La-Z-Boy is all about kicking back and relaxing. Though synonymous with the reclining chair, the company makes a range of upholstered furniture.
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La-Z-Boy, Inc for a retailer in a somewhat "luxury" area in the midst of housing declines and forclosures has been doing very well. They are a poster child for revamping, getting costs under control, managing advertising, and managing inventory. Threre is little not to like here from a retail perspective, but overall there is little upside here either. La-Z-Boy, Inc continues to surprise analysts, though the bar is fairly low and store traffic increases and EPS beats slightly. This genreates a "pop" from short covering and a slow decline.
Some of these plays burn me lately and I'm starting to avoid these short term plays. In this case the market is at a transition point as we finish off the year. It wants to pop for a rally and if it does La-Z-Boy is unlikely to participate further than what it did today and should get left behind by the S&P for a small CAPS gain. If the market collapses then stocks such as La-Z-Boy Inc has a habit of getting punished more than most stocks and I should get some good retrace.
This is a nice little company, but again I don't see the upside and given the market conditions I think it's worth a retrace play. Even with improved earnings the P/E is over 20 and the margins are still thin. Cash flow still relies on nearly perfect inventory management. It may take some time to play out, I'll be in my recliner easing back if this pick survives through the New Year and reality finally hits the markets.
Lost a paragraph somewhere:
I use to think that cutting your operations to genearate a short term profit was detriminatal in the long run. La-Z-Boy has been doing a good job proving me wrong. There is some opportunity to cut, if you're careful, and don't negate quality and customer service. Unfortunately too many companies do and lose customer support, adding to their demise.
Overall, however La-Z-Boy does not give guidance and despite a good quarters outcome, the 20% spike is excessive. Management also warned in their PR report (http://finance.yahoo.com/news/La-Z-Boy-Reports-Fiscal-2012-prnews-963322337.html?x=0)
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Darrow stated, "We expect the operating environment for the industry to remain challenging based on low consumer confidence levels, a depressed housing market and volatility in the financial markets. Against that backdrop, however, we believe the strength of the La-Z-Boy brand, the success of our marketing campaign and the efficiencies of our various operating platforms position us well going forward, and are confident the company will be able to capitalize on an eventual improvement in the marketplace. Importantly, we are continuing to execute against our strategic objectives and are investing in our business to deliver improved performance going forward."
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That's not 20% rosy. Retrace back to sub-$10 depending on the markets, maybe in the low $9's.
.I'm not a LazyBoy stockholder - am a recent customer however. Can tell you will never purchase LazyBoy again nor will I recommend to anyone I know.
Bought a living room set in January. After comparison shopping went to LazyBoy last. Found a set we liked but the recliner would need to be a custom order. The cost was approx $1000+ more than another comparable chain we went to prior - but we liked the pieces and did the deal right there. The showroom rep said 4-6 weeks for the custom order. Long story short after the fifth week we called the local showroom and corporate number. Item was scheduled to ship soon. After the sixth week I called the corporate number back. The item was not in production yet but would be soon. Voiced displeasure but they were indifferent. Received a call from "Beth" who informed me custom orders take EIGHT WEEKS and apologized for the misinformation given in the showroom. When the order was eventually scheduled to ship the second half of the balance was due. My wife went into pay and heard the same sales person telling another unsuspecting consumer that their custom order would take 4-6 weeks - the same thing she told us. At which point it was very evident this was a deceptive sales ploy. In all likelihood if they tell their prospective clients eight weeks no one will wait and shop elsewhere. Virtually two months to the day we ordered we took delivery (yesterday). Upon arrival (2) of the (4) pieces were damaged - including the piece we waited the eight weeks for. The delivery person called his supervisor Eric. Eric was going to call me to set up a time to repair. If I did not hear from Eric he gave me his (856) number to call. Naturally did not hear from Eric so I called the number. The number was temporarily out of service. Called the (800) number spoke with Linda. She took all the info. Issued a service ticket number and said someone would be there on Friday to repair. Shortly thereafter the local showroom sales person called to say the repair would not be on Friday because the replacement parts would not be here by then. I called the (800) back and spoke with Lauren K who requested pictures of the damage and would get back to me to confirmed she had received. She has yet to do that. Emailed the CEO Kurt Darrow (twenty-four hours ago) and have yet to receive even a form letter-type email attempting to blow sunshine up my ass.
Its very evident from a customer's point of view the "customer service" stops after they have your money. I paid more for a product that in my home looks like I bought at a scratch and dent store.
These are the types of incidences investors in a company do not hear about.