La-Z-Boy Incorporated (NYSE: LZB) shares crashed more than 18% after the furniture company reported its operating results for the fiscal 2018 first quarter ended July 29, 2017. La-Z-Boy Incorporated manufactures, markets, imports, exports, distributes and retails upholstery furniture products. Sales for the fiscal 2018 first quarter were $357.1 million, compared with $340.8 million in the prior year’s first quarter.

Earnings per share for the quarter were $0.24 versus $0.28 in last year’s first quarter.

Sales in the company’s upholstery segment increased 2.6% to $274.4 million and the operating margin declined to 8.5% from 11.4% in last year’s first quarter, which included a 0.9 percentage point benefit from a legal settlement.  In the casegoods segment, sales increased 1.9% to $25.5 million and the operating margin increased to 10.7% from 8.6%. Sales in the retail segment increased 15.5% to $110.5 million.  On the core base of 122 stores included in last year’s first quarter, delivered sales declined 1.1% versus the prior year and the segment’s operating margin decreased to 1.6% from 2.3%.

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, “After a strong finish to fiscal 2017, we are disappointed with our start to this fiscal year.  Although we posted a consolidated sales increase for the quarter, much of it related to acquired sales which did not add volume to our upholstery manufacturing operations which is our most profitable segment.  Lower volume throughout our plants made it difficult to absorb fixed costs and this, combined with the normal seasonal slowdown and continued investments across the business, impacted our upholstery operating margin for the period. Additionally, due to acquisitions and growth in our retail segment, SG&A expenses increased during the quarter.  As we move forward, we intend to manage our SG&A appropriately given various levels of volume.  Our casegoods business performed well for the quarter as we continue to improve our product offering, value proposition and service levels to our customers.  We believe this business is well positioned for continued growth moving forward.”