La-Z-Boy Net Falls 34 Percent in Second Quarter



MONROE, Mich.—Net income for La-Z-Boy dropped 34 percent in its fiscal second quarter, totaling $3.9 million.

Declines in sales and gross margin were to blame for the bottom-line shortfall in the quarter, which ended on Oct. 23. Net sales slipped 2.6 percent to $293 million, due largely to a 3.4 percent drop in sales in the upholstery segment. The retail segment posted an operating loss of $4.4 million, in spite of a 3.2 percent gain in sales, due to the ratio of lease expenses to sales and lower average tickets for sales.
Gross margin shed 235 basis points to finish the quarter at 29.1 percent, with most of the impact coming from higher costs of raw materials. La-Z-Boy did manage to keep a lid on expenses, with selling, general and administrative costs falling 5.9 percent in dollars and 96 basis points as a percentage of sales, to 27.2 percent.

Kurt Darrow, president and chief executive officer, noted that La-Z-Boy’s ability to control expenses kept its bottom line black in the quarter. “Importantly, with this lower-cost structure in place, we are focusing on initiatives to pave the way for future growth and market-share gains when the economy strengthens and consumers are more inclined to purchase big-ticket items,” Darrow said.