La-Z-Boy Reports Record Fiscal 2023 First-Quarter Results

La-Z-Boy Incorporated, a global leader in residential furniture, today reported record-setting first-quarter results for the quarter ended July 30, 2022.

Fiscal 2023 first-quarter highlights versus prior year:

• Consolidated sales increased 15% to $604 million, a first-quarter record
  – Operating profit and operating margin were also all-time first-quarter records
• Retail segment sales increased 30% to $236 million, an all-time quarterly record
  – Operating profit and operating margin were also all-time quarterly records
• Joybird written sales increased 12%

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy, said, “We delivered excellent results for the quarter, amidst challenging trends for the global economy and the furniture industry. We are focused on navigating the near-term volatile environment with agility while strengthening our business for the long term with our Century Vision strategy. This quarter, we further built our iconic La-Z-Boy brand with the acquisition of five La-Z-Boy Furniture Galleries^® stores in the Denver market, and our Joybird brand with the opening of two new Joybird retail stores.”

Whittington added, “In the near term, we remain focused on working down our backlog to drive delivered sales and enhance service to customers with shorter, pre-pandemic lead times. Our supply chain team continues to improve results and reduce start-up friction costs at our new plants in Mexico to strengthen wholesale gross margins over time. At the same time, we have increased our marketing spend to pre-pandemic levels to increase traffic and conversion and support the equity of our brands. With a strong balance sheet, we have the means to make prudent investments in our business and we expect to deliver enhanced long-term returns to all stakeholders.”

FY23 Q1 Results vs. FY22 Q1:

Consolidated Results:

• Consolidated sales in the first quarter of fiscal 2023 increased 15% to $604 million, reflecting pricing and surcharge actions and the positive effects of product and channel mix
• Consolidated GAAP operating margin was 8.7% versus 6.5%
• Consolidated non-GAAP⁽¹⁾ operating margin was 8.9% versus 6.6%
  • Improved operating margin was driven primarily by a change to the company’s consolidated business mix, with Retail becoming a larger portion, and fixed-cost leverage on higher sales
• GAAP diluted EPS increased to $0.89 from $0.54; non-GAAP⁽¹⁾ diluted EPS increased 65% to $0.91 from $0.55

Retail Segment:

• Sales:
  • Delivered sales increased 30% to an all-time quarterly record of $236 million
  • Delivered same-store sales increased 25%
  • Written same-store sales for the company-owned La-Z-Boy Furniture Galleries^® stores (the company’s Retail segment) decreased 15%, reflecting a return to normal seasonality associated with the summer period and consumer sentiment impacts from macroeconomic and geopolitical concerns
  • Written same-store sales were 12% higher than pre-pandemic levels
• Operating Performance:
  • Non-GAAP⁽¹⁾ operating margin and operating profit increased to all-time records of 16.2%, and $38 million, respectively, versus 11.2%, and $20 million in last year’s first quarter, primarily driven by fixed-cost leverage on higher delivered sales volume

Wholesale Segment:

• Sales:
  • Increased 12% to a first-quarter record of $442 million driven by realized pricing and surcharge actions coupled with favorable channel and product mix, partially offset by lower volume, primarily the result of some external dealers temporarily delaying receipt of finished goods due to warehouse constraints
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin increased to 6.1% versus 4.7%, primarily reflecting pricing and surcharge actions as well as favorable channel and product mix, partially offset by increased raw material and plant costs

Corporate & Other:

• Joybird delivered sales increased 10% to $43 million
• Joybird written sales increased 12% versus the year-ago first quarter, supported by improved web conversion, average order value and average sales price
• Intercompany eliminations increased in the first quarter 2023 versus the year-ago period due to higher sales from the company’s Wholesale segment to its Retail segment
• Joybird posted a small loss for the period, reflecting continued investments in marketing while experiencing increases in freight costs as well as friction costs associated with the opening of a second manufacturing facility in Tijuana; the company expects Joybird to be profitable for the full fiscal year

Balance Sheet and Cash Flow as of FY23 Q1

• Ended the quarter with $241 million in cash⁽²⁾ and $25 million in investments to enhance returns on cash, and no external debt
• Generated $33 million in cash from operating activities versus $6 million in the prior-year quarter
• Spent $21 million on capital expenditures for the quarter, primarily related to Retail store upgrades, new Retail stores, and plant upgrades at our manufacturing and distribution facilities
• Returned $12 million to shareholders, including $7 million in dividends and $5 million in share repurchases, or approximately 0.2 million shares of stock, leaving approximately 7.3 million shares available for repurchase under its authorized share repurchase program

Dividend

On August 23, 2022, the Board of Directors declared a quarterly cash dividend of $0.165 per share on the common stock of the company, payable on September 15, 2022, to shareholders of record on September 7, 2022.

Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “While we maintain our long-term commitment to steady sales growth and margin progress, we continue to anticipate results may vary significantly during fiscal 2023 as a result of current industry dynamics as well as macroeconomic and geopolitical uncertainty and its effect on consumer sentiment. Taking all known factors into consideration, we expect delivered sales for the fiscal 2023 second quarter to be up 2% to 5% versus the second quarter of fiscal 2022, in a range of about $590 million to $605 million, and consolidated non-GAAP operating margin to be in a range of about 8.0% to 8.5%.”
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(1)Non-GAAP amounts for the first quarter of fiscal 2023 exclude:

• a charge of $0.9 million pre-tax, or $0.02 per diluted share, related to our business realignment plan, including costs associated with the closure of our Newton, Mississippi manufacturing facility.
• purchase accounting charges related to acquisitions completed in prior periods totaling $0.3 million pre-tax, or $0.00 per diluted share, with $0.2 million included in operating income and $0.1 million included in interest expense.

Non-GAAP amounts for the first quarter of fiscal 2022 exclude:

• purchase accounting charges related to acquisitions completed in prior periods totaling $0.4 million pre-tax, or $0.01 per diluted share, with $0.3 million included in operating income and $0.1 million included in interest expense.

Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating the Non-GAAP measures used in this press release and a reconciliation to the most directly comparable GAAP measure.

⁽²⁾Cash includes cash, cash equivalents and restricted cash

For the complete press release, click here.

About La-Z-Boy

La-Z-Boy Incorporated is one of the world’s leading residential furniture producers, marketing furniture for every room of the home. The Wholesale segment includes England, La-Z-Boy, American Drew^®, Hammary^®, Kincaid^® and the company’s international wholesale and manufacturing businesses. The company-owned Retail segment includes 163 of the 350 La-Z-Boy Furniture Galleries^® stores. Joybird is an e-commerce retailer and manufacturer of upholstered furniture. The corporation’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 559 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 – Media Contact – kathy.liebmann@la-z-boy.com – (734) 241-2438

Source: La-Z-Boy Incorporated