Home builder stocks have done well as the number of new home starts have increased. We feel that furniture stocks should benefit more going forward. The most famous furniture stock of all is Lazy Boy (LZB). LZB is the leading global producer of reclining chairs and the second largest distributor in the US according to Furniture Today. The market value of LZB is just over $1 billion still quite small given they are the leading brand in the industry.
No sitting back and relaxing here
LZB had a tough time during the crisis cutting staff and resizing production. But today the company is stronger LZB can now manufacture the same amount of furniture in their five facilities as they did in nine factories five years ago.
Source: Lazy Boy annual report
LZB is now a different company as the graphs above suggest. Debt of $150 million has been paid down LZB now has net cash of $125 million. LZB currently has 878 stores with plans to increase to 1,000 outlets, over 87% of sales are just in the US. LZB also signed a deal last year with Kuka Home a large Chinese retailer to sell product in China. The stores will be owned by Kuka home but LZB will receive a portion of the profits.
Sit back, relax and enjoy the ride.
Disclosure: Decisive has no long position in Lazy Boy (LZB) stock