La-Z-Boy Conference Call Highlights

La-Z-Boy Incorporated LZB reported its fourth quarter earnings on Tuesday. Shares of the company are up 6 percent.

Below are some key highlights form tis conference call.

Performance Highlights:

• During the quarter, we grew the business, improved our operating performance, made strides in the execution of our 4-4-5 strategy, and returned value to shareholders.
• We increased sales 3.8% after a 14.9% increase in last year's comparable quarter.
• Increased the consolidated operating margin to 8.3%.
• Achieved an 11% operating margin for the upholstery segment and a 4.4% operating margin for the retail segment.
• Experienced a 3.4% increase in written same-store sales for the La-Z-Boy Furniture Galleries network.
• Added eight new stores across the network, generated $33 million in cash from operations, increased the dividend and purchased 640,000 shares of our stock.
• In summary, from a number of different perspectives, it was a solid quarter overall.

Three Business Segments:

• First the upholstery. For the quarter, sales in the upholstery segment increased 3.6%.
• We achieved an 11% operating margin reflecting the overall efficiencies of our operations.
• As we work to deliver long-term profitable growth, we continue to make investments in the business during the period, these included the ongoing implementation of a new ERP system and a replacement of our website and e-Commerce platforms.
• With the digital elements of the consumers overall purchase process becoming even more important, it is critical we provided more inspiring, compelling and easy desktop and mobile site experience. We expect the new website in e-Commerce platform to go live in the fourth quarter and we'll finish with the ERP implementation throughout our plans in May.
• We are also pleased that our stationary business continues to grow at a faster rate than the growth we're experiencing in our core recliner business, indicating our Live Life Comfortably campaign featuring Brooke Shields is resonating with consumers. While best known for our motion offering and with the belief that we have the largest share in that category, for us the greatest potential for growth is in the stationary sofa market given it is the largest segment of upholstery business and where comparatively we have a smaller share.
• We will continue to invest in the marketing program and plan to develop new commercials to air next spring.
• For fiscal 2015, we plan to execute 30 projects to 35 projects across the La-Z-Boy Furniture Galleries network including new stores, relocations, and remodels.
• By the end of the year, we plan to have 11 net new stores and we'll also change out 15 old format stores and convert them to the new design – new concept design.
• The combined activity will nearly double the number of new stores in the new concept design format over last year's level.
• Averaging $4.5 million per store.
• At the end of the second quarter, 52 stores of the 325 stores were in the new concept design and we expect to have about 65 in this format by year end.
• Written same-store sales for the La-Z-Boy Furniture Gallery network increased 3.4% following an average of 10.8% over the last three years' second quarter.
• After three full years of compounded double-digit increases, we did expect the same-store sales growth rate to moderate, and we continue to work to drive consumers to our retail outlets and maximize the sale process.
• For the quarter, consolidated operating income was $30.2 million compared with $26 million in the fiscal 2014 second quarter.
• During the quarter, we generated $33 million in cash from operating activities and ended the period with $115 million in cash and cash equivalents.
• For fiscal year 2016, we expect CapEx to return to more normalized level of about $25 million.
• Our effective tax rate from continuing operations for the second quarter of fiscal year 2015 was 35.3% compared to 32.5% for the second quarter of fiscal 2014.