La-Z-Boy returns to profit for fiscal year

6/8/2005

MONROE - Rebounding from its first annual loss in three decades, La-Z-Boy Inc. reported yesterday that it had higher sales and a $37.2 million profit for its latest fiscal year.

The nation's second-largest furniture maker, which last year cut jobs and plants and began importing more of its wood furniture, said it had a profit of 71 cents a share for the fiscal year ending April 30, up from a loss of 11 cents a share, or $5.8 million, a year earlier.

Sales for the latest year hit $2.05 billion, up from $1.95 billion a year ago.

Company executives said the results showed its cost controls and sales moves were beginning to pay off.

"We are now prepared to enter our new fiscal year with a clearer focus on our core business," said Kurt Darrow, La-Z-Boy's president and chief executive officer.

"These changes are continuing to better align us with the three core elements of our business model, which are remaining the leading marketer, manufacturer, and distributor of upholstered furniture; being a marketer, distributor, and importer of casegoods furniture; and being the leading proprietary retailer of furniture."

The financial report was released after trading ended on the New York Stock Exchange. The firm's stock closed at 4 p.m. at $13.85, up 4 cents but nearer to its 52-week low than its high.

Helping the financial results were the sales of the Monroe firm's contract-furniture unit and idle manufacturing facilities and equipment, the company said.

The majority of La-Z-Boy's profit was made in the fourth quarter: $20.8 million, or 40 cents a share, on sales of $565.6 million, compared with a loss of $42 million, or 80 cents a share, on sales of $532.2 million for the same period a year earlier.

The financial picture was boosted a bit by the fact that its latest fiscal year had 53 weeks versus 52 the prior year and its fourth quarter was 14 weeks.

Affecting the results were one-time items such as a change in workers' compensation estimates, a reduction in allowance for doubtful accounts, a restructuring gain.

Also, higher prices for steel, plywood, and other raw materials hurt profits, the company said.

Earnings benefited by gains of nearly $7 million from the sale of some operations but were offset by a restructuring charge of $10.3 million. Sales also improved in its new-format stores.

A year ago, the Fortune 1,000 firm reported a slip in revenues as well as its first net loss since it began selling stock to the public in 1972.

Afterward, the maker of the famous reclining chair and other furniture began to work aggressively to shed its stodgy image in its products and its stores, it cut 645 jobs and shut three plants, and it decided to import most of its wood furniture from China instead of making it in the United States.

Mr. Darrow, who is to face analysts' questions today, said he is "cautiously optimistic" about the furniture industry this year and is pleased with improvements in his firm's operations.

He forecast single-digit growth in the current fiscal first quarter on top of last year's $455 million in sales.

But all is not well in the industry.

Furniture Brands International Inc., the biggest U.S. residential furniture company, said yesterday it will lay off at least 1,244 workers and close four plants in North Carolina, as well as import more of its goods from outside the country.

The St. Louis company said the increased imports and efforts to cut costs at its U.S. facilities are moves to increase its profit margins.