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La-Z-Boy Tries to Sit Up


The reference is a little dated, but you could call La-Z-Boy (LZB) a “Rodney Dangerfield” stock. From the perspective of long-term investors, the furniture company seems to be doing a lot of things right: It is reorganizing its distribution system, remodeling stores, introducing new furniture products, and, more controversially, moving much of its production to Mexico and closing a Utah factory. Yet on Wall Street, La-Z-Boy gets no respect.

The furniture firm is suffering from the terrible housing market, of course, for which it can blame the 9 cents per share loss it reported on June 17. However, analysts have told me that many of its problems — increasingly unfashionable products, higher costs than overseas competition — actually pre-date the housing slowdown.

La-Z-Boy is stuck trying to undertake an overhaul at a very bad time.

On June 17, traders actually sent La-Z-Boy stock 2.24% higher, to 6.84. They were perhaps pinning hopes on management’s projections of a small profit next year. However, La-Z-Boy execs still expect sales to fall another 3% to 7% in the next year. The stock is down 42% in the past year.

Until housing bounces back and furniture sales rebound, La-Z-Boy is unlikely to get much credit for even the best new products or the smartest restructuring plan.


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