La-Z-Boy Incorporated (LZB) Earnings Report: Will Investors Rest Comfortably? HOFT & FLXS

The Q4 2014 earnings report for La-Z-Boy Incorporated (NYSE: LZB), a potential peer of other furniture stocks like Hooker Furniture Corporation (NASDAQ: HOFT) and Flexsteel Industries, Inc (NASDAQ: FLXS), is due out after the market closes on Tuesday. Aside from the La-Z-Boy Incorporated earnings report, it should be said that Hooker Furniture Corporation reported Q1 2015 on June 5th (they reported a double-digit income rise on higher sales in first quarter) and Flexsteel Industries, Inc reported Q3 2014 earnings on April 16th (they record net sales and net income). However and the last time around, investors did not like it when La-Z-Boy Incorporated reported quarterly profit of 32 cents a share that missed forecasts calling for a profit of 35 cents a share and they really did not like revenue missing expectations by 7.7%. The company is also doing some restructuring.

What Should You Watch Out for With the La-Z-Boy Incorporated Earnings Report?

First, here is a quick recap of La-Z-Boy Incorporated's recent earnings history from Yahoo! Finance:

Earnings HistoryApr 13Jul 13Oct 13Jan 14

EPS Est	0.28	0.15	0.26	0.35
EPS Actual	0.30	0.18	0.31	0.31
Difference	0.02	0.03	0.05	-0.04
Surprise %	7.10%	20.00%	19.20%	-11.40%

 

Back in mid February, La-Z-Boy Incorporated reported a 3% revenue rise to $350.4 million (short of consensus estimates for $378.74 million), same-store written sales for the company's Furniture Galleries store network increased 3.6% (far lower than the 11.8% increase in the third quarter 2013) and net income from continuing operations of $17.2 million, or $0.32 per diluted share, compared with last year's third-quarter results of $16.8 million, or $0.31 per diluted share, which included $0.04 relating to gains on the sale of investments and a related tax benefit. The Chairman/CEO commented:

"We believe the fundamental pace of our business and ability to improve our profitability on sales growth remains steady and unchanged.  During the third quarter, however, weather conditions did have some impact on sales, production and deliveries."

He latter added:

"While markets in the northeast and Midwest were challenged during the period, written sales in warmer climates and in those markets not impacted by severe weather conditions continued to exhibit strength."

And:

"We remain optimistic about our ability to continue to grow profitably in the future.  The cadence of our business remains strong, particularly as we head into the fourth quarter, which is historically our largest volume period, and roll out our Urban Attitudes collections."

This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenues of $368.12M and EPS of 0.32 - lower than the consensus EPS of $0.33 expected seven days ago and $0.34 expected sixty days ago.

On the news front and back in April, La-Z-Boy Incorporated announced it will restructure its casegoods business, which represents approximately 10% of revenue, by transitioning to an all-import model for its wood furniture – a nice way of saying they will import cheaper products from Asia. Specifically, La-Z-Boy Incorporated will discontinue casegoods production at its Hudson, North Carolina facility because too big given the level of demand in the US; exit the hospitality business as that furniture is also manufactured at the Hudson facility; market for sale its youth furniture business, Lea Industries, as it does not align with the company's long-term strategic objectives; consolidate and transition its warehouse and repair functions from its two North Wilkesboro, North Carolina facilities to Hudson.

Approximately 100 employees will be affected and La-Z-Boy Incorporated will take pre-tax charges in the range of $13 million to $15 million, or $0.15 to $0.17 per share after tax, of which approximately 75% is expected to be non-cash.  The majority of these charges will be incurred in the fourth quarter of the company's 2014 fiscal year and the remainder taken in the first half of fiscal 2015 while the Lea business will be reported as discontinued operations commencing with the fourth quarter of fiscal 2014.

What do the La-Z-Boy Incorporated Charts Say?

The latest technical chart for La-Z-Boy Incorporated shows a downward trend since the start of the year that has moderated in recent months:

A look at the long term performance chart shows that La-Z-Boy Incorporated has really outperformed Furniture Corporation and Flexsteel Industries, Inc:

A look at Hooker Furniture Corporation's technical chart also shows a downward trend since late last year while Flexsteel Industries, Inc has been trending downward since April:

What Should Be Your Next Move?

This time around, it will be harder to blame the weather for any revenue or earnings miss. In other words, La-Z-Boy Incorporated will need to show that its fundamentals otherwise remain sound – allowing investors to rest easily.