La-Z-Boy Reports Fiscal 2014 First-Quarter Results
Fiscal 2014 first-quarter highlights:
- Consolidated sales for the first quarter increased 5.8% compared with the fiscal 2013 first quarter;
- Same-store written sales for the La-Z-Boy Furniture Galleries® store network increased 12.7% for the first quarter on top of a 9.2% increase in last year's first quarter;
- Consolidated operating income increased 94% to
$14.8 million from$7.6 million in the fiscal 2013 first quarter; - The upholstery segment posted an 8.7% operating margin versus 6.5% in last year's first quarter;
- The retail segment posted operating income of
$1.9 million , with a 2.9% operating margin, compared with an operating loss of$2.0 million , or a (3.5%) operating margin, in last year's first quarter; and - The company generated cash from operations of
$13.0 million during the quarter.
Sales for the fiscal 2014 first quarter were
Wholesale Segments
For the fiscal 2014 first quarter, sales in the company's upholstery segment increased 7.0% to
Darrow commented, "This quarter
Darrow added, "Sales in the casegoods segment remain challenged, although we do believe that as the housing market continues to improve, the wood business across the industry will be a beneficiary given it was the hardest hit in the macroeconomic downturn. We are continuing to evolve our product line and are aggressively shifting the style mix of our four casegoods brands, with the expansion of more casual and transitional design offerings, which we believe will appeal to younger consumers and better reflect today's casual lifestyle. On the operating side, although sales decreased for the quarter, our primarily variable cost structure enabled us to maintain profitability for the period."
Retail Segment
For the fiscal 2014 first quarter, retail delivered sales were
Darrow stated, "The performance in our retail segment has been on a steady upward trajectory and this quarter marks the 18th consecutive quarterly improvement over prior-year performance and third straight profitable quarter. We are particularly pleased that the segment was profitable in what is typically our seasonally slowest quarter. Increases in traffic and average ticket, as well as other key metrics, including a more favorable merchandising mix which enhanced our gross margin performance, led to improved results. Given the high fixed-cost structure related to SG&A in the segment, additional volume will allow us to leverage those costs nicely and further contribute to the blended margin we are achieving through our integrated retail model."
La-Z-Boy Furniture Galleries® Stores Network
System-wide, for the first quarter of fiscal 2014, including company-owned and independent-licensed stores, same-store written sales, which the company tracks as an indicator of retail activity, were up 12.7% versus last year's first quarter.
Total written sales, which include new and closed stores, were up 13.2% for the first quarter. At the end of the first quarter, the La-Z-Boy Furniture Galleries® store system was composed of 312 stand-alone stores.
For fiscal 2014, the La-Z-Boy Furniture Galleries® store network, including company-owned and independent-licensed stores, is planning for approximately 20 store projects, including openings, remodels and relocations. In the fiscal 2014 first quarter, one new store was opened, one store was relocated and two stores were closed. At the end of the quarter, 16 stores of the total 312 were in the new concept design format introduced in 2011.
Balance Sheet and Cash Flow
During the quarter, the company generated
Business Outlook
Darrow stated, "We are optimistic about the business of
Conference Call
Forward-looking Information
This news release contains, and oral statements made from time to time by representatives of La‑Z‑Boy may contain, "forward-looking statements." With respect to all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those we anticipate or project due to a number of factors, including: (a) changes in consumer confidence and demographics; (b) speed of economic recovery or the possibility of another recession; (c) changes in the real estate and credit markets and their effects on our customers and suppliers; (d) international political unrest, terrorism or war; (e) volatility in energy and other commodities prices; (f) the impact of logistics on imports; (g) interest rate and currency exchange rate changes; (h) operating factors, such as supply, labor or distribution disruptions; (i) any court actions requiring us to return any of the Continued Dumping and Subsidy Offset Act distributions we have received; (j) changes in the domestic or international regulatory environment; (k) adoption of new accounting principles; (l) severe weather or other natural events such as hurricanes, earthquakes, flooding, tornadoes and tsunamis; (m) our ability to procure fabric rolls and leather hides or cut-and-sewn fabric and leather sets domestically or abroad; (n) fluctuations in our stock price; (o) information technology conversions or system failures; (p) effects of our brand awareness and marketing programs; (q) the discovery of defects in our products resulting in delays in manufacturing, recall campaigns, reputational damage, or increased warranty costs; (r) litigation arising out of alleged defects in our products; (s) our ability to locate new La-Z-Boy Furniture Galleries® stores (or store owners) and negotiate favorable lease terms for new or existing locations; (t) our ability to successfully integrate acquired businesses and realize the benefit of anticipated synergies; and (u) those matters discussed in Item 1A of our fiscal 2013 Annual Report on Form 10-K 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, whether to reflect new information or new developments or for any other reason.
