Shares of La-Z-Boy jumped 22.1 percent Wednesday after the furniture maker reported quarterly earnings that easily topped analysts' expectations.
La-Z-Boy, which operates its biggest plant in Dayton, Tenn., said its customers have been shifting toward higher-priced and more profitable products for the company, such as leather.
America's no. 2 furniture manufacturer said profits rose in fiscal 2017 to $85.9 million, or $1.73 a share, up 8 percent from the $79.2 million, or $1.55 a share, earned a year ago
Overall sales were flat at $1.52 billion, compared to $1.525 billion a year ago. But La-Z-Boy said its consolidated operating margin was the highest in more than a decade and the profit results were well ahead of industry expectations of 46 cents per share.
La-Z-Boy's upholstery segment sales were $1.2 billion and had a 13.5 percent operating margin.
For the fourth quarter, La-Z-Boy had a profit of $27.9 million, or 57 cents a share, up 23 percent from $22.7 million, or 45 cents a share a year ago. Fourth quarter sales were $412.7 million, which compared with $417 million a year ago.
La-Z-Boy stock rose $5.80 per share to close Wednesday at $32.
"Our fourth quarter delivered a strong finish to the year, reflecting the culmination of many strategic initiatives, gaining momentum, coupled with the efficiencies of our manufacturing platform," Kurt Darrow, president and CEO of La-Z-Boy, told analysts in a call Wednesday. "Throughout the year, we continue to make strategic investments in the business to drive long-term growth. We increased the La-Z-Boy Furniture Galleries network as part of the 4-4-5 store build-out plan and acquired 14 La-Z-Boy Furniture Galleries store from independent dealers, adding to the growth of our company-owned retail business."
La-Z-Boy is building a $16 million innovation center next to its sprawling manufacturing plant in Dayton. The 70,000-square-foot center will serve as the innovation hub for the entire company, Darrow said during a groundbreaking for the facility in February.
Since coming to Dayton and opening a 300,000-square-foot plant in Rhea County some 40 years ago, La-Z-Boy has expanded to 1.2 million square feet and employs more than 1,300 workers in Rhea County.