Is La-Z-Boy Stock Taking a Nap?

Source: Thinkstock

Source: Thinkstock

La-Z-Boy Incorporated (NYSE:LZB) is a very well-known company. It has been a household name for some time. For those who may be unfamiliar with the company, it manufactures, markets, imports, distributes, and retails upholstery products, accessories, and casegoods furniture products in the United States and Canada. The company also produces reclining chairs and manufactures/distributes residential furniture in the United States. It operates in three segments: Upholstery, Casegoods, and Retail segment. The Upholstery segment manufactures or imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans, and sleeper sofas. This segment sells directly to La-Z-Boy furniture galleries stores, operators of Comfort Studios locations, dealers, and other independent retailers.

The Casegoods segment imports, markets, manufactures, and distributes casegoods furniture, including bedroom sets, dining room sets, entertainment centers and occasional pieces, and upholstered furniture. This segment sells its products to dealers and other independent retailers. The Retail segment sells upholstered furniture, casegoods, and other accessories to the end consumer through the retail network.

The stock has been a real disappointment for shareholders year-to-date, shedding nearly 20 percent of its value. However, I expect the bleeding to continue as the company had weak sales, to which it essentially blamed the weather for, rather than taking ownership and stating it would make the company work. Lets review the numbers.

The company is still making money, but it is having trouble keeping pace with analyst estimates. Earnings were in-line for the quarter, but the company missed on revenues Sales for the fiscal 2014 fourth-quarter were $353.0 million, up 2.1 percent compared with the prior year’s fourth-quarter. The company reported income from continuing operations attributable to La-Z-Boy Incorporated of $14.6 million, or $0.27 per diluted share, including a $0.06 per share restructuring charge related to the company’s Casegoods segment. This compares with last year’s fourth-quarter results of $18.9 million, or $0.34 per diluted share, which included a $0.03 per share benefit due mainly to foreign and state taxes and $0.01 per share in an after-tax gain related to the sale of investments. Adjusted income from continuing operations attributable to La-Z-Boy Incorporated per share was $0.33 in the fourth-quarter of fiscal 2014, versus $0.30 in the fourth quarter of fiscal 2013.