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8-K - LA-Z-BOY INC | v174519_8k.htm |
EX-99.2 - LA-Z-BOY INC | v174519_ex99-2.htm |
EXHIBIT
99.1
NEWS
RELEASE
Contact: Kathy
Liebmann (734)
241-2438
kathy.liebmann@la-z-boy.com
LA-Z-BOY REPORTS
THIRD-QUARTER PROFIT
MONROE,
MI. February 16, 2010—La-Z-Boy Incorporated (NYSE: LZB) today
reported its operating results for the fiscal third quarter ended January 23,
2010.
Fiscal
2010 third-quarter highlights:
·
|
Net
income was $0.21 per share, including a $0.01 per share restructuring
charge and income of $0.05 per share in anti-dumping duties received on
wood bedroom furniture imported from
China;
|
·
|
Consolidated
sales increased 5.7%, led by a double-digit sales increase in the
company’s upholstery segment;
|
·
|
The
upholstery segment posted an 11.1% operating
margin;
|
·
|
The
retail segment’s performance continued to improve, with the operating loss
reduced by 42%, or $3.0 million, on relatively flat
sales;
|
·
|
The
company generated $22.7 million in cash from operations, including $4.4
million in anti-dumping duties, and increased cash on its balance sheet by
$20.5 million to $79.5 million.
|
Net sales
for the third quarter were $305.1 million, up 5.7% compared with the prior
year’s third quarter. The company reported net income attributable to
La-Z-Boy Incorporated of $11.0 million, or $0.21 per share, compared with a loss
of $64.5 million, or a loss of $1.25 per share, in the fiscal 2009 third
quarter. The 2010 third-quarter results include a $0.01 per share
restructuring charge, primarily related to costs associated with the
consolidation in the company’s casegoods facilities as well as the previously
announced store closures within the company’s retail segment. The quarter’s
results also include income of $4.4 million, or $0.05 per share, reflecting
anti-dumping duties received on imports of Chinese wood bedroom
furniture. This compares with $8.1 million in anti-dumping
duties received in the third quarter of fiscal 2009. Additionally, the
fiscal 2009 quarter was negatively impacted by charges totaling $60.5 million
for asset impairments and restructuring.
Kurt L.
Darrow, President and Chief Executive Officer of La-Z-Boy, said, “Despite the
ongoing challenging macroeconomic environment, our delivered sales increased
5.7% for the quarter. Although we are comparing the period to a
low-volume quarter last year, we believe the strength of the La-Z-Boy brand,
with the inherent quality associated with it, and our mid-price-point focus has
served our company well in this environment. We are also encouraged
that the consumer appears to be slowly returning to the
marketplace. Additionally, La-Z-Boy Incorporated has operated
profitably for four consecutive quarters in an industry that has faced
significant challenges, particularly over the past 16-month
period. This is a direct result of the ongoing execution and success
of strategic projects initiated over the last several years, which have improved
the efficiencies of our operations, combined with substantial cost reductions
throughout the organization. Our retail operation continues to make
progress and, again, greatly reduced its year-over-year
loss. Importantly, as we move into the fourth quarter of fiscal 2010,
we expect to begin realizing further cost savings from additional strategic
projects under way and look forward to experiencing their full benefit in our
results throughout the next fiscal year.”
Darrow
continued, “During the quarter, we continued to strengthen our balance sheet
and, as of the end of the fiscal 2010 third quarter, we had $79.5 million in
cash and essentially maintained the availability on our revolving line of credit
at $84.4 million. Although we continue to manage our business
aggressively with respect to cost controls, today our primary focus is driving
sales growth throughout each of our operating segments. With the
strides we have made in improving our operating efficiencies combined with the
La-Z-Boy brand remaining the strongest in the industry, we intend to capitalize
on our market position and will leverage our vast network of more than 800
branded outlets, which includes both La-Z-Boy Furniture Galleries® stores and
Comfort Studios®.
