President and CEO at furniture firm La-Z-Boy, Kurt Darrow, commented on recent industry trends ahead of the BB&T Capital Markets investor conference in San Francisco on August 10.
Mr Darrow said: "Our results for the fiscal 2011 first quarter were impacted negatively by a number of factors, including higher raw material costs, supply chain disruptions and delays, Hurricane Alex, which affected shipping from our Mexican-based cut-and-sew operations and inefficiencies at the Mexico facility as we complete the transition of all custom cut-and-sewn product from our US operations.
“In addition to seasonality playing a role in terms of overall volume levels during the quarter, the storm in Mexico washed out roads, delaying the transport of cut-and-sewn kits to our US-based facilities.
“As a result of the supply chain disruptions and delays, our US plants did not run as planned during July and we were required to move approximately $10 million of orders from production in July into August. Accordingly, we anticipate reporting relatively flat to slightly increased sales for the first quarter of fiscal 2011 and earnings per share in a break-even range."
Mr Darrow added that the company had demonstrated solid and consistent performance in its upholstery segment during the previous five quarters and said that things are looking up.
“We believe many of the issues that reduced our first-quarter production levels are behind us,” he said. “Raw material pricing has been on the decline from its peak in the May-through-June period, supply chain disruptions are being minimised and our Mexico facility is improving its efficiencies. Importantly, the issues faced during the quarter are not systemic to our business and historically our first quarter is not indicative of our performance for the remainder of the year."