MONROE, Mich., Nov. 28, 2012 /PRNewswire/ -- La-Z-Boy
Incorporated (NYSE: LZB) today reported its operating results for
the fiscal 2013 second quarter ended October
27, 2012. The company also announced that it
reinstated its quarterly dividend.
Fiscal 2013 second-quarter highlights:
- Sales for the second quarter increased 4.8% compared with the
fiscal 2012 second quarter;
- Same-store written sales for the La-Z-Boy Furniture Galleries®
store network increased 13.3% for the second quarter;
- The upholstery segment's sales increased 7.5%, and its
operating margin was 8.4% versus 8.7% in last year's second
quarter;
- The company completed its acquisition of nine La-Z-Boy
Furniture Galleries® stores in the southern Ohio market on October
1, 2012;
- Delivered sales in the company-owned retail segment increased
16.1% (including the southern Ohio
and other new stores), and the segment's operating margin improved
to (0.9%) from (5.1%) in last year's second quarter. The delivered
sales increase of the same 83 stores included in last year's second
quarter was 10.2%;
- Consolidated operating income was $10.6
million, net of $2.7 million
of restructuring, compared with $12.2
million in the fiscal 2012 second quarter; and
- The company generated $13 million
in cash from operating activities.
Net sales for the fiscal 2013 second quarter were $322.3 million, up 4.8% compared with the prior
year's second quarter. The company reported net income
attributable to La-Z-Boy Incorporated of $6.6 million, or $0.12 per diluted share, after $0.03 in restructuring charges relating to the
company's casegoods segment, versus $7.9
million, or $0.15 per diluted
share in the prior-year period.
Kurt L. Darrow, Chairman,
President and Chief Executive Officer of La-Z-Boy, said, "During
the quarter, our overall sales performance outpaced industry
trends, led by a 13.3% same-store sales increase for the La-Z-Boy
Furniture Galleries® network of stores. We remain focused on
driving growth and increased profitability and, with an eye on the
future, continued to make strategic investments this quarter.
During the period, we increased our marketing spend on the brand
campaign, which we believe is delivering strong results, and opened
or remodeled several stores. This additional investment
during the quarter, coupled with increased incentive compensation
expenses stemming from improvements in sales and operating results,
affected our earnings for the period. As we move into the
back half of the fiscal year, we expect incentive compensation
expenses to have less of an impact compared to the first half of
the year. We are also pleased to be in a position to reinstate our
quarterly dividend to shareholders, which will be $0.04, demonstrating the faith our management
team and Board of Directors have in our business model and
strategy."
Wholesale Segments
For the fiscal 2013 second
quarter, sales in the company's upholstery segment increased to
$259.5 million from $241.4 million in the prior year's second
quarter. The upholstery segment's operating margin for the
quarter was 8.4% compared with 8.7% in last year's second
quarter. In the casegoods segment, sales for the fiscal 2013
second quarter were $34.5 million,
down 3.9% from $35.9 million in the
fiscal 2012 second quarter, and the operating margin for the
segment decreased to 2.6% from 5.5% in last year's second
quarter.
Darrow commented, "We continue to be pleased with the
effectiveness of our brand advertising campaign. Not only is
it driving a more qualified consumer to the store network, but we
are growing our stationary line of furniture at a faster rate than
our core recliner business, which is one of the key objectives of
the campaign. The fact that we offer a wide range of stylish,
on-trend upholstered furniture continues to resonate with the
consumer. On the production side, we are managing our
operations diligently to ensure efficiencies, while improving our
supply chain to provide more consistency in servicing our various
customers. On the merchandising side, we are focused on
ongoing innovation to drive growth and have been particularly
pleased with the success of our power line of products."
