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LaZBoy Inc. Reports Operating Results (10-Q)

November 28, 2012 | About:
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10qk

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LaZBoy Inc. (LZB) filed Quarterly Report for the period ended 2012-10-27.

La-z-boy, Inc. has a market cap of $858.5 million; its shares were traded at around $16.14 with a P/E ratio of 16.8 and P/S ratio of 0.7.

Highlight of Business Operations:

Our Upholstery segment s sales increased $18.1 million in the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. Increased volume and selling price, in addition to changes in product mix drove the majority of the 7.5% increase in sales. We believe the increase in orders was a result of an effective promotional plan which drove increased volume for our La-Z-Boy branded business, as well as the improved performance of our network of retail stores, which includes our company-owned and independent-licensed stores.

Our Retail segment s sales increased $8.5 million in the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. Of this increase, $2.1 million was due to the acquisition of nine retail stores in the southern Ohio market on October 1, 2012. The remainder was primarily the result of an increase in traffic during the second quarter of fiscal 2013 as compared to the second quarter of fiscal 2012, as well as an increase in ticket count and an increase in average sales per ticket. We attribute these to enhanced effectiveness on the part of our sales staff as well as the continued benefit of our promotional plan which we believe drove a more qualified customer to our stores.

Our Upholstery Segment s sales increased $38.8 million in the first six months of fiscal 2013 compared to the first six months of fiscal 2012. Increased volume and selling price, in addition to changes in product mix drove the majority of the 8.4% increase in sales. We believe these improvements were a result of an effective promotional plan which drove increased volume for our La-Z-Boy branded business, as well as the improved performance of our network of retail stores, which includes our company-owned and independent-licensed stores.

Our Retail Segment s sales increased $16.8 million in the first six months of fiscal 2013 compared to the first six months of fiscal 2012. Of this increase, $2.1 million was due to the acquisition of nine retail stores in the southern Ohio market on October 1, 2012. The remainder was primarily the result of an increase in traffic during the first six months of fiscal 2013 as compared to the first six months of fiscal 2012, as well as an increase in ticket count and an increase in average sales per ticket. We attribute these to enhanced effectiveness on the part of our sales staff as well as the continued benefit of our promotional plan which we believe drove a more qualified customer to our stores.

Sales During the third quarter of fiscal 2012, we deconsolidated our last VIE due to the expiration of the operating agreement that previously caused us to be considered its primary beneficiary. Eliminations increased in the first six months of fiscal 2013 as compared to the same period in the prior year due to higher sales from our Upholstery and Casegoods segments to our Retail segment as a result of the increased volume in the Retail segment. Operating Loss Our Corporate and Other operating loss increased in the first six months of fiscal 2013 as compared to the first six months of fiscal 2012. The increased operating loss was mainly due to higher incentive compensation costs. The $2.7 million restructuring charge recorded in the second quarter of fiscal 2013 mainly related to fixed asset and inventory writedowns associated with the closure of our lumber processing operation in our Casegoods segment. Income Taxes Our effective tax rate for the first six months of fiscal 2013 was 36.5%. We recorded a substantial tax benefit during the first six months of fiscal 2012 as a result of releasing a portion of the valuation allowance relating to our U.S. federal and state deferred tax assets. Absent this discrete adjustment, our effective tax rate for the first six months of fiscal 2012 would have been 36.0%. Liquidity and Capital Resources Our sources of cash liquidity include cash and equivalents, short-term and long-term investments, cash from operations and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, meet debt service, and fulfill other cash requirements for day-to-day operations, dividends to shareholders and capital expenditures. We had cash and equivalents of $86.6 million at October 27, 2012, compared to $152.4 million at April 28, 2012. The decrease in cash and equivalents is attributable to investment purchases to enhance our returns on our excess cash, an acquisition of assets, an increase in restricted cash for letters of credit collateral, and timing of working capital increases.

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