Additional Information
This news release is just one part of
Background Information
The corporation's branded distribution network is dedicated to selling
LA-Z-BOY INCORPORATED |
||||||
CONSOLIDATED STATEMENT OF INCOME |
||||||
First Quarter Ended |
||||||
(Unaudited, amounts in thousands, except per share data) |
7/27/13 |
7/28/12 |
||||
Sales |
$318,913 |
$301,501 |
||||
Cost of sales |
215,627 |
211,889 |
||||
Gross profit |
103,286 |
89,612 |
||||
Selling, general and administrative expense |
88,464 |
81,986 |
||||
Operating income |
14,822 |
7,626 |
||||
Interest expense |
136 |
173 |
||||
Interest income |
180 |
121 |
||||
Other income (expense), net |
536 |
(121) |
||||
Income before income taxes |
15,402 |
7,453 |
||||
Income tax expense |
5,467 |
2,758 |
||||
Net income |
9,935 |
4,695 |
||||
Net income attributable to noncontrolling interests |
(345) |
(297) |
||||
Net income attributable to La-Z-Boy Incorporated |
$9,590 |
$4,398 |
||||
Basic weighted average shares outstanding |
52,343 |
52,193 |
||||
Basic net income attributable to La-Z-Boy Incorporated per share |
$0.18 |
$0.08 |
||||
Diluted weighted average shares outstanding |
53,051 |
53,040 |
||||
Diluted net income attributable to La-Z-Boy Incorporated per share |
$0.18 |
$0.08 |
||||
Dividends declared per share |
$0.04 |
— |
LA-Z-BOY INCORPORATED |
|||||
CONSOLIDATED BALANCE SHEET |
|||||
(Unaudited, amounts in thousands) |
7/27/13 |
4/27/13 |
|||
Current assets |
|||||
Cash and equivalents |
$139,500 |
$131,085 |
|||
Restricted cash |
12,693 |
12,686 |
|||
Receivables, net of allowance of $19,944 at 7/27/13 and $21,607 at 4/27/13 |
139,186 |
160,005 |
|||
Inventories, net |
158,031 |
146,343 |
|||
Deferred income taxes – current |
20,414 |
20,640 |
|||
Other current assets |
27,125 |
30,121 |
|||
Total current assets |
496,949 |
500,880 |
|||
Property, plant and equipment, net |
113,254 |
118,060 |
|||
Goodwill |
12,837 |
12,837 |
|||
Other intangible assets |
4,838 |
4,838 |
|||
Deferred income taxes – long-term |
29,759 |
30,572 |
|||
Other long-term assets, net |
56,369 |
53,184 |
|||
Total assets |
$714,006 |
$720,371 |
|||
Current liabilities |
|||||
Current portion of long-term debt |
$7,564 |
$513 |
|||
Accounts payable |
52,449 |
50,542 |
|||
Accrued expenses and other current liabilities |
84,406 |
99,108 |
|||
Total current liabilities |
144,419 |
150,163 |
|||
Long-term debt |
393 |
7,576 |
|||
Other long-term liabilities |
74,608 |
70,664 |
|||
Contingencies and commitments |
— |
— |
|||
Shareholders' equity |
|||||
Preferred shares – 5,000 authorized; none issued |
— |
— |
|||
Common shares, $1 par value – 150,000 authorized; 52,489 outstanding at 7/27/13 and 52,392 outstanding at 4/27/13 |
52,489 |
52,392 |
|||
Capital in excess of par value |
247,738 |
241,888 |
|||
Retained earnings |
223,333 |
226,044 |
|||
Accumulated other comprehensive loss |
(35,745) |
(35,496) |
|||
Total La-Z-Boy Incorporated shareholders' equity |
487,815 |
484,828 |
|||
Noncontrolling interests |
6,771 |
7,140 |
|||
Total equity |
494,586 |