Darrow continued, "On the Casegoods side of the business, the
trend from last quarter continued with occasional furniture sales
outpacing the higher-ticket bedroom and dining room categories,
which across the industry are more challenged in this macroeconomic
environment. With respect to our Hudson, North Carolina manufacturing facility,
we began production in August of several new American Drew bedroom
groups, which is increasing capacity utilization at the
plant. Additionally, we are in the process of converting the
Hudson facility to a production
model that emulates the cellular structure at our La-Z-Boy branded
facilities. This new process will focus on assembling and
finishing component parts in smaller quantities than our current
operation. Our model will enable us to better service our
customers and reduce costs and finished goods inventory.
Along with these changes, we have closed our lumber processing
operations and will begin sourcing all wood parts. This will
result in lower overhead and operating costs moving forward.
We continue to believe that maintaining our domestic Casegoods
production with its customization and quick-ship attributes is
strategically important, providing the facility is operating
profitably.
Retail Segment
For the fiscal 2013 second quarter,
retail delivered sales were $61.2
million, up 16.1% compared with the second quarter of last
year. Excluding the southern Ohio and other new stores delivered sales for
the same 83 stores included in last year's second quarter increased
10.2%. The retail group continued to make progress in
its operating performance, posting an operating loss of
$0.6 million, with an operating
margin of (0.9%) compared with an operating loss of $2.7 million, or an operating margin of (5.1%),
in last year's second quarter.
Darrow stated, "Our retail segment continues on the path to
profitability, with this period marking the fifteenth consecutive
quarter of performance improvement. During the quarter, we
experienced an increase in store and web traffic, demonstrating our
advertising messages are reaching the consumer. We also
increased units per ticket, the average ticket and our In-Home
Design sales, all of which contributed to increasing the gross
margin. Additionally, on October 1,
2012, we completed the acquisition of the southern
Ohio market, which consists of
nine La-Z-Boy Furniture Galleries® stores in Cincinnati, Columbus and Dayton, and a supporting distribution
center. As reported previously, the southern Ohio operation has been a consistent solid
performer. This transaction brought our company-owned store
count to 97. We continued to invest in our company-owned
retail store system during the period and opened two new stores,
relocated one and remodeled one. Assuming business conditions
remain at current levels, we believe our retail segment will be
profitable for the second half of the fiscal year."
La-Z-Boy Furniture Galleries® Stores
Network
System-wide, for the second quarter of fiscal 2013,
including company-owned and independent-licensed stores, same-store
written sales, which the company tracks as an indicator of retail
activity, were up 13.3% versus last year's second
quarter.
Total written sales, which include new and closed stores, for
the second quarter were up 14.9%. At the end of the
second quarter, the La-Z-Boy Furniture Galleries® store system was
composed of 317 stand-alone stores.
Additionally, the La-Z-Boy Furniture Galleries® store network,
including company-owned and independent-licensed stores, plans to
open, remodel or relocate 10 to 15 additional stores throughout
fiscal 2013, of which three opened in the second quarter, two were
remodeled and two were relocated.
Balance Sheet and Cash Flow
During the quarter, the
company generated $12.9 million in
cash from operating activities and ended the period with
$86.6 million in cash and
equivalents. Since the end of fiscal 2012, we have increased
our longer term investments by $26
million, used $16 million of
cash to acquire the southern Ohio
business and increased our restricted cash by $7 million, which collateralized our Letters of
Credit. Total debt was $7.7
million. At quarter end, La-Z-Boy's
debt-to-capitalization ratio was 1.6% compared with 2.1% at the end
of fiscal 2012 and 6.8% at the end of the second quarter last
year.
Dividend
The company's Board of Directors reinstated
the dividend and declared a quarterly cash dividend of $0.04 per share on the company's common
stock. The dividend will be payable December 20, 2012, to shareholders of record as
of December 10, 2012.
Business Outlook
Darrow stated, "Although the
operating environment for the overall furniture industry remains
challenging, we believe our business model will provide for
profitable growth. We will continue to make strategic
investments in our brand advertising campaign, store system and
other areas that we deem critical to driving top-line growth,
retail profitability and conversion on increased volume. With a
vast network of La-Z-Boy branded distribution outlets, coupled with
a successful advertising campaign and lean manufacturing structure,
we are well positioned to capitalize on an improving economy,
particularly when housing and consumer confidence
strengthen.
