On June 19, Income Investor recommendation La-Z-Boy
- The overall sluggish furniture industry contributed to the company's 9.4% drop in sales. Upholstery, casegoods, and retail segments were the poorest performers.
- Despite the decline in both sales and earnings, overall costs improved significantly, increasing margins across the board.
- Management effectively managed the balance sheet in response to the weakening sales by reducing both debt and inventory and increasing cash reserves.
- Because of the difficult external environment, the company is currently operating in, management is offering yearly guidance and anticipates sales to be down 5%-10% with fiscal earnings in the range of $0.45 to $0.60.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q4 2007 |
Q4 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$406.9 |
$449.4 |
(9.4%) |
|
Net Profit* |
$8.5 |
($12.4) |
N/A |
|
EPS |
$0.16 |
($0.24) |
N/A |
|
Diluted Shares |
51.5 |
51.7 |
(0.4%) |
Get back to basics with the income statement.
Margin Checkup
|
Q4 2007 |
Q4 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
26.5% |
26.1% |
0.3 |
|
Operating Margin |
3.1% |
(0.8%) |
3.9 |
|
Net Margin |
2.1% |
(2.8%) |
4.8 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q4 2007 |
Q4 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$51.7 |
$24.1 |
114.7% |
|
Accounts Rec. |
$230.4 |
$270.6 |
(14.8%) |
|
Inventory |
$197.8 |
$238.8 |
(17.2%) |
|
Liabilities |
Q4 2007 |
Q4 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$68.1 |
$85.6 |
(20.4%) |
|
Long-Term Debt |
$111.7 |
$173.4 |
(35.6%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
YTD 2007 |
YTD 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$31.8 |
$37.9 |
(16.0%) |
|
Capital Expenditures |
$4.8 |
$7.5 |
(35.9%) |
|
Free Cash Flow |
$27.0 |
$30.4 |
(11.1%) |
Free cash flow is a Fool's best friend.
Related Foolishness:
- Foolish Forecast: Lifesaving La-Z-Boy?
- Foolish Forecast: Overachieving La-Z-Boy
- Bassett Bays
- How YOU Doin', Natuzzi?
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