Analyst Upgrades Shares Of La-Z-Boy; Stock Climbs

NEW YORK (AP) — An analyst upgraded shares of La-Z-Boy Inc. on Wednesday, after the furniture maker swung to a fiscal first-quarter profit, lifting shares in afternoon trading.

After Tuesday's closing bell, La-Z-Boy reported a profit of $2 million, or 4 cents per share, compared with a loss of $8.5 million, or 17 cents per share, a year earlier when the company recorded big restructuring charges.

Results topped Wall Street expectations, despite sales declines in its upholstery unit and casegoods segment.

Raymond James analyst Budd Bugatch upgraded the stock to "Strong Buy" from "Market Perform," encouraged by the quarterly results during what he called the company's seasonally weakest quarter.

Operating margins were strong, despite weak sales, and the company was able to generate $13.8 million in cash flow from operations. The company also paid down $11.7 million in debt, he added.

Bugatch also said although same-store sales declined, the dip was the best he's seen since last year's second quarter. Same-store sales measure sales at stores open at least one year.

"Additionally, La-Z-Boy has not yet enjoyed the benefit of its developing Mexican cut-and-sew operation, which management avows will deliver $21 million in savings during fiscal 2011," he wrote in a client note.

Shares of La-Z-Boy rose 61 cents, or 8.2 percent, to $8.01.