Goodbye 2007. We hardly knew ya. Already, fiscal year line-jumper La-Z-Boy
Naught good, I fear
For Q1 2008, La-Z-Boy reported a 13% decline in sales to $344.4 million, and a $0.17-per-share loss (including $0.04 worth of restructuring charges), in contrast to last year's $0.04-per-share profit. Why all the bad news? According to CEO Kurt Darrow, "ongoing challenging business conditions pervasive throughout the furniture industry ... made it difficult to absorb our current fixed costs."
And yet, no sooner had Darrow uttered these words than CEO Farooq Kathwari of La-Z-Boy rival Ethan Allen
Confusing the issue, however, we also have Home Depot
There's furniture, and then there's furniture
Meanwhile, back at La-Z-Boy, upholstered furniture sales in particular bore the brunt of the "challenging" business conditions. Sales within this segment fell 14% year over year, and in confirmation of Darrow's observation about absorbing fixed costs, these fewer sales wrecked the segment's operating margins, which dropped 250 basis points to 3.5%. Taking this data, and wondering what it can tell us about the future, here's what I'm thinking now:
As you may recall, in February 2007, ex-Motley Fool Hidden Gems pick Hooker Furniture
That could be good for Hooker -- if it means Hooker stole market share from La-Z-Boy. It could also be bad -- if it means that upholstered furniture sales have taken a hard hit across the industry. Personally, I'm guessing at the latter, but we'll have to wait until Hooker reports early next month to be sure.
What did we expect out of La-Z-Boy last quarter, and what did we get? Find out in: