La-Z-Boy Incorporated (NYSE:LZB) today announced it intends to
acquire the Arizona La-Z-Boy Furniture Galleries® stores, which
compose the largest-volume licensee operator within the 350-store
network, from EBCO, Inc., owned by Edward O. Breunig, III, an
independent dealer. Based on calendar-year 2017 revenue, the
EBCO organization ranks 77th in Furniture Today’s Top 100 U.S.
Furniture Stores listing, published in May 2018. It was also
named one of the Top Companies to Work for in Arizona in 2018, by
AZ Central, a USA Today publication. Included in the acquisition
are six stores in the Phoenix metropolitan area, two stores in the
Tucson market, and one store in Prescott. The stores had combined
calendar 2017 revenue of $78 million. The acquisition will
provide continuity for the highly successful Arizona-based business
and its employees following the planned retirement of the
independent dealer. The nine stores will become part of the
La-Z-Boy retail segment and will bring the total company-owned
store count to 155. The transaction is expected to close in August
2018, subject to customary closing conditions.
Kurt L. Darrow, Chairman, President and Chief
Executive Officer, of La-Z-Boy Incorporated, said, “We are excited
to acquire this thriving business and see great prospects in the
Arizona market for La-Z-Boy. We are grateful to the Breunig
family for their unwavering dedication to our company and store
network, and their 35-year commitment to building and developing
the most successful independent La-Z-Boy licensee business in North
America. As strong ambassadors of our brand, they have made
meaningful contributions throughout the years to strengthen our
store system while maintaining a focus on providing an excellent
customer experience to thousands of clients. I would like to take
the opportunity to thank Ed, who worked tirelessly to further build
the Arizona La-Z-Boy organization and introduce new services within
the market after taking over the business in 1999 from his father,
who opened the first store in Arizona in 1983. Ed has been a
tremendous leader and friend, and we wish him all the best in his
well-deserved retirement.”
Breunig, Chief Executive Officer, of EBCO, said,
“I could not be more thankful to my parents, Ed and Claudia
Breunig, for taking a big risk 35 years ago to start a retail
furniture company. The business they started and the way they
mentored so many people left an enduring mark. It has been my honor
to continue their work by building and leading an incredible team
of talented, passionate and hard-working individuals whose
dedication to outstanding service to one another, to our clients
and to the community is, in my opinion, unmatched in retail. I am
proud of the business we have built together and I am confident
that our long-time partner in progress, La-Z-Boy Incorporated, will
continue our family tradition. La-Z-Boy will have an excellent team
of leaders to continue the management of day-to-day operations,
headed by Frank Neal, who has served as President for the last five
years. Frank is a very accomplished retail leader who oversees all
functions of the business and is largely responsible for our
incredible sales growth.”
Darrow added, “Arizona is a vibrant market with
one of the highest population growth rates in the nation, which
bodes well for furniture sales. The top four highest sales
volume stores in the 350 La-Z-Boy Furniture Galleries® store
network are among those we are acquiring. Additionally,
Arizona has great demographics with respect to the core La-Z-Boy
consumer and, due to the market dynamics, we are excited about its
potential and believe there could be room for additional La-Z-Boy
Furniture Galleries® stores in the future. The nine stores we are
acquiring are profitable, will be quickly integrated into our
retail segment and be accretive.”
As La-Z-Boy is already recording a portion of
the Arizona-store volume in its wholesale segments, the acquisition
of the Arizona stores will contribute approximately $40 million
annually of sales volume to the company on a consolidated
basis.
Darrow concluded, “With a solid team in place,
we expect a smooth and seamless transition for customers who will
continue to enjoy the excellent shopping experience and service
they have come to expect not only from the Arizona-based La-Z-Boy
Furniture Galleries® stores, but in all our stores. The future for
La-Z-Boy Incorporated is bright and exciting and I am confident in
our long-term prospects and uncompromising commitment to evolving
and meeting challenges in the dynamic marketplace.”
Terms of the deal were not disclosed. La-Z-Boy
will supply financial information relating to the transaction when
it reports its fiscal 2019 first-quarter results in August.
Forward-looking Information
This news release contains, and oral statements
made from time to time by representatives of La‑Z‑Boy may contain,
“forward-looking statements.” With respect to all forward-looking
statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Actual results could differ materially from
those we anticipate or project due to a number of factors,
including: (a) changes in consumer confidence and demographics; (b)
the possibility of a recession; (c) changes in the real estate and
credit markets and their effects on our customers, consumers and
suppliers; (d) international political unrest, terrorism or war;
(e) volatility in energy and other commodities prices; (f) the
impact of logistics on imports and exports; (g) tax rate, interest
rate, and currency exchange rate changes; (h) changes in the stock
market impacting our profitability and our effective tax rate; (i)
operating factors, such as supply, labor or distribution
disruptions (e.g. port strikes); (j) changes in legislation,
including the tax code, or changes in the domestic or international
regulatory environment or trade policies, including new or
increased duties, tariffs, retaliatory tariffs, trade limitations
and termination or renegotiation of the North American Free Trade
Agreement; (k) adoption of new accounting principles; (l) fires,
severe weather or other natural events such as hurricanes,
earthquakes, flooding, tornadoes and tsunamis; (m) our ability to
procure, transport or import, or material increases to the cost of
transporting or importing, fabric rolls, leather hides or
cut-and-sewn fabric and leather sets domestically or abroad; (n)
information technology conversions or system failures and our
ability to recover from a system failure; (o) effects of our brand
awareness and marketing programs; (p) the discovery of defects in
our products resulting in delays in manufacturing, recall
campaigns, reputational damage, or increased warranty costs; (q)
litigation arising out of alleged defects in our products; (r)
unusual or significant litigation; (s) our ability to locate new
La-Z-Boy Furniture Galleries® stores (or store owners) and
negotiate favorable lease terms for new or existing locations; (t)
the ability to increase volume through our e-commerce initiatives;
(u) the impact of potential goodwill or intangible asset
impairments; and (v) those matters discussed in Item 1A of our
fiscal 2018 Annual Report on Form 10-K and other factors identified
from time to time in our reports filed with the Securities and
Exchange Commission. We undertake no obligation to update or revise
any forward-looking statements, whether to reflect new information
or new developments or for any other reason.
Additional Information
This news release is just one part of La-Z-Boy’s
financial disclosures and should be read in conjunction with other
information filed with the Securities and Exchange Commission,
which is available at:
https://lazboy.gcs-web.com/financial-information/sec-filings.
Investors and others wishing to be notified of future La-Z-Boy news
releases, SEC filings and quarterly investor conference calls may
sign up at: https://lazboy.gcs-web.com/.
Background Information
La-Z-Boy Incorporated is one of the world’s
leading residential furniture producers, marketing furniture for
every room of the home. The La-Z-Boy upholstery segment companies
are England and La-Z-Boy. The casegoods segment consists of three
brands: American Drew, Hammary, and Kincaid. The company-owned
retail segment includes 146 of the 350 La-Z-Boy Furniture
Galleries® stores.
The company’s branded distribution network is
dedicated to selling La-Z-Boy Incorporated products and brands, and
includes 350 stand-alone La-Z-Boy Furniture Galleries® stores and
535 independent Comfort Studio® locations, in addition to in-store
gallery programs for the company’s Kincaid and England operating
units. Additional information is available at
http://www.la-z-boy.com/.
Contact: Kathy
Liebmann
(734)
241-2438
kathy.liebmann1@la-z-boy.com
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