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Full-line vendor La-Z-Boy‘s sales for the fiscal 2017 first quarter ended July 16 dipped less than 1% to $340.8 million, but net income was up slightly to $13.8 million from $13.7 million in last year’s first quarter.
“Our manufacturing operations are running efficiently and when combined with other supply chain initiatives, we drove improved profitability for the fiscal 2017 first quarter, increasing consolidated operating margin to 6.4%,” said Chairman and CEO Kurt Darrow. “While we experienced flat sales for the quarter due to weaker demand at wholesale and inconsistent traffic throughout the La-Z-Boy Furniture Galleries store system, we are in an excellent service position for both our dealers and the consumer as we approach the traditionally stronger fall selling season.”
For the fiscal 2017 first quarter, sales in the company’s upholstery segment decreased 1.9% to $267.4 million versus the prior year’s first quarter. In the case goods segment, sales for the fiscal 2017 first quarter were $25 million, up 7% over last year’s first quarter.
“During the quarter, we achieved an 11.1% operating margin in the upholstery segment, some 200 basis points higher than in last year’s comparable quarter,” Darrow said.”The main performance drivers were improvements in procurement, plant efficiency and productivity, and we also benefitted from a slight shift in product mix. In our case goods segment, the operating margin for the quarter was 8.6%, versus 7.2% in last year’s comparable quarter, reflecting both improved volume, particularly as we gain traction with our newer more transitional collections and operating efficiencies.
“As we move into the early fall, we are optimistic about the prospects for upholstery and case goods collections introduced at the April Furniture Market in High Point. In particular, the iClean fabric collection introduced for our La- Z-Boy product line and the AD Modern group from American Drew were received enthusiastically by our dealer base. These products will arrive on retail floors in September.”
La-Z-Boy’s retail segment outpaced its wholesale business 10.5% during the first fiscal quarter to $95.7 million, but comparable store delivered sales were off 4.4% compared with last year’s basis of 108 stores. System-wide, for the first quarter of fiscal 2017, including company-owned and independent-licensed stores, same-store written sales, which the company tracks as an indicator of retail activity, were down 1.9% versus last year’s first quarter, which experienced a 5.3% increase.
“For fiscal 2017, we are planning for approximately 30 projects, including 12 net new stores, as well as remodels and relocations that include changing out old-format stores into the new concept design format, which is performing at the highest level of our three store formats,” Darrow said. “During the first quarter, the La-Z-Boy Furniture Galleries network opened five new stores, remodeled four, relocated one and closed one. In the second quarter of fiscal 2017, we are planning for three new stores and two remodels throughout the network.”
Looking ahead, Darrow believes La-Z-Boy is making the correct strategic investments to drive sales growth, profitability and returns to shareholders.
“In addition to the execution of our 4-4-5 store build-out strategy, we are working to increase other distribution channels, expand our share of the stationary upholstery category and capitalize on our integrated retail strategy through growing the number of stores owned by the company,” he said. “At the same time, we are developing a number of new growth strategies to take us well into the future as we capitalize on our brand strength and efficient operating platform.”
For the complete 8-K release, click here.
