Shares of La-Z Boy, an American furniture manufacturer based in Monroe, Michigan, saw its shares explode over 14% after the company reported first quarter results for fiscal 2019.
The stock had its biggest one day gain since June 21st of last year as traders reacted to the results.
Earnings for the first quarter came to 34 cents a share. Analysts had only expected 25 cents a share. Sales jumped almost 8% to $384.7 million and retail same-store sales turned positive after several weak quarters. Analysts were waiting for sales of just $368 million.
The company’s Chief Executive Kurt Darrow also said that La-Z Boy had closed two acquisitions after the quarter end. One acquisition was of e-commerce furniture seller Joybird and nine Arizona L-Z-Boy Furniture galleries. This included four of the highest sales volume locations in the 351-store network.
“Importantly, the Joybird acquisition will help La-Z-Boy expand its e-commerce capabilities (less than 5% of total sales) and attraction to a younger customer base, a demographic that it underpenetrated, historically,” said Raymond James analyst Budd Bugatch.
Darrow said that “Joybird will provide us with a greater presence online and allow us to more easily and effectively reach millennial and Gen X consumers who often prefer the mid-century modern product and styling that Joybird offers and the ability to shop through the online channel.”
Darrow also said a 3.1 percent increase in same-store sales in the company’s La-Z-Boy Furniture Galleries network was a key contributor to the strong first quarter results. The company also saw strong sales growth in all 139 company-owned stores. “We had an excellent start to fiscal 2019, with strong results across the business,” Darrow remarked.
He did however warn that “concerns relating to potential duties and tariffs that could impact the business persist, and we are monitoring that situation closely to determine what changes may be appropriate.”
“Our team is keeping a watchful eye on the developments and is working with our industry association, the American Home Furnishing Alliance in lobbying efforts,” he said.
“The Association’s position mirrors ours and that these duties are not good for the consumer, nor are they good for the majority of our industry.”
“What really has the industry perplexed is, we understand products that can be bought in both countries and whether or not there’s fair trade going on. But there is very minimal supply of fabrics and leathers in this country that the industry can buy, and most of it comes from China,” he also said.