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La-Z-Boy Management Discusses Q3 2012 Results - Earnings Call Transcript

And with that, let me turn over the call to Kurt Darrow, La-Z-Boy's Chairman, President and Chief Executive Officer. Kurt?

Kurt L. Darrow

Thank you, Kathy. Good morning, everyone, and thanks for joining us. Yesterday afternoon, we reported our third quarter results for fiscal 2012. We posted an increase of 8.4% in consolidated sales, led by a strong performance in our Upholstery segment and a 70% increase in consolidated operating income.

Additionally, same-store written sales for the La-Z-Boy Furniture Galleries network increased 8.6%. And our retail segment significantly improved its results, recording a slight operating loss of 1.1% on a 6.7% delivered sales increase on our base 67 stores.

Although the environment for furniture remains challenging, we've maintained a disciplined mindset and approach all along that we would control the controllables. And the changes we have made to our business are delivering results even in this economy. We continue to execute against our strategy to achieve growth, retail profitability, and positive conversion, in other words, a higher margin on incremental volume. And our performance demonstrates we are on a successful path to meeting our objectives.

Now let me take a few minutes to discuss our wholesale operations. For the quarter, sales for the upholstery segment increased 10.7%, $249 million versus last year's third quarter. And the operating margin increased to 9.1% from 8.2% in the comparable period last year. We believe the increase in sales, combined with the increase in same-store written sales for the La-Z-Boy Furniture Gallery network, continues to give credence to our assertion that we are indeed gaining market share. In fact, for the full calendar year of 2011, the same-store written sales comps for the Furniture Gallery network was almost 10%.

We are pleased with our brand platform as we believe it's driving a more interested and qualified consumer to our stores. At the same time, our product and merchandising team is doing a great job to further entice the consumer. We're growing our in-home design program, which presents significant opportunity for us, and are continuing to expand the network of La-Z-Boy Furniture Gallery stores by opening additional stores in the new design and converting existing ones. All in all, a lot of positive on the sales side, and we will continue to -- and we will continue our focus on increasing volume throughout the segment.

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