Lazy La-Z-Boy

If asked about La-Z-Boy's (NYSE: LZB  ) prospects, you might think they would be pretty good. High gas prices have folks spending more time at home. World events have families huddled by their television sets. A comfortable La-Z-Boy recliner would fit in quite nicely, right?

Well, the reality is that La-Z-Boy is like one of its jammed recliners. It's stuck in an awkward position and having a hard time getting back up. Cheap imports and low demand have hurt the company. Last night, La-Z-Boy posted a loss for its fiscal fourth quarter, with revenue growth coming in flat.

Furniture companies can pan out as cozy investments. Hooker Furniture (Nasdaq: HOFT  ) is 62% higher since being recommended in Motley Fool Hidden Gems just last summer. Stanley Furniture (Nasdaq: STLY  ) has seen its sales grow for eight consecutive quarters. Clearly, the chaise malaise isn't universal.

La-Z-Boy has done the noble thing by eating its own cooking, buying back 3.4 million shares in fiscal 2004. However, too much of a good thing can be a bad thing, as the company's debt has grown during the process. It may be time to put the spoon down before its balance sheet gets even worse.

And while the company has seen sales pick up, particularly in its upholstery division, its operating margins remain pitiful. Share buybacks are honorable, but sales and profits matter. Far from sitting pretty, La-Z-Boy has problems that may ultimately test its financial fortitude.

Funny name, but Hooker Furniture has been a solid pick for Tom Gardner and his Motley Fool Hidden Gems members. Find out what Tom's picking up these days with a free trial.

Longtime Fool contributor Rick Munarriz has been in a jammed recliner before, but he reckons it wasn't the quality handiwork of a La-Z-Boy. He does not own shares in any of the companies mentioned in this story.