Monroe, MI - La-Z-Boy is gradually revamping its image in an attempt to appeal to younger and more urban consumers. The 88 year-old maker of recliners has given a facelift to its showrooms and is getting edgier with its advertising to try to grab a greater share of the market. It wants to present itself as a maker of fashionable furniture, only some of which reclines.
The company doesn't want to cannibalize its bread-and-butter, as recliners still account for 42% of the company's revenues, though that figure is down from 49% in 2010. But the company is exploring ways to sell other types of furniture. It's sending in-house designers into customer's homes to offer free advice, and sleeker furniture such as its Urban Attitudes line is getting more floor space in its showrooms.
The company is also building smaller stores in an effort to win in the urban market. Some of the urban stores have floorspace around 5,000 sq. ft., about a third the size of a typical store. Renovations of the stores are averaging up to $600,0000 each.
Television ads feature Brooke Shields typically sitting in sofas or chairs, not recliners. Her glamorous presence counteracts the relaxed image of a recliner company. As company CEO Kurt Darrow recently told The Wall Street Journal, "We don't believe we have to remind people we make recliners."
In the fiscal year ended April 25, La-Z-Boy sales increased 5% from a year earlier to $1.43 billion, nicely outpacing the overall U.S. market for residential furniture, which grew about 2% in 2014, according to the investment bank Mann, Armistead & Epperson. For the past 5 years, La-Z-Boy's shares had total returns of 91%, compared with 53% for the Dow Jones U.S. Furnishings Index. Profits at renovated stores shot up 29% to $55.1 million as the company exited some of its lagging furniture-business lines. La-Z-Boy remains second in the U.S. furniture business behind Ashley Furniture Industries, Inc. Ashley has annual sales of $4 billion and predicts annual growth between 7% and 10%.
La-Z-Boy's recliners, some of which sport new features such as massage functions and separate motors for lumbar support and the head rest, can cost up to $2,200, so the company still wants to sell recliners while making efforts to sell more chic furniture. About half of the company's La-Z-Boy branded furniture is sold at La-Z-Boy stores and the rest at various retailers. The company plans to increase the number of La-Z-Boy stores from its current level of 325 to 400 by 2019. Most of the stores are owned by independent operators but La-Z-Boy owns about a third of them and plans to increase that percentage in an effort to capture a greater percentage of each store's profits. By owning the stores the company also has greater control over the way the furniture is presented.
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