Consumers put gas and food before comfy chairs.
When people can't afford gas, and the price of food moves up every month, it is hard to get them to buy expensive furniture instead of paying their mortgages.
La-Z-Boy (NYSE: LZB, Bullboard) makes good products but it is operating in an economy where people can't by them. It shows in the stock. The company trades at $6.35 down from a 52-week high of $12.30.
The company has already admitted it will be a bad year, which may set up a buying opportunity; same-day sales in the quarter ending January 26 were $373.1 million, down about 8% from the year before. The company swung to a very small profit of $9.5 million. Since LZB owns some of its own stores, the retail downturn has hit it very hard. Retail sales were down 18% for the quarter.
LZB's balance sheet is okay. The company has $63 million in cash and long-term debt of $146 million.
It's a shame, but this stock will stay down as long as the housing market is falling apart.
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