La-Z-Boy's 2Q falls short on costs

La-Z-Boy's 2nd-quarter results miss expectations; shares tumble after hours

Associated Press

MONROE, Mich. (AP) -- La-Z-Boy Inc. reported Wednesday that its fiscal second-quarter net income fell as investments in its business took a toll on its bottom line.

The quarter's results fell short of market expectations and La-Z-Boy's shares shed 13 percent in after-hours trading.

The Monroe, Mich.-based furniture company earned $6.6 million, or 12 cents per share, for the quarter that ended Oct. 27. That's down from $7.9 million, or 15 cents per share, in the prior year. The latest quarter included a restructuring charge that amounted to 3 cents a share.

Its revenue increased nearly 5 percent to $322.3 million from $307.7 million.

Analysts polled by FactSet were expecting the company to earn 20 cents per share after excluding one-time items. They expected revenue of $325.4 million.

La-Z-Boy CEO Kurt Darrow said the operating environment for the furniture industry remains challenging but the company's sales outpaced industry trends in the second quarter. That included a more than 13 percent increase at its stores open at least a year. That is considered a key indicator of a retailer's financial performance because it strips away the impact of recently opened or closed stores.

The company, however, spent more on marketing, store openings, incentive compensation and store remodels to build future growth and that cut into its earnings.

La-Z-Boy said it expects some of its expenses will moderate in the second half of its fiscal year but said it will continue to invest in its future growth.

"We are well positioned to capitalize on an improving economy, particularly when housing and consumer confidence strengthen," Darrow said.

Management said it remains confident in its business model and as a result, it reinstated its quarterly dividend. The 4 cent dividend will be paid Dec. 20 to shareholders of record as of Dec. 10.

La-Z-Boy's stock fell $2.16 to $14.01 in aftermarket trading following the release of the earnings report.

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