La-Z-Boy (LZB 31.58, -1.67, -5.03%) is trading about 5% lower today
after fourth quarter sales did not accelerate as quickly as the market had
anticipated, and earnings narrowly beat market expectations even with a tax
Jumping right into the fourth quarter results, consolidated sales were up 1.8% to $420.03 mln on same-store written sales for the La-Z-Boy Furniture Galleries network. which grew 3.9%. On the core base of 138 stores included in last year’s fourth quarter, delivered sales declined 1.1% versus the year ago period. For the fourth quarter of fiscal 2018, total written sales from new and closed stores increased 5.4% compared with the fourth quarter of fiscal 2017.
Earnings per diluted share in the fourth quarter increased to $0.72 and included a $0.06 per share benefit related to tax reform and consolidated operating margins were up 40 basis point to 10.9%.
Sales in the company’s upholstery segment were up 0.6% to $327.2 mln and the operating margin was 12.8% compared with 13.7% in last year’s fourth quarter. In the casegoods segment, sales grew 17.5% to $30.6 mln and the operating margin increased to 9.2% from 7.8%. Sales in the retail segment increased 3.0% to $121.5 mln and the operating margin increased to 6.6% from 6.5%.
For fiscal 2019, LZB expects total capital expenditures to be in the range of $55-65 mln, higher than in fiscal 2018 due to the construction of a new corporate office building and plant expansion for the company's England subsidiary; plant upgrades to their manufacturing facility in Dayton, Tennessee; and the relocation of one of its regional distributional centers, all of which it anticipates being completed by the end of this fiscal year.
For the first quarter, LZB notes that this period is typically the weakest in terms of sales and earnings due to a general slowdown throughout the furniture industry related to the summer period. As a result of this, the majority of the company’s manufacturing facilities will close for a week in July for vacation and maintenance. With lower volume during the period in addition to the one week without production and shipments, the company historically converts at a lower rate during the first quarter.
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