Conference Call
La-Z-Boy will hold a conference call
with the investment community on Thursday,
November 29, 2012, 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
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 our share of certain Continued Dumping and
Subsidy Offset Act distributions; (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 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 2012 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 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://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-sec.
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://investors.la-z-boy.com/phoenix.zhtml?c=92596&p=irol-alerts&t=&id=&.
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 operating units in the Casegoods Group consist of two
groups, one including American Drew, Lea and Hammary, and the
second being Kincaid. The company-owned retail segment
includes 97 of the 317 La-Z-Boy Furniture Galleries® stores.
The corporation's proprietary distribution network is dedicated
to selling La-Z-Boy Incorporated products and brands, and includes
317 stand-alone La-Z-Boy Furniture Galleries® stores and 563
independent Comfort Studios® locations, in addition to in-store
gallery programs for the company's Kincaid, England and Lea operating units. Additional
information is available at http://www.la-z-boy.com/.
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
Second
Quarter Ended
|
(Unaudited, amounts in thousands, except per share
data)
|
|
10/27/12
|
|
10/29/11
|
Sales
|
|
$322,341
|
|
$307,679
|
Cost of
sales
|
|
222,032
|
|
211,896
|
Gross profit
|
|
100,309
|
|
95,783
|
Selling,
general and administrative expense
|
|
89,746
|
|
83,535
|
Operating income
|
|
10,563
|
|
12,248
|
Interest
expense
|
|
191
|
|
389
|
Interest
income
|
|
116
|
|
166
|
Other
income (expense), net
|
|
212
|
|
(108)
|
Income before income taxes
|
|
10,700
|
|
11,917
|
Income tax
expense
|
|
3,868
|
|
4,245
|
Net income
|
|
6,832
|
|
7,672
|
Net
(income) loss attributable to noncontrolling interests
|
|
(213)
|
|
198
|
Net income attributable to La-Z-Boy
Incorporated
|
|
$6,619
|
|
$7,870
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
52,356
|
|
52,055
|
Basic net
income attributable to La-Z-Boy Incorporated per share
|
|
$0.13
|
|
$0.15
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
53,268
|
|
52,475
|
Diluted
net income attributable to La-Z-Boy Incorporated per
share
|
|
$0.12
|
|
$0.15
|
|
|
|
|
|
LA-Z-BOY INCORPORATED
|
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
Six
Months Ended
|
|
(Unaudited, amounts in thousands, except per share
data)
|
|
10/27/12
|
|
10/29/11
|
|
Sales
|
|
$623,842
|
|
$587,773
|
|
Cost of
sales
|
|
433,921
|
|
411,062
|
|
Gross profit
|
|
189,921
|
|
176,711
|
|
Selling,
general and administrative expense
|
|
171,732
|
|
160,990
|
|
Operating income
|
|
18,189
|
|
15,721
|
|
Interest
expense
|
|
364
|
|
813
|
|
Interest
income
|
|
237
|
|
349
|
|
Income
from Continued Dumping and Subsidy Offset Act, net
|
|
