.

“Over the course of the quarter, we experienced a progressive decline in sales trends, particularly in October, as sales deteriorated in conjunction with the turmoil in the global financial and credit markets,” said Kurt Darrow, La-Z-Boy’s president and CEO. “The economic landscape, coupled with the already weak housing market and historically low consumer confidence levels, required us to take aggressive action to realign our operating structure with the current rate of orders.”

That action included the recent 10 percent reduction in all levels of the workforce, or 850 employees; and the closure of 15 to 20 mostly dealer-owned La-Z-Boy Furniture Galleries after La-Z-Boy Inc. withdrew credit support; reduction of 2009 capital expenditures buy about a third; and aggressive reduction of overall operating expenses and inventories to be in alignment with today’s sales volumes.

Second-quarter upholstery sales did rise 8.1 percent, but decreased volumes negatively affected operating margins, which fell to 3.3 percent from 7For the fiscal 2009 second quarter, sales in the company’s upholstery segment decreased 8.1% to $248 million 7.1 percent in last year’s second quarter.

In the second quarter, the La-Z-Boy Furniture Galleries store system opened one new store, relocated and/or remodeled one and closed four, bringing the total store count to 330, of which 219 are in the New Generation format. For the remainder of fiscal 2009, the network plans to open 10 New Generation format stores (two new stores and eight will be either remodels or relocations) and, with the withdrawal of credit, it anticipates closing 15 to 20.

System-wide, same-store written sales were down 4.7 percent. Total written sales, which include new stores, were down 4.6 percent. Additionally, same- store written sales for October were down over 17 percent.

Commenting on the company’s business outlook, Darrow said: “The instability that continues to define the overall macroeconomic environment points to the likelihood of a protracted recession. We are particularly concerned with the inconsistency and lack of visibility of our incoming order rates coupled with the consumer confidence index falling to its lowest level on record. With that as a backdrop, the company deemed it prudent to suspend yearly guidance at this time. We will continue to run our business to improve profitability in this uncertain economic environment.”