MONROE, Mich. La-Z-Boy president and CEO, Kurt Darrow, has commented on business trends in anticipation of meeting with analysts and investors at the BB&T Capital Markets investor conference in San Francisco on Aug. 10.
Darrow stated, "Our results for the fiscal 2011 first quarter were impacted negatively by a number of factors, including higher raw material costs, supply chain disruptions and delays, Hurricane Alex, which affected shipping from our Mexican-based cut-and-sew operations and inefficiencies at the Mexico facility as we complete the transition of all custom cut-and-sewn product from our U.S. operations. In addition to seasonality playing a role in terms of overall volume levels during the quarter, the storm in Mexico washed out roads, delaying the transport of cut-and-sewn kits to our U.S.-based facilities. As a result of the supply chain disruptions and delays, our U.S. plants did not run as planned during July and we were required to move approximately $10 million of orders from production in July into August. Accordingly, we anticipate reporting relatively flat to slightly increased sales for the first quarter of fiscal 2011 and earnings per share in a break-even range."
Darrow continued, "Together, those factors prevented us from achieving previous operating efficiency levels during the first quarter of fiscal 2011. For the previous five quarters, we have demonstrated solid and consistent performance in our upholstery segment, reflecting the various lean initiatives and cellular production processes instituted throughout our operations. We believe many of the issues that reduced our first-quarter production levels are behind us. Raw material pricing has been on the decline from its peak in the May-through-June period, supply chain disruptions are being minimized and our Mexico facility is improving its efficiencies. Importantly, the issues faced during the quarter are not systemic to our business and historically our first quarter is not indicative of our performance for the remainder of the year. As an example, in last year's first quarter, we earned 4 cents per share and earned 62 cents for the full year."
La-Z-Boy Incorporated will announce its fiscal 2011 first-quarter results on Aug. 17.