—
|
|
322
|
|
Other
income, net
|
|
91
|
|
265
|
|
Income before income taxes
|
|
18,153
|
|
15,844
|
|
Income tax
expense (benefit)
|
|
6,626
|
|
(37,684)
|
|
Net income
|
|
11,527
|
|
53,528
|
|
Net income
attributable to noncontrolling interests
|
|
(510)
|
|
(122)
|
|
Net income attributable to La-Z-Boy
Incorporated
|
|
$11,017
|
|
$53,406
|
|
|
|
|
|
|
|
Basic
average shares
|
|
52,274
|
|
51,999
|
|
Basic net
income attributable to La-Z-Boy Incorporated per share
|
|
$0.21
|
|
$1.01
|
|
|
|
|
|
|
|
Diluted
average shares
|
|
53,169
|
|
52,458
|
|
Diluted
net income attributable to La-Z-Boy Incorporated per
share
|
|
$0.20
|
|
$1.00
|
|
LA-Z-BOY INCORPORATED
|
CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
(Unaudited, amounts in thousands)
|
|
10/27/12
|
|
4/28/12
|
|
Current
assets
|
|
|
|
|
|
Cash and equivalents
|
|
$86,608
|
|
$152,370
|
|
Restricted cash
|
|
9,792
|
|
2,861
|
|
Receivables, net of allowance of $23,032 at 10/27/12
and $22,705 at 4/28/12
|
|
154,025
|
|
167,232
|
|
Inventories, net
|
|
168,995
|
|
143,787
|
|
Deferred income tax assets – current
|
|
21,450
|
|
19,081
|
|
Other current assets
|
|
29,218
|
|
14,669
|
|
Total current assets
|
|
470,088
|
|
500,000
|
|
Property,
plant and equipment, net
|
|
115,009
|
|
114,366
|
|
Goodwill
and other intangible assets
|
|
18,010
|
|
3,028
|
|
Deferred
income tax assets – long-term
|
|
31,422
|
|
33,649
|
|
Other
long-term assets, net
|
|
50,688
|
|
34,696
|
|
Total assets
|
|
$685,217
|
|
$685,739
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Current portion of long-term debt
|
|
$368
|
|
$1,829
|
|
Accounts payable
|
|
52,011
|
|
56,630
|
|
Accrued expenses and other current
liabilities
|
|
79,969
|
|
91,300
|
|
Total current liabilities
|
|
132,348
|
|
149,759
|
|
Long-term
debt
|
|
7,375
|
|
7,931
|
|
Other
long-term liabilities
|
|
80,974
|
|
80,234
|
|
Contingencies and commitments
|
|
—
|
|
—
|
|
Shareholders' equity
|
|
|
|
|
|
Preferred shares – 5,000 authorized; none
issued
|
|
—
|
|
—
|
|
Common shares, $1 par value – 150,000 authorized;
52,416 outstanding
at 10/27/12 and 52,244 outstanding
at 4/28/12
|
|
52,416
|
|
52,244
|
|
Capital in excess of par value
|
|
236,248
|
|
231,332
|
|
Retained earnings
|
|
199,152
|
|
189,609
|
|
Accumulated other comprehensive loss
|
|
(29,820)
|
|
(31,281)
|
|
Total La-Z-Boy Incorporated shareholders'
equity
|
|
457,996
|
|
441,904
|
|
Noncontrolling interests
|
|
6,524
|
|
5,911
|
|
Total equity
|
|
464,520
|
|
447,815
|
|
Total liabilities and equity
|
|
$685,217
|
|
$685,739
|
|
LA-Z-BOY INCORPORATED
|
CONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
|
|
|
|
|
Six
Months Ended
|
|
(Unaudited, amounts in thousands)
|
|
10/27/12
|
|
10/29/11
|
|
Cash flows
from operating activities
|
|
|
|
|
|
Net income
|
|
$11,527
|
|
$53,528
|
|
Adjustments to reconcile net income to cash provided
by
(used for) operating
activities
|
|
|
|
|
|
Loss (gain) on disposal of assets
|
|
47
|
|
(139)
|
|
Deferred income tax benefit
|
|
(457)
|
|
(43,784)
|
|
Restructuring
|
|
2,686