491,968 |
|||
Total liabilities and equity |
$714,006 |
$720,371 |
LA-Z-BOY INCORPORATED |
|||||
CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||
Quarter Ended |
|||||
(Unaudited, amounts in thousands) |
7/27/13 |
7/28/12 |
|||
Cash flows from operating activities |
|||||
Net income |
$9,935 |
$4,695 |
|||
Adjustments to reconcile net income to cash provided by (used for) operating activities |
|||||
Deferred income tax expense (benefit) |
700 |
(180) |
|||
Provision for doubtful accounts |
(1,245) |
669 |
|||
Depreciation and amortization |
5,847 |
5,486 |
|||
Stock-based compensation expense |
3,193 |
3,619 |
|||
Pension plan contributions |
— |
(1,160) |
|||
Change in receivables |
21,812 |
19,657 |
|||
Change in inventories |
(11,688) |
(23,273) |
|||
Change in other assets |
(1,193) |
(2,906) |
|||
Change in payables |
1,907 |
(4,546) |
|||
Change in other liabilities |
(16,248) |
(17,407) |
|||
Net cash provided by (used for) operating activities |
13,020 |
(15,346) |
|||
Cash flows from investing activities |
|||||
Proceeds from disposal of assets |
2,078 |
922 |
|||
Capital expenditures |
(3,216) |
(5,235) |
|||
Purchases of investments |
(6,432) |
(10,783) |
|||
Proceeds from sales of investments |
8,558 |
2,198 |
|||
Change in restricted cash |
(6) |
(6,931) |
|||
Net cash provided by (used for) investing activities |
982 |
(19,829) |
|||
Cash flows from financing activities |
|||||
Payments on debt |
(132) |
(2,121) |
|||
Stock issued for stock and employee benefit plans |
763 |
654 |
|||
Excess tax benefit on stock option exercises |
3,277 |
873 |
|||
Purchases of common stock |
(7,071) |
(4,012) |
|||
Dividends paid |
(2,110) |
— |
|||
Net cash used for financing activities |
(5,273) |
(4,606) |
|||
Effect of exchange rate changes on cash and equivalents |
(314) |
(25) |
|||
Change in cash and equivalents |
8,415 |
(39,806) |
|||
Cash and equivalents at beginning of period |
131,085 |
152,370 |
|||
Cash and equivalents at end of period |
$139,500 |
$112,564 |
|||
LA-Z-BOY INCORPORATED |
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SEGMENT INFORMATION |
|||||
Quarter Ended |
|||||
(Unaudited, amounts in thousands) |
7/27/13 |
7/28/12 |
|||
Sales |
|||||
Upholstery segment: |
|||||
Sales to external customers |
$224,352 |
$210,363 |
|||
Intersegment sales |
30,522 |
27,804 |
|||
Upholstery segment sales |
254,874 |
238,167 |
|||
Casegoods segment: |
|||||
Sales to external customers |
27,276 |
33,317 |
|||
Intersegment sales |
2,160 |
1,292 |
|||
Casegoods segment sales |
29,436 |
34,609 |
|||
Retail segment sales |
66,274 |
57,119 |
|||
Corporate and Other |
1,011 |
702 |
|||
Eliminations |
(32,682) |
(29,096) |
|||
Consolidated sales |
$318,913 |
$301,501 |
|||
Operating Income (Loss) |
|||||
Upholstery segment |
$22,236 |
$15,578 |
|||
Casegoods segment |
557 |
1,279 |
|||
Retail segment |
1,926 |
(1,988) |
|||
Corporate and Other |
(9,897) |
(7,243) |
|||
Consolidated operating income |
$14,822 |
$7,626 |
SOURCE
Kathy Liebmann, (734) 241-2438, kathy.liebmann@la-z-boy.com