Upholstery products maker La-Z-Boy Inc. (LZB), Tuesday reported a swing to profit in the first quarter, even as sales declined reflecting the difficult macroeconomic environment, helped by cost-cutting measures. Looking ahead, La-Z-Boy expects the operating environment to remain challenging for the remainder of the year. La-Z-Boy shares gained more than 6% in the after-hours trading, following the announcement of results.
The Monroe, Michigan-based company's first quarter net income attributable to La-Z-Boy Inc. was $2.00 million or $0.04 per share, compared to a loss of $8.54 million or $0.17 per share in the same quarter last year.
First quarter results include a $0.01 per share restructuring charge, primarily related to the consolidation of the company's casegoods facilities and the previously announced store closures within the retail segment.
On average, four analysts polled by Thomson Reuters expected the company to report a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
Quarterly sales declined 18.3% to $263.00 million from $322.00 million last year. Street analysts had a consensus revenue estimate of $321.65 million for the quarter.
Same-store written sales, which the company tracks as an indicator of retail activity, for the quarter were down 2.3%, while total written sales, which include new and closed stores dropped 8.4%.
Sales in the upholstery segment for the quarter decreased 17% year-over-year to $196.70 million from last year. Sales in the casegoods segment decreased 25.5% to $36.00 million from last year, while retail sales decreased 15.2% to $36.0 million from the year-ago period.
Operating income for the quarter was $3.00 million, compared to operating loss of 413.10 million last year.
Kurt Darrow, President and Chief Executive Officer, La-Z-Boy said, "In what is historically a weaker-demand quarter given seasonality issues, our results for the period demonstrate the effectiveness of the many structural changes we have made to our business combined with the major strategic initiatives implemented over the past several years."
During the quarter, the company generated $13.8 million in cash from operating activities and decreased debt by $11.7 million.
La-Z-Boy indicated further improving the efficiency of its upholstery segment as the Mexican-based cut-and-sew facility continues to expand its production capacity. The company expects to see cost savings early in calendar 2010, with the full benefit, estimated to be $20 million, realized in fiscal year 2011.
LZB closed Tuesday's trading at $7.41, up $0.45 or 6.47%, on a volume of 1.31 million shares on the NYSE. In after hours, the stock further gained $0.45 or 6.07%, trading at $7.86.
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