The weaker-than-anticipated retail environment during the summer period leads us to now expect year-over- year sales for the quarter to be essentially flat compared to our original expectation of a mid-single-digit increase.
Kurt Darrow, CEO, La-Z-Boy

La-Z-Boy (LZB) warned that it now expects earnings per share for its second fiscal quarter ending October 28, 2006 to be in the range of $0.01 - $0.04 per share, down from the company's earlier estimates of $0.11 - $0.15 per share. During last year's second fiscal quarter, the company had a loss of $0.12 per share, which included an after-tax restructuring charge of $0.10 per share related to the closure of its Waterloo, Ontario upholstery facility and $0.01 in income from discontinued operations.

La-Z-Boy President and CEO Kurt Darrow noted, "The weaker-than-anticipated retail environment during the summer period leads us to now expect year-over- year sales for the quarter to be essentially flat compared to our original expectation of a mid-single-digit increase. Although we saw a pick up in written sales over the Labor Day weekend, the momentum was brief and subsequent activity has been sporadic. Our reduction in earnings guidance is primarily due to lower-than-expected sales volume, which is impacting both our wholesale upholstery and casegoods businesses as well as our company-owned retail stores."

Darrow continued, "While volume has been challenging, our core wholesale businesses are expected to show improving margin trends both year over year and sequentially from our fiscal first quarter, demonstrating the changes we've made in these operations are enabling us to operate more efficiently even on lower volume. However, in our retail segment, where we have a higher fixed-cost structure and are continuing to address transitional issues in many of our markets, the decrease in volume is having a significant impact on our expected operating results."

The company plans to report this year's fiscal second quarter operating results after the market close on Tuesday, November 14, 2006.