Furniture maker and retailer La-Z-Boy (NYSE:LZB) reported a profit for its fiscal first quarter which was largely because of a tax benefit. Excluding this significant benefit, the company's profits were much more modest, though ahead of last year's first quarter results. Regardless, the market slammed La-Z-Boy shares, taking them down 13% after hours.

Investopedia Markets: Explore the best one-stop source for financial news, quotes, and insights.

Fiscal First Quarter
Reported income for La-Z-Boy in the first quarter was $45.5 million, or 85 cents per diluted share, compared to a loss of $216,000 or a zero EPS, in the year ago quarter. $43.4 million, or 81 cents a share, of the earnings was due to a tax benefit. Excluding that benefit, EPS would have been 4 cents. Revenue increased to $280 million from $263.3 million, a 6% increase. The revenue breakdown for La-Z-Boy was $217.5 million from its upholstered furniture business, a 7.7% increase. Retail revenue was $48.8 million, a 38.3% increase, Case goods furniture sales were $34.1 million, a 7% decrease. La-Z-Boy Furniture Galleries stores open at least a year turned in a 9.7% increase in revenue. The first quarter represents a slow period in the selling seasons of the company and the furniture industry.

Furniture Struggles
La-Z-Boy is not alone in struggling to ramp up profits in the furniture industry. Leggett & Platt (NYSE:LEG), known for its hefty dividend payout, manufactures components used in office and residential furniture, reported quarterly results in July which saw revenue climb by 8% on price increases but which did little to boost incremental profit. Inflation was the main concern for the company, though it did offset some of this with pricing.

Haverty Furniture (NYSE:HVT) also had tough going in its recent quarter, with sales off by 1.4% year over year, and showed a decrease of 1.3% for the first half of its fiscal year. Haverty reported a slightly larger loss of 4 cents per share compared to a loss of 3 cents per share in the year ago quarter. The home buyer stimulus factored into the year ago quarter, while pricing disciplines and cost controls resulted in a lower SG & A for this quarter, d but weren't enough to offset the recent quarter's loss. Management cited the ongoing difficulties in the housing industry having its impact on the retail furniture trade.

The office may be doing better than the home, though, as Steelcase (NYSE:SCS) has managed to benefit from a rising demand in office furniture. Steelcase has been growing revenue and margins despite the pressure of input costs. One home furnisher doing well is Ethan Allen Interiors (NYSE:ETH). In its latest earnings report that came out at the beginning of August, Ethan Allen showed a 9% year over year revenue increase for its fourth quarter, and a 32.7% jump in net income, excluding special items. Ethan Allen had a strong year with a 15.1% increase in net sales, while net income was in the black after a loss in last year's fiscal year. Ethan Allen has been strongly on the rebound and has been re-making itself. The industry overall has a long way to go, however.

The Bottom Line
The market's reaction to La-Z-Boy's quarter seems a bit harsh, as La-Z-Boy has been making strides in returning to profitability after a nearly disastrous recession. La-Z-Boy posted a profit in fiscal 2010 after a couple of hard years, particularly 2009. Obviously, any kind of rebound in the housing industry would help further, but even if the economy can simply hold its own for a while, the furniture sector can slowly continue to mend itself. La-Z-Boy isn't an Ethan Allen at the moment, but it continues to move farther and farther away from the brink of the financial precipice it was on. (So you've finally decided to start investing, but what should you put in your portfolio? Find out here. See How To Pick A Stock.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  2. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  3. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  4. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  5. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  6. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  7. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  8. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  9. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  10. Stock Analysis

    The Biggest Risks of Investing in Amazon Stock

    Find out which risks are most important to Amazon's shareholders. Learn which operational risks impact share prices and which financial risks affect investors.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!