Restructuring Clears Path To Higher Profits

Article Excerpt

LA-Z-BOY INC. $13 (New York symbol LZB; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) is the world’s largest maker of reclining chairs. It also makes sofas, wall units and tables. Sales fell from $2.15 billion in 2002 (fiscal years end April 30) to $2.0 billion in 2004, due to the sale of its baby furniture division and growing competition from Asian furniture makers. Sales improved to $2.05 billion in 2005, but slipped to $1.9 billion in 2006. The company responded to the slower sales with a major restructuring plan. It replaced most of its domestic casegoods (wood furniture) operations in North America with cheaper imports. It also streamlined its upholstery business. If you exclude restructuring and other charges, La- Z-Boy’s earnings grew from $1.23 a share in 2002 to $1.67 in 2003, but fell to $0.47 in 2006. The company has completed most of its restructuring, and earnings should improve to $0.75 a share in fiscal 2007. The stock now trades…

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