La-Z-Boy Reports Record Fiscal 2023 Second-Quarter Results; Increases Dividend By 10%

La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported record-setting second-quarter results for the period ending October 29, 2022.

Fiscal 2023 second-quarter highlights versus prior year:

• Consolidated sales increased 6% to $611 million, a second-quarter record
  
• GAAP operating profit increased by 14%
  – Non-GAAP operating profit increased by 19%
  – GAAP operating margin increased 70 basis points to 10.1%
  – Non-GAAP operating margin increased 100 basis points to 10.0%
• GAAP EPS increased by 20%
  – Non-GAAP EPS increased by 24%
• Retail segment sales increased 31% to $252 million, an all-time quarterly record
  – Operating profit also all-time quarterly record

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “We delivered record second-quarter sales and operating performance in a challenging environment led by our company-owned Retail business. Strong supply chain execution in the period allowed us to reduce our backlog and improve service to customers and consumers as we continue to shorten lead times and move closer to delivering on our brand promise — quality custom furniture with speed to market. On the strength of that value proposition, our business remains larger than pre-pandemic levels as consumers continue to place a value on the comfort of their homes and entrust La-Z-Boy to deliver it.”

Whittington added, “As we face near-term macroeconomic and geopolitical headwinds that have slowed the pace of written sales, we are operating from a position of brand and financial strength. We remain focused on the long term, controlling what we can, and positioning the company to move through this period with ongoing operational excellence. We are pivoting quickly to respond to market dynamics, including proactively aligning our cost structure with demand, and making prudent investments to drive long-term profitable growth through Century Vision. As we tackle what lies ahead, we are confident we will navigate the environment well, build for the future, and emerge stronger while increasing market share throughout these challenging times.”

FY23 Q2 Results vs. FY22 Q2:

Consolidated Results:

• Consolidated sales in the second quarter of fiscal 2023 increased 6% to $611 million, with the realization of pricing and surcharge actions and the positive effects of a favorable product and channel mix offsetting lower delivered unit volume
• Consolidated GAAP operating margin was 10.1% versus 9.4%
• Consolidated non-GAAP⁽¹⁾ operating margin was 10.0% versus 9.0%
   – Improved operating margin was driven primarily by a focus on manufacturing and delivering our consumer sold backlog for our company-owned Retail stores and the benefit of pricing and surcharge actions, partially offset by higher input costs and marketing investments
• GAAP diluted EPS increased 20% to $1.07 from $0.89; non-GAAP⁽¹⁾ diluted EPS increased 24% to $1.05 from $0.85

Retail Segment:

• Sales:
   – Delivered sales increased 31% to an all-time quarterly record of $252 million; delivered same-store sales increased 25%, as we improved service to consumers and moved closer to pre-pandemic lead times in the period
   – Total written sales for the company-owned La-Z-Boy Furniture Galleries^® stores (the company’s Retail segment) decreased 5%, reflecting softer demand across the industry driven by economic uncertainty and weaker consumer sentiment
  • Written same-store sales for the company-owned La-Z-Boy Furniture Galleries^® stores decreased 10%
  • Written same-store sales were 12% higher than pre-pandemic levels (FY20 Q2)
• Operating Performance:
   – Non-GAAP⁽¹⁾ operating margin and operating profit increased to all-time records of 16.5%, and $42 million, respectively, versus 12.5%, and $24 million in last year’s second quarter, primarily driven by fixed-cost leverage on higher delivered sales volume

Wholesale Segment:

• Sales:
   – Increased 2% to a second-quarter record of $446 million driven by the realization of pricing and surcharge actions coupled with favorable channel and product mix; these factors were partially offset by lower volume, primarily the result of some dealers delaying receipt of finished goods due to warehouse constraints
• Operating Margin:
   – Non-GAAP⁽¹⁾ operating margin was 8.6%, 50 basis points below prior year; pricing and surcharge actions were more than offset by increased raw material costs, plant inefficiencies due to lower volume, and increased marketing spend to pre-pandemic levels

Corporate & Other:

• Joybird delivered sales decreased 5% to $38 million, and written sales declined 27% versus the year-ago second quarter, reflecting both slowing e-commerce trends and the effects of changes in campaign execution with a key marketing partner which have since been reversed
• Joybird posted a loss for the period, primarily reflecting lower volume, an unfavorable shift in product mix, and a lower return on advertising spend

Balance Sheet and Cash Flow as of FY23 Q2

• Ended the quarter with $208 million in cash⁽²⁾ and $19 million in short-term investments to enhance returns on cash, and no external debt
• Year to date, generated $31 million in cash from operating activities versus $15 million in the prior-year six-month period
• Year to date, spent $40 million on capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® store projects, new stores, and upgrades at our manufacturing and distribution facilities
• Year to date, returned $19 million to shareholders, including $14 million in dividends and $5 million in share repurchases; the company has approximately 7.3 million shares available for repurchase under its authorized share repurchase program

Dividend

On November 30, 2022, the Board of Directors declared a quarterly cash dividend of $0.1815 per share on the common stock of the company, an increase of 10% over the prior quarter. The dividend will be paid on December 20, 2022, to shareholders of record on December 12, 2022.

Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “As we successfully reduce our backlog to enable pre-pandemic consumer lead times, we expect the second half of our fiscal year to be impacted by continued external headwinds on consumer demand. As a result, we estimate delivered sales for the fiscal 2023 third quarter to be in a range of about $525 million to $535 million, and consolidated non-GAAP operating margin to be in a range of about 7.0% to 7.5%.”

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