Furniture seller La-Z-Boy Inc (NYSE:LZB) is up nearly four percent during mid-afternoon trading today, rising $1.05 to $27.80 at the time of writing. After the final bell yesterday, the Monroe, Michigan-based company released its second-quarter 2017 financial results – crushing Wall Street estimates on both the top and bottom lines, but declining compared to last year.
La-Z-Boy reportedly generated net income of 42 cents per share during the three-month period, one cent higher than the year-ago quarter and 4 cents above the consensus estimate. Net revenue was posted at $376.6 million, down from $382.9 million reported for the same quarter last year – but $0.6 million above analysts’ forecasts.
Operating margin grew from 8.7 percent in the second quarter of 2016 to 8.8 percent this year. The operating margin from La-Z-Boy’s upholstery business was 12.7 percent, the highest the company has ever reported – despite its upholstery department declining 3.3 percent year-over-year.
“While the consumer environment experienced weaker demand during the summer and early fall, macroeconomic indicators that generally bode well for discretionary spending and home furnishings remain positive,” said Kurt L. Darrow, La-Z-Boy’s Chairman, President and CEO. “With that as a backdrop, our advertising, merchandising and promotional plans remain intact as we strategically position the company to capitalize on what is typically a strong holiday selling season.”
La-Z-Boy said that, while volumes decreased, the average customer purchase was larger during the reported quarter.
The company called the consumer environment “choppy” over the last half-year, but expects that sales will be at least somewhat lifted during the end of the year as holiday-happy shoppers are expected to buy more furniture.
Mr. Darrow added that the company is taking steps and spending money to promote its long-term growth and profitability. Earlier in November, the company purchased nine La-Z-Boy Furniture Galleries locations from an independent dealer – as part of continuing efforts to expand its integrated retail platform. La-Z-Boy also inked a deal to acquire the license for its brand in the UK and Ireland, an agreement that was completed in the third quarter of the current fiscal year.
La-Z-Boy is also beefing up its marketing strategy, having produced two new television commercials starring Brooke Shields as its brand ambassador. The first commercial started airing in November, and the second will premiere early next year.
Apart from announcing its comparatively weaker sales data, La-Z-Boy told investors that it is boosting its quarterly dividend payment from ten cents to 11 cents. The payment date is slated for December 15, to shareholders of record on December 9.
The author does not have any positions in the above mentioned companies.
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