La-Z-Boy's Lazy Earnings, Tesla's Hot News, and Why Housing Stank

Good morning, good lookin'... The three things you need to know on June 18th are:

Jun 17, 2014 at 11:00PM
Clint Dempsey's kicks had you feeling good Monday. So Wall Street responded strongly on Tuesday, as the Dow (DJINDICES:^DJI) gained 27 points, while investors await the Fed's Wednesday interest rate news.

1. La-Z-Boy sinks on uncomfortable sales
Lean back, relax, and sink into a couple hundred pounds of plush leather comfort while you read about the quarterly performance of cozy furniture-maker La-Z-Boy (NYSE:LZB). Shares of LZB plummeted 11.4% in after-hours trading Tuesday afternoon on word that same-store sales fell nearly 1% during the last three months, following last year's 11% jump.

Passing out in a La-Z-Boy's hug feels awesome. So what's the problem? Shelves. LZB's "casegoods" (like bookcases) business represents 10% of its revenue, but the company has incurred some serious costs as it transitions it to an "all-import" model -- no more "Made in America" shelves for the La-Z-Boys.
The takeaway is that the market for absurdly sized furniture with an absurd brand name seems to be shrinking. In fact, La-Z-Boy also admitted that the company will shockingly close its plants for a whole week this quarter, not because they're lazy, but because summer is such a slow season for them.

2. Tesla stock pops on New Jersey law change
Tesla cars are coming to a lot near you... thanks to legislation by the New Jersey General Assembly to give Tesla (NASDAQ:TSLA) a free pass on the requirement that dealerships be independent of car manufacturers. It's still awaiting Senate passage, and Chris Christie's signature (Elon Musk is calling in a Krispy Kreme bribe), but the stock jumped 3% Tuesday on positive signals from lawmakers.

State law forbids carmakers from selling directly to customers. Instead of buying from Ford, you need to buy through Monaghan Ford and their "crazy-Presidents-Day-deals-of-a-lifetime." Why? Historically, this law is meant to protect consumers by preventing the car manufacturers from manipulating prices and creating greater competition through dealers.
Just like strip clubs, you can touch, but you can't buy in Jersey. Tesla tightly controls its brand and marketing through "showrooms" -- and in New Jersey, Tesla showrooms are for show only right now because of the law. But if the new legislation passes Tuesday, it will give Tesla four of its own dealerships where it can sell cars in the Garden State.
The takeaway is that states are still afraid to let carmakers sell directly to you, but they're making a Tesla exception. New Jersey and Pennsylvania are both rewriting laws as politicians eagerly attach themselves to the progressive "do their part to help Tesla save their state with green cars" spiel. The New Jersey legislation signals that weird car dealership laws won't get in the way of their growth.

3. Housing starts drop big-time in May
Kim and Kanye may have shacked up post-wedding... but it wasn't enough to help the U.S. housing market maintain consistent growth. According to the Commerce Department, construction on new homes (aka "Housing Starts") fell 6.5% in May, fresh after jumping 12.7% in April, for its first decline in four months.

The takeaway is that 2014 has been tough for the housing market. After getting smacked during the '08 recession, U.S. housing turned around in 2012, and gained momentum throughout 2013. But as interest rates rose slightly and winter weather froze homebuyers to start 2014, home sales and construction have struggled to maintain growth so far this year.

As originally published on

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