Recline and Define Your Interest in These Companies
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Sometimes it's nice to sit back and enjoy your favorite libation while researching companies in a relaxed manner. Rash investment decisions can cause a nervous rash, and blemishes on any disposable income you have in your cash account. With that in mind, recline and define your interest in these companies.
La-Z-Boy Incorporated (NYSE: LZB) is one of the world's leading residential furniture producers with three reportable operating segments: upholstery, case goods, and retail. At the end of November 2012, they reported operating results for the fiscal 2013 second quarter ended Oct. 27, 2012.
Sales for the fiscal 2013 second quarter increased 4.8 percent compared with the fiscal 2012 second quarter. Net sales were $322.3 million. Same-store written sales for the La-Z-Boy Furniture Galleries store network increased 13.3 percent. The upholstery segment's sales increased 7.5 percent; its operating margin was 8.4 percent versus 8.7 percent in the prior year's second quarter.
They reported net income attributable to La-Z-Boy Incorporated of $6.6 million, or $0.12 per diluted share, after $0.03 in restructuring charges relating to their case goods segment, versus $7.9 million, or $0.15 per diluted share, in the prior-year period. Consolidated operating income was $10.6 million, net $2.7 million in restructuring, compared with $12.2 million in the second fiscal quarter of 2012.
Investors should consider that the company increased their marketing spending on their brand campaign. Furthermore, La-Z-Boy opened and remodeled a number of stores. Therefore, this had an impact on their earnings. However, increased marketing spending shows corporate aggressiveness to maintain and build market share. Opening new stores is a good sign for investors that the company has the resources to expand. Remodeling new stores should facilitate improved sales from those stores and possibly lure in new customers for even greater sales growth.
La-Z-Boy had increased incentive compensation expenses due to improvements in sales and operating results. This affected earnings, but investors shouldn't swoon as they perform due diligence on the company. Increased incentive compensation expenses bespeak a finely-tuned sales staff that's driving growth.
Of further note to investors: La-Z-Boy has reinstated their quarterly dividend ($0.04). This is a signal to investors of the company's confidence in their marketing and other corporate initiatives. La-Z-Boy will report their fiscal 2013 third-quarter operating results after the close of trading on the NYSE on Tuesday, Feb. 19, 2013.
Ethan Allen Interiors, Inc. (NYSE: ETH) is a top interior design company and manufacturer/retailer of premier home furnishings. In January, they reported operating results for the three months ended Dec. 31, 2012. Net sales in the quarter increased 4.4 percent over the prior year to $191.3 million.
Net sales at their Retail division increased 6.1 percent to $151.8 million. This includes comparable design center growth of 4.9 percent. Retail division written orders increased 1.2 percent over the 10.3 percent growth in the year ago second quarter. Comparable design center written orders increased 0.1 percent over the 6.7 percent growth the year before. Investors should note that it's all growth here, though it may be modest in some cases – but no declines.
Excluding special items in both periods, net income for this quarter was $11.4 million, or $0.39 per diluted share, compared to $8.6 million, or $0.30 per diluted share in the year ago period. US GAAP net income for the quarter was $9.8 million, or $0.34 per diluted share, compared to the prior year of $8.1 million, or $0.28 per diluted share.
What's significant for investors concerning the company? They expanded their global operations by entering the European and Montreal markets. They opened design centers in Brussels, Belgium and in Montreal, Quebec. Physical expansion (design centers), and net sales and net income growth is typically a sign of a quality company, in terms of finances and corporate management. Dividend-favoring investors should consider that the Company declared a regular quarterly cash dividend of $0.09 per share.
Going forward, investors may wish to investigate corporations that produce products we lounge, sleep, and do whatever in, everyday of our lives. They can offer a more relaxing investing environment compared to higher-risk equity offerings. If you play the more riskier ventures, a step back to recline in one of these stocks, or something such as Leggett & Platt, Incorporated (NYSE: LEG) can provide the soothing rest one often needs after bolder forays on the market.
Leggett & Platt's Residential Furnishings segment is the leading supplier of mattress springs, pocketed coils, bed frames, ornamental beds, bedding accessories, and more. Overall, full year 2012 sales increased 2 percent to $3.72 billion. Unit volume grew 3 percent and acquisitions (net of divestitures) contributed 1 percent to sales. EBIT increased, and EBIT margin improved from 6.5 percent in 2011 to 9.2 percent in 2012.
A key point for investors to consider: President and CEO Mr. David S. Haffner stated that the company "…generated more than enough cash from operations to readily fund dividends and capital expenditures, something we've accomplished for over 20 years."
You may be getting very, very sleepy, like me, with a smile on your face, as you ponder possible returns from companies relating nice financial bedtime stories to potential investors. These aforementioned stocks are no guarantee against sleepless nights. However, you usually can get your 7 or 8 hours more consistently than with investments that are more adventurous.
MichaelONTARIO has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!