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From Home Furnishing Business

La-Z-Boy Profits Jump 10% on Wholesale, Retail Growth

La-Z-Boy (NYSE: LZB) said profits rose 10% to $22.9 million or 47 cents per share in the quarter ended Oct. 28 on a 4.4% jump in sales.

The company said its retail and wholesale businesses both showed growth, and operating margins increased in its retail segment and case goods segment.

Consolidated sales for the quarter, the second quarter of La-Z-Boy’s fiscal year, totaled $393.2 million. That compares with $376.6 million in last year’s second fiscal quarter.

Same-store written sales for its La-Z-Boy Furniture Galleries network of retail stores rose 1.9%. Total sales from company-owned stores rose 8.7% to $116.7 million.

Wholesale sales in the upholstery segment were up 3% to $304.8 million, and sales were up 8.4% to $28.1 million in the case goods segment.

“We are pleased with our performance, particularly given the multiple external factors that influenced the quarter, including the hurricanes, Northern California wildfires and raw material pricing pressure, and are encouraged by the prospects for our business,” said Kurt Darrow, chairman, president and CEO. “The La-Z-Boy Furniture Galleries store network posted its third consecutive quarterly written same-store sales increase.  This bodes well as we move into the back half of our fiscal year which is a seasonally stronger sales period and where we will be able to maximize our supply chain efficiencies with additional volume.”

Darrow said the hurricanes and fires had a negative effect on sales of approximately 1%, which reduced earnings by about 1 cent per share.

“With respect to our operating margin, our cost reduction efforts and the timing of our price increases did not enable us to stay ahead of inflationary pressures we experienced for our three core raw material components of steel, poly and lumber,” he explained. “We have passed these costs through with an across-the-board price increase that will go into effect in December, and expect it to offset the raw material price pressure by the beginning of the calendar year.”

Two company-owned retail stores were opened during the quarter. The company now owns 147 of the 350 La-Z-Boy Furniture Galleries stores.

For the six months ended Oct. 28, sales totaled $750.3 million, up from $717.4 million in the first half of the previous fiscal year.

Six-month net income totaled $34.54 million or 71 cents per share. In the comparable period, the totals were $34.63 million or 70 cents per share.

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