Upholstery
Segment
For the
fiscal 2010 third quarter, sales in the company’s upholstery segment increased
17.6% to $234.3 million compared with $199.2 million in the prior year’s third
quarter. However, in last year’s third quarter, La-Z-Boy shifted the
reporting of its retail warehouse operations to the upholstery
segment. This change affected the timing of inter-company revenue and
profit recognition for the Upholstery Group and resulted in a one-time reduction
in last year’s third quarter of inter-company sales and operating income for the
group of $12.1 million and $3.3 million, respectively, with corresponding
offsets recorded in consolidation. When accounting for the revenue
adjustment, the upholstery segment’s sales for the fiscal 2010 third quarter
increased by 11%. The adjustment had no impact on the
consolidated sales growth of 5.7% or our consolidated operating
profit.
Darrow
noted, “In addition to posting an adjusted 11% sales increase, which bodes well
for our company going forward, we achieved an 11.1% operating margin performance
in the upholstery segment, a significant increase from last year’s margin of
negative 0.8%, and an increase from this year’s second quarter on only slightly
higher sequential sales. Our results clearly demonstrate the
efficiencies of our operations, particularly throughout the La-Z-Boy branded
facilities, where we implemented the cellular production process and are
achieving the benefits we envisioned. Going forward, we expect to
further strengthen our operational efficiencies as our Mexico-based cut-and-sew
center continues to increase its production. We are on plan to be
transitioned by the end of fiscal 2010 and will begin to realize a portion of
the estimated $20 million in annual savings during this fiscal year’s fourth
quarter.”
System-wide,
for the third quarter of fiscal 2010 (November 2009 through January 2010),
including company-owned and independent-licensed stores, same-store written
sales, which the company tracks as an indicator of retail activity, increased
3.9%. Total written sales for the third quarter of fiscal 2010, which
include new and closed stores, decreased 1.9%. For the full calendar year 2009,
same-store sales decreased 5.7%. At the end of the third quarter, 308
stand-alone stores comprised the La-Z-Boy Furniture Galleries® system, of which,
68 stores were owned by the company.
Casegoods
Segment
Sales in
the company’s casegoods segment for the fiscal 2010 third quarter were $36.0
million, a 14.5% decline compared with $42.1 million in last year’s third
quarter. Darrow stated, “Even on a double-digit decline in sales, we
were able to generate a small profit, posting a 0.8% operating
margin. Although the casegoods business continues to be impacted more
severely than upholstery in challenging economic times, our team continues to
refine its operations and achieve efficiencies. We are on track to
realize $5 million in annual cost savings, based on current volumes, from the
manufacturing facility consolidation and the warehouse shift announced earlier
this year. We completed the consolidation of the two manufacturing
facilities into one in Hudson, NC, and the associated transition of our
warehouse facility is on schedule to be completed by the fiscal year
end. A small portion of the cost savings from these initiatives
was realized in the third quarter. Additionally, we are in the
process of consolidating our American Drew/Lea and Hammary
operations. The consolidation will be completed by the end of our
fiscal 2010 fourth quarter and will garner greater operational efficiencies and
allow us to better leverage the global supply chain.”
Retail
Segment
For the
fiscal 2010 third quarter, retail sales were $40.4 million, relatively flat
compared with $40.5 million in the prior-year period. The retail
group posted an operating loss of $4.1 million for the quarter, and its
operating margin was (10.2%). Darrow stated, “Our retail operation
continues to make progress in what remains a difficult operating
environment. During the quarter, we improved the segment’s gross
margin, demonstrated good cost disciplines and decreased our loss compared with
last year’s third quarter. On the front end of the business, the sales team is
focused on increasing the average ticket and close ratios and we have noted an
increase in customer traffic into our stores. Throughout the course
of the past year, our marketing initiatives have remained robust with
advertising designed to drive traffic into the La-Z-Boy Furniture Galleries®
network of stores, and we believe La-Z-Boy is gaining market
share.”
