La-Z-Boy sales drop again
By Larry Thomas -- Furniture Today, February 16, 2004
MONROE, Mich. — La-Z-Boy reported its fifth straight quarterly sales decline last week, but the nation's second-largest furniture producer said an improving business climate soon could reverse that trend.
President and CEO Kurt Darrow said the company currently has a noteworthy order backlog in its case goods and upholstery divisions, a good sign that business is improving at retail.
"We have seen some very positive trends in the last 90 days in our order velocity," he said during a conference call to discuss La-Z-Boy's results. "And we continue to believe there's a large pent-up demand for residential furniture."
For its third quarter ended Jan. 24, sales slid 3.6% to $492.2 million, while net income dropped 34% to $15.3 million, or 29 cents per share.
The numbers were at the high end of estimates the company provided last fall, but Darrow said they "remain far short of where we'd like them to be, and where we know they can and will be."
Upholstery sales, which account for more than 75% of total sales, essentially were flat in the most recent quarter, while case goods sales dropped 14%.
Darrow said the bulk of the case goods decline occurred in La-Z-Boy's contract business for the hospitality industry.
Case goods sales "would have been down in the mid-single digits" without the hospitality segment, he said.
"We continue the process of laying the groundwork that will enable us to achieve higher levels of sales growth and profitability," he said. "We believe these changes, together with the existing strengths of our company, position us to take advantage of what looks to be an improving furniture environment."
He said the company continues to generate about 50% of sales in its La-Z-Boy unit from the proprietary network of 322 La-Z-Boy Furniture Galleries stores.
He said 65 stores have been converted to the larger "new generations" format, and at least 20 locations will be converted annually for the next four to five years.
About 20 new stores will be opened in 2004, Darrow said.
| La-Z-Boy | |||
|---|---|---|---|
| Owns Alexvale, Bauhaus, England, Hammary, Kincaid and Ladd | |||
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 1/24 | 2004 | 2003 | Change |
| (a) Based on average shares outstanding of 52.9 million in the 2004 quarter, 56.8 million in the 2003 quarter, 54.1 million in the 2004 nine months and 58.1 million in the 2003 nine months. (b) Includes a $59.8 million extraordinary charge, the cumulative effect of an accounting change. | |||
| Sales | $492,167,000 | $510,539,000 | (3.6%) |
| Operating income | 26,040,000 | 39,561,000 | (34.2%) |
| Net income | 15,279,000 | 23,161,000 | (34.0%) |
| Earnings per share (a) | 0.29 | 0.41 | (29.3%) |
| 9 months ended 1/24 | 2004 | 2003 | Change |
| Sales | $1,454,657,000 | $1,571,501,000 | (7.4%) |
| Operating income | 64,397,000 | 119,684,000 | (46.2%) |
| Net income | 36,259,000 | (b)11,207,000 | 223.5% |
| Earnings per share (a) | 0.67 | 0.19 | 252.6% |