|
|
166
|
|
Provision for doubtful accounts
|
|
654
|
|
2,118
|
|
Depreciation and amortization
|
|
11,239
|
|
12,372
|
|
Stock-based compensation expense
|
|
6,959
|
|
3,285
|
|
Pension plan contributions
|
|
(2,320)
|
|
(1,860)
|
|
Change in receivables
|
|
11,689
|
|
(1,418)
|
|
Change in inventories
|
|
(22,290)
|
|
(4,765)
|
|
Change in other assets
|
|
(6,090)
|
|
(2,993)
|
|
Change in payables
|
|
(4,619)
|
|
(1,034)
|
|
Change in other liabilities
|
|
(11,484)
|
|
2,046
|
|
Net cash (used for) provided
by operating activities
|
|
(2,459)
|
|
17,522
|
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
Proceeds from disposal of assets
|
|
985
|
|
221
|
|
Capital expenditures
|
|
(11,637)
|
|
(8,218)
|
|
Purchases of investments
|
|
(31,514)
|
|
(5,214)
|
|
Proceeds from sales of investments
|
|
5,684
|
|
5,160
|
|
Acquisitions, net of cash acquired
|
|
(15,863)
|
|
—
|
|
Change in restricted cash
|
|
(6,931)
|
|
—
|
|
Other
|
|
—
|
|
(681)
|
|
Net cash used for investing activities
|
|
(59,276)
|
|
(8,732)
|
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
Payments on debt
|
|
(2,255)
|
|
(4,860)
|
|
Payments for debt issuance costs
|
|
—
|
|
(390)
|
|
Stock issued for stock and employee benefit
plans
|
|
1,236
|
|
321
|
|
Excess tax benefit on stock option
exercises
|
|
1,025
|
|
—
|
|
Purchases of common stock
|
|
(4,012)
|
|
(1,542)
|
|
Net cash used for financing activities
|
|
(4,006)
|
|
(6,471)
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and equivalents
|
|
(21)
|
|
(48)
|
|
Change in
cash and equivalents
|
|
(65,762)
|
|
2,271
|
|
Cash and
equivalents at beginning of period
|
|
152,370
|
|
115,262
|
|
Cash and
equivalents at end of period
|
|
$86,608
|
|
$117,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY INCORPORATED
|
SEGMENT
INFORMATION
|
|
|
|
|
|
|
|
|
Second
Quarter Ended
|
|
Six
Months Ended
|
|
(Unaudited, amounts in
thousands)
|
|
10/27/12
|
|
10/29/11
|
|
10/27/12
|
|
10/29/11
|
|
Sales
|
|
|
|
|
|
|
|
|
|
Upholstery
Segment
|
|
$259,462
|
|
$241,400
|
|
$497,629
|
|
$458,862
|
|
Casegoods
Segment
|
|
34,528
|
|
35,943
|
|
69,137
|
|
70,074
|
|
Retail
Segment
|
|
61,198
|
|
52,711
|
|
118,317
|
|
101,525
|
|
VIEs, net
of intercompany sales eliminations
|
|
—
|
|
2,762
|
|
—
|
|
6,103
|
|
Corporate
and Other
|
|
628
|
|
817
|
|
1,330
|
|
1,411
|
|
Eliminations
|
|
(33,475)
|
|
(25,954)
|
|
(62,571)
|
|
(50,202)
|
|
Consolidated Sales
|
|
$322,341
|
|
$307,679
|
|
$623,842
|
|
$587,773
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
Upholstery
Segment
|
|
$21,790
|
|
$20,993
|
|
$37,368
|
|
$32,118
|
|
Casegoods
Segment
|
|
902
|
|
1,962
|
|
2,181
|
|
2,519
|
|
Retail
Segment
|
|
(575)
|
|
(2,683)
|
|
(2,563)
|
|
(6,061)
|
|
VIEs
|
|
—
|
|
(204)
|
|
—
|
|
363
|
|
Restructuring
|
|
(2,654)
|
|
(50)
|
|
(2,686)
|
|
(166)
|
|
Corporate
and Other
|
|
(8,900)
|
|
(7,770)
|
|
(16,111)
|
|
(13,052)
|
|
Consolidated Operating
Income
|
|
$10,563
|
|
$12,248
|
|
$18,189
|
|
$15,721
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE La-Z-Boy Incorporated