Why La-Z-Boy's Shares Got Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of furniture slinger La-Z-Boy (NYSE: LZB  ) were getting put out on the sidewalk by investors today, falling as much as 14% after the company announced fiscal fourth-quarter results. Further fallout from La-Z-Boy's results could be seen throughout the furniture industry, as Ethan Allen (NYSE: ETH  ) dropped 11.5%, Furniture Brands (NYSE: FBN  ) slipped 2.4%, and Hooker Furniture (Nasdaq: HOFT  ) was down almost 3%.

So what: A quick glance at the numbers might make you think it was a darn good quarter for La-Z-Boy. Same-store-sales galloped ahead 10%, while earnings per share leapt from $0.19 last year to $0.37. However, the fourth quarter's bottom line benefited from a $0.19 boost from anti-dumping duties. After adjusting for that one-time gain, the $0.18 in per-share profit sharply missed the $0.26 that Wall Street expected. Total sales, meanwhile, slipped 3.4% to $327 million. Analysts were expecting $334 million.

Now what: The company chalked the less-than-stellar results up to a shorter operating period -- last year's fiscal fourth quarter had 14 weeks; the most recent had just 13 -- along with changes in the company's tax rate, and additional incentive compensation. Meanwhile, CEO Kurt Darrow highlighted the year's overall progress -- notably a 92% increase in operating income -- and the company's strong balance sheet.

Investors seem far more focused on the short term, though, and the fact that, after adjusting for writedowns in last year's fourth quarter, operating income clearly lost its momentum in the most recent quarter.

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