La-Z-Boy earnings, sales hit by COVID-19 shutdowns

Staff photo by Tim Barber Rick Johnson, quality technician, inspects operation of the recliner before moving it to shipping in the standard La-Z-Boy recliner cellular team section of Plant 6 at the Dayton facility.

La-Z-Boy Inc. earnings in its most recent fiscal quarter topped Wall Street forecasts despite the closing of most of its stores and production during part of this spring due to the coronavirus.

The furniture maker on Tuesday reported fiscal fourth-quarter earnings of $2.3 million, or 5 cents per share. Adjusted for one-time gains and costs, earnings came to 49 cents per share.

The results surpassed Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 31 cents per share.

The furniture company posted revenue of $367.3 million in the period, which did not meet Street forecasts. Three analysts surveyed by Zacks expected $391.4 million.

"Our fourth quarter started with a 20.4% increase in written same-store sales for the entire La-Z-Boy Furniture Galleries network in February, and we experienced other examples of strength across our vast network of distribution," said Kurt L. Darrow, chairman, president and CEO of La-Z-Boy. "However, the trajectory of sales and earnings growth for the last two months of the year were significantly impacted by COVID-19 and mandated retail closures across North America."

The majority of La-Z-Boy stores closed for at least the last four weeks in the most recent fiscal quarter, and most closures extended into the first quarter of fiscal 2021.

"We temporarily closed the majority of our manufacturing operations, and managed all other expenses, including temporarily furloughing 70% of our workforce and dramatically reducing all other cash expenditures to preserve liquidity," Furrow said.

Those moves idled the 1,400 employees at La-Z-Boy's biggest plant located in Dayton, Tennessee. Most of those furloughed workers are now back on the job.

"We are pleased to have called back some 6,000 furloughed workers, who have eagerly returned or will return to work by July 1st," Furrow said. "However, we also made the decision to permanently close our Newton, Mississippi manufacturing facility and reduce our global workforce by approximately 10%. We deeply regret the impact of our actions on affected employees, but these moves are in the best long-term interest of the company."

For the year, the company reported profit of $77.5 million, or $1.66 per share. Revenue was reported as $1.7 billion.

La-Z-Boy shares have fallen 12% since the beginning of the year. Ahead of Tuesday's earnings report after the market closed, La-Z-Boy shares closed at $27.75, a decrease of almost 8% in the last 12 months.