Balance
Sheet
La-Z-Boy’s
debt-to-capitalization ratio was 12.8% compared with 21.9% a year ago and 13.3%
at the end of the fiscal 2010 second quarter. During the quarter, the
company generated $22.7 million of cash from operations, including $4.4 million
in anti-dumping duties, increased its cash position and maintained a very low
debt level. The availability under La-Z-Boy’s revolving line of
credit was $84.4 million.
Business
Outlook
Darrow
stated, “While we remain concerned about various economic factors, particularly
unemployment and credit availability, we note some positive signs with respect
to La-Z-Boy’s same-store-sales figures, the strength of our upholstery sales
performance this quarter as well as continued progress in our retail
segment. As noted earlier, while we will remain mindful of cost
containment and controls, our entire organization is focused on driving sales
throughout all three segments of our business as we continue to pursue market
share gains to ensure La-Z-Boy Incorporated maintains a leadership position in
the industry. At the same time, we will continue to ensure that our
balance sheet remains strong to allow for the greatest operating flexibility
going forward.”
Conference
Call
La-Z-Boy
will hold a conference call with the investment community on Wednesday, February
17, 2010, at 8:30 a.m. eastern time. The toll-free dial-in number is
877.407.0778; international callers may use 201.689.8565.
Forward-looking
Information
Any
forward-looking statements contained in this news release are based on current
information and assumptions and represent management’s best judgment at the
present time. Actual results could differ materially from those anticipated or
projected due to a number of factors. These factors include, but are not limited
to: (a) changes in consumer confidence and demographics; (b) continued economic
recession in certain parts of the country and fluctuations in our stock price;
(c) changes in the real estate and credit markets and the potential impacts on
our customers and suppliers; (d) the impact of terrorism or war; (e) continued
energy and other commodity price changes; (f) the impact of logistics on
imports; (g) the impact of interest rate and currency exchange rate changes; (h)
operating factors, such as supply, labor or distribution disruptions including
changes in operating conditions, product recalls or costs; (i) effects of
restructuring actions; (j) changes in the domestic or international regulatory
environment; (k) the impact of adopting new accounting principles; (l) the
impact from natural events such as hurricanes, earthquakes and tornadoes; (m)
the ability to procure fabric rolls and leather hides or cut and sewn fabric and
leather sets domestically or abroad; (n) those matters discussed in Item 1A of
our fiscal 2009 Annual Report on Form 10-K and factors relating to acquisitions
and other factors identified from time-to-time in our reports filed with the
Securities and Exchange Commission. We undertake no obligation to update or
revise any forward-looking statements, either to reflect new developments or for
any other reason.
Additional
Information
This news release is just one part of
La-Z-Boy’s financial disclosures and should be read in conjunction with other
information filed with the Securities and Exchange Commission, which is
available at: http://www.la-z-boy.com/About/Investor-Relations/Sec-Filings/. Investors and others
wishing to be notified of future La-Z-Boy news releases, SEC filings and quarterly investor
conference calls may sign up at: http://www.la-z-boy.com/About/Investor-Relations/Email-Alerts/
Background
Information
La-Z-Boy
Incorporated is one of the world’s leading residential furniture producers,
marketing furniture for every room of the home. The La-Z-Boy Upholstery Group
companies are Bauhaus, England and La-Z-Boy. The La-Z-Boy Casegoods Group
companies are American Drew/Lea, Hammary and Kincaid.
The
corporation’s proprietary distribution network is dedicated exclusively to
selling La-Z-Boy Incorporated products and brands, and includes 308 stand-alone
La-Z-Boy Furniture Galleries® stores and 502 independent Comfort Studios®, in
addition to in-store gallery programs at the company’s Kincaid, England and Lea
operating units. Additional information is available at http://www.la-z-boy.com/.