La-Z-Boy links $5.8M net loss to writeoffs
By Larry Thomas -- Furniture Today, May 31, 2004
MONROE, Mich. — MONROE, Mich. — La-Z-Boy said a series of one-time charges and writeoffs, many related to its struggling case goods business, resulted in a net loss of $5.8 million in its fiscal year.
The second-largest U.S. furniture maker, which derives about 25% of its revenues from case goods, said the number included a net loss of $42.1 million in its fourth quarter, a period that included a $71.9 million writedown of the value of some of its assets.
Sales dropped 5.3% for the year ended April 24.
"It's a year that we are pleased to see behind us," said La-Z-Boy President Kurt Darrow during a conference call with securities analysts.
He said about $60.6 million of the writedown was related to intangible assets in its case goods business, with about half that figure linked to contract furniture for the hospitality market, which has suffered in recent years as hotel construction and remodeling slowed.
Case goods sales declined 11.5% for the quarter and 13.3% for the year, while upholstery increased 4.6% for the quarter but was off 2.7% for the year.
Companywide, sales were $544.2 million for the quarter and $2 billion for the fiscal year. That compares with $540.3 million and $2.1 billion, respectively, in the previous year.
Although he acknowledged that retail business "has not been anything fantastic" for the past five to six weeks, Darrow said order trends in both upholstery and case goods are positive.
"April was one of the more positive (High Point) markets in many years," he told analysts. "We landed a large number of new placements."
During the fourth quarter, he said the company acquired four La-Z-Boy stores in the Baltimore market and opened one new one there. The company now owns 36 of its 324 proprietary stores, and he said the company may buy more units in order to attain market-share goals in major metropolitan areas.
Darrow said 68 of the stores have been converted to the larger New Generation format and said 40 more new-format stores will be opened in fiscal 2005. About half those locations will be new stores and the remainder will be remodelings or relocations of existing stores, he said.
Sales typically improve about 25% once the new format is rolled out, and he said the 10 largest proprietary stores now generate more than $10 million each in annual sales.
| La-Z-Boy | |||
|---|---|---|---|
| Owns Alexvale, Bauhaus, England, Hammary, Kincaid and Ladd | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 4/24 | 2004 | 2003 | Change |
| Sales | $544,219,000 | $540,329,000 | 0.7% |
| Operating income | 36,682,000 | 43,190,000 | (15.1%) |
| Net income | (a)(42,055,000) | 25,109,000 | — |
| Earnings per share (b) | (0.80) | 0.45 | — |
| Year ended 4/24 | 2004 | 2003 | Change |
| Sales | $1,998,876,000 | $2,111,830,000 | (5.3%) |
| Operating income | 101,079,000 | 162,874,000 | (37.9%) |
| Net income | (a)(5,796,000) | (c)36,316,000 | — |
| Earnings per share (b) | (0.11) | 0.63 | — |
| (a) Includes a $71.9 million pretax charge for the write-down of intangibles in both periods and an $8.3 million extraordinary loss, the cumulative effect of an accounting change, in both periods. The 2004 quarter also includes a $2.5 million income tax benefit. (b) Based on average shares outstanding of 52.3 million in the 2004 quarter, 55.6 million in the 2003 quarter, 53.7 million in the 2004 year and 57.4 million in the 2003 year. (c) Includes a $59.8 million extraordinary charge, the cumulative effect of an accounting change. | |||
