La-Z-Boy (LZB) Acquires Brand License for U.K., Ireland Markets
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La-Z-Boy Incorporated (NYSE: LZB) announced it signed an agreement to acquire the license for the La-Z-Boy brand in the United Kingdom and Ireland from Furnico Ltd., which has been La-Z-Boy’s sales and distribution partner in the market for the past eight years. Annual wholesale revenue for this business is approximately $42 million, based on current exchange rates. Due to the licensing agreement in place today, La-Z-Boy Incorporated already captures approximately half of the sales volume. The agreement will be effective January 1, 2017, and its results will be reported in the company’s upholstery segment. The existing Furnico business outside of the La-Z-Boy license will continue with its normal operations.
The company also announced it acquired nine La-Z-Boy Furniture Galleries® stores from an independent dealer on November 1, 2016, with annual retail volume of approximately $35 million. The stores are located in the northeastern Pennsylvania market, with seven in the state, one in Dover, NJ and one in Middletown, NY. The transaction is a result of a planned retirement of the independent dealer and the mutually agreed-upon decision that selling the stores to La-Z-Boy Incorporated would be in the best interest of their employees while providing for the greatest stability and continuity of the business. The stores will become part of La-Z-Boy’s retail segment.
Kurt L. Darrow, Chairman, President and Chief Executive Officer, of La-Z-Boy Incorporated, said, “These two businesses represent approximately $77 million in annual sales volume. Because we were already recording a portion of this volume in our wholesale upholstery segment, these two transactions will contribute approximately $41 million of incremental sales volume, based on current exchange rates, to consolidated sales on an annual basis. While we continue to steadily build the La-Z-Boy brand throughout the U.S. and Canada through our 4-4-5 store growth strategy, we are identifying opportunities to monetize the brand’s value outside North America and expect there to be additional opportunities in other markets in the future.”
Based in Maidenhead, England, La-Z-Boy U.K., Ltd. will be led by Keith Wilson, who until recently was with Calligaris, serving as Director for its U.K. and Ireland business. He will work closely with Jeff Lillich, the head of La-Z-Boy’s Europe, Middle East and Africa business. A team will be recruited to support the growth of the business and its existing customers.
Doug Collier, Senior Vice President, Chief Marketing Officer and President International, of La-Z-Boy Incorporated, said, “Furnico has done an amazing job in growing the business and we intend to further enhance our position in the market by making investments in the brand and our digital presence. We thank David Winter, Paul Riding and the rest of the Furnico team for the outstanding work they have done, and look forward to a great future for the business.”
Darrow added, “As we continue to build our company-owned retail business with new La-Z-Boy Furniture Galleries® stores, it is also growing through acquisitions of stores from retiring independent dealers. The nine stores acquired are profitable, will be quickly integrated into our retail segment and be accretive. I would like to take the opportunity to thank Alyssa and Frank Hager, who opened their first store in Wilkes-Barre, PA, in 1997. They have been great partners, steadily building their business throughout their almost 20-year tenure, and we wish them all the best in their much-deserved retirement. As the company-owned retail segment grows, we are further able to capitalize on the combined wholesale/retail margin associated with our integrated retail strategy, which continues to deliver results.”
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