La-Z-Boy 3Q Profit Narrows on Softer Demand
Hurt by a continued slump in consumer confidence, La-Z-Boy (NYSE:LZB) said Tuesday that its third-quarter profit was cut in half amid lower sales.
The Monroe, Mich.-based company posted net income of $10 million, or 19 cents a share, compared with $11.2 million, or 21 cents a share, in the same quarter last year. Revenue for the maker of recliners and other types of furniture was $292 million, down 4.3% from $305.1 million a year ago, in line with Wall Street expectations.
Sales took a 2.1% hit from the deconsolidation of its southern California variable interest entity, and were further impacted by ongoing macro economic challenges related to housing slumps and consumer confidence, according to the company.
“We continue to execute effectively against our strategic objectives and achieved improved operating results in both the casegoods and retail business segments,” said La-Z-Boy CEO Kurt L. Darrow. “Although macro economic challenges continue to impact our overall business, we are cautiously optimistic the consumer is more confident in returning to the marketplace.”
Upholstery sales slipped 3.9% and its casegoods units fell 1.7%, partially offset by a 9.2% improvement in retail segment sales. The company attributed the lower wholesales to weaker demand during the weeks leading up to the holidays and higher prices for raw materials. It attributed retail gains to effective promotional plans that led to improved customer traffic.
Looking ahead, the company said it appears the consumer is more comfortable making larger ticket furniture purchases, as evidenced by a rebound in same-store sales. Until the housing sector strengthens, however, the company remains “guardedly optimistic” of a turnaround in the furniture market.