La-Z-Boy shares fall on profit decline

La-Z-Boy Inc.'s shares fell Wednesday after the furniture maker reported a drop in its fiscal fourth-quarter profit.

THE SPARK: La-Z-Boy reported after the market closed that its net income fell to $18.3 million, or 33 cents per share, for the quarter. The period included a 3 cents-per-share benefit, mainly due to foreign and state taxes. That was compared with $19.6 million, or 37 cents per share, earned in the same quarter last year. Last year's quarter included a 19 cent-per-share benefit related to anti-dumping duties.

Revenue increased 10 percent to $359.5 million from $327.4 million.

Company President and CEO Kurt Darrow did not issue a formal forecast, but said that the furniture industry typically experiences weaker demand during the summer months.

As a result, La-Z-Boy plants shut down for one week of vacation and maintenance during the first quarter, which ends in July. Darrow also said that its first quarter is usually its weakest in terms of sales and earnings due to the seasonal slump.

THE BIG PICTURE: La-Z-Boy, based in Monroe, Mich., sells its products directly to customers or through its chain of 313 owned and leased La-Z-Boy Furniture Galleries stores.

THE ANALYSIS: Raymond James analyst Budd Bugatch reaffirmed his "Strong Buy" rating on the stock and increased his target price to $24 from $21, saying the quarter was better than expected.

The analyst said that the company continues to increase its market share, improve its profitability and increase a key sales measure, despite a sluggish environment.

However, Bugatch lowered his first-quarter earnings estimates to 16 cents per share from 17 cents per share based on Darrow's comments. However, the analyst increased his full-year profit forecast by a penny to $1.12 per share.

SHARE ACTION: Shares of La-Z-Boy fell 76 cents, nearly 4 percent, to $19.52 by early afternoon Wednesday. Its stock remains at the upper end of its 52-week trading range of $10.95 to $20.36.