MONROE, MI - Residential furniture makers La-Z-Boy and Nova LifeStyle offered an upbeat forecast during their earning call, but office and contract furniture comglomerate HNI (Hon, Allsteel, etc.) is anticipating a slowdown on the horizon. All three had a strong 3rd quarter.
La-Z-Boy, Nova LifeStyle and HNI all reported strong results in sales or profits. But while La-Z-Boy and Nova LifeStyle see sunny sales momentum late in the year, HNI is preparing for storm clouds.
La-Z-Boy margins up nearly 10%
In reporting its Fiscal 2016 results last week for the quarter ended October 24, 2015, La-Z-Boy said its consolidated operating margin rose 8.7% from 8.3% in the fiscal 2015 second quarter . Consolidated operating income increased 10.6% to $33.4 million, compared to the same quarter last year.
La-Z-Boy is changing many of its stores to appeal to younger, hip urban customers by giving a facelift to its showrooms and running edgier ads.
CEO Kurt L. Darrow remarked, "For the quarter, we improved our overall performance and achieved a consolidated operating margin of 8.7%, driven primarily by efficiencies within our manufacturing facilities and supply chain, as well as strong retail execution. With sales trends accelerating throughout the period, we are pleased to enter the third quarter with momentum.
"As part of our multi-faceted growth strategy, during the period, we increased the size of our company-owned retail segment with the acquisition of 10 La-Z-Boy Furniture Galleries stores from independent dealers. Additionally, three new stores were opened across the network as part of our 4-4-5 initiative. Simultaneously, we are working to expand our share of the stationary upholstery market and increase our business through distribution channels beyond the La-Z-Boy Furniture Galleries store network."
Darrow commented, "We are beginning to see the benefits of the new ERP system in our La-Z-Boy branded facilities which helped us achieve a 12.1% operating margin in our upholstery segment. During the period, our performance was also fueled by efficiencies in our supply chain and solid sales and operating margin performance from England, Inc., our sister upholstery company. At the recent High Point Furniture Market, we expanded our Urban Attitudes collection and also offered power in several new styles.
During the quarter, the company acquired 10 La-Z-Boy Furniture Galleries stores from independent dealers: two in Wisconsin, two in the Carolinas and six in Ohio.
Nova LifeStyle Grows in North America and China
Nova LifeStyle Furniture, Los Angeles, reported a sales increase of 12% for the third quarter, 2015 compared to the prior year period, due to expansion in North America and China, especially through IKEA. Its gross margin was 15%, compared to 23% in Q3 2014. The company said the decrease was due to additional materials being purchased from third-party manufacturers in advance of pending sales in the coming quarter.
North American sales rose 19%, while sales in China grew 12%., but sales in Europe were down 30% due to “the slow European economy.” The company reported receipt of a new yearly order plan from IKEA in China with higher volume expected in the coming months.
The company plans to launch an ecommerce platform and mobile apps by the end of 2015. In the next several months the company intends to introduce a bedroom series, which will include beds and bedside tables.
HNI Corp. Cautious About Coming Months
HNI Corp. reported a Q3 sales increase of $1.2 million or 0.2% to $615.9 million. The Muscatine, IA-based maker of contract furniture brands such as Hon, Allsteel, Gunlocke and Paoli, and saw net income increase 16% to $61.1 million.
"We delivered double digit earnings growth for the third quarter. We are competing well in our markets despite a softening economy, which led to modest declines in office furniture and organic hearth sales. We are taking calculated actions to reset our cost structure for a range of slowing economic scenarios," said Stan Askren, HNI CEO.
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