La-Z-Boy (NYSE: LZB) reported Q1 EPS of $0.24, $0.05 worse than the analyst estimate of $0.29. Revenue for the quarter came in at $357.1 million versus the consensus estimate of $359.34 million.

Same-store written sales for the La-Z-Boy Furniture Galleries® network increased 0.7%.

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, “After a strong finish to fiscal 2017, we are disappointed with our start to this fiscal year. Although we posted a consolidated sales increase for the quarter, much of it related to acquired sales which did not add volume to our upholstery manufacturing operations which is our most profitable segment. Lower volume throughout our plants made it difficult to absorb fixed costs and this, combined with the normal seasonal slowdown and continued investments across the business, impacted our upholstery operating margin for the period. Additionally, due to acquisitions and growth in our retail segment, SG&A expenses increased during the quarter. As we move forward, we intend to manage our SG&A appropriately given various levels of volume. Our casegoods business performed well for the quarter as we continue to improve our product offering, value proposition and service levels to our customers. We believe this business is well positioned for continued growth moving forward.”

Darrow continued, “Over the past year, we have developed a comprehensive e-commerce strategy to address the evolution in furniture sales through this channel and are pursuing three opportunities: increasing online sales of La-Z-Boy furniture through la-z-boy.com and other digital players; leveraging the strength of our world-class global supply chain to support other e-commerce brands; and investing in new online companies. One such investment that converted to preferred shares in a recent round of financing, has already increased in value and contributed to our earnings this quarter.”

Darrow added, “During the period, we continued to grow our retail segment. The company opened two La-Z-Boy Furniture Galleries® stores as part of our 4-4-5 strategy and further integrated recently acquired stores. For the quarter, we achieved a written same-store sales increase of 0.7% throughout the La-Z-Boy Furniture Galleries® store network during the summer period and look forward to moving into the traditionally stronger fall selling season. We are in an excellent service position and as we have demonstrated, we are able to drive increased profitability throughout our manufacturing operations with adequate volume. We remain optimistic about our business for the remainder of the fiscal year, particularly as we capitalize on a dual strategy to reach core La-Z-Boy consumers through our vibrant store program and our independent dealer network while attracting a new and younger consumer through our multi-faceted e-commerce approach.”

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