La-Z-Boy Incorporated Announces Strong Q2 Results

La-Z-Boy Incorporated (NYSE: LZB), a global leader in the manufacture and retail of residential furniture, today reported second quarter results for the period ended October 28, 2023. Sales totaled $511 million, on the high end of guidance provided last quarter and a decrease of 16% against a year ago period that benefited from delivery of pandemic related backlog. Written same-store sales for the entire La-Z-Boy Furniture Galleries^® network increased 1% versus a year ago, with company-owned written same-store sales essentially flat against a challenged consumer environment. Operating margin was 6.6% in the quarter on a GAAP basis and 7.9% on a Non-GAAP basis, which exceeded previously provided guidance. Earnings per diluted share totaled $0.63 on a GAAP basis and $0.74 on a Non-GAAP basis.

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “In spite of a challenging macro environment and the continued soft home furniture industry, La-Z-Boy Incorporated continues to outperform. These results were achieved via strong execution, particularly in our retail stores and across our supply chain. We continue to make progress on our Century Vision strategy, highlighted by growth in our company-owned Retail store base, which now represents just over half of our entire network. Building on that foundation, we recently signed an agreement to acquire an additional six store network from an independent La-Z-Boy Furniture Galleries^® dealer in the Midwest.”

Whittington added, “We are excited about the potential of our new brand campaign, “Long Live the Lazy,” which was introduced in August. In the quarter, we activated our new marketing strategy, leveraging data based consumer insights and our brand heritage of comfort and quality to connect with a broader consumer base. Despite weakness in near-term industry traffic trends, we continue to take a long-term approach to investing in our business and are making steady progress toward building a more agile supply chain and optimizing our network. Although consumer traffic trends remain a headwind, La-Z-Boy remains well positioned to continue outperforming the industry due to our iconic brand, consumer preferred shopping experience, and long-term approach to investing in our business, enabled by the strength of our balance sheet. We are confident in our ability to grow at a pace double the industry and deliver double-digit operating margins over the long term.”

Third Quarter Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “Our second quarter results were roughly in line with the top end of sales guidance, and exceeded Non-GAAP operating margin⁽²⁾ expectations given strong execution, particularly in our Retail business. Looking forward, we expect consumer trends for our industry to remain challenging. With this in mind, we are prudently planning for sales in the third quarter of fiscal 2024 to be relatively consistent with the second quarter. Further, we expect third quarter Non-GAAP operating margin⁽¹⁾ to be similar to the first half of the year. As such, we are forecasting fiscal third quarter sales to be in the range of $515-535 million and Non-GAAP operating margin⁽¹⁾ to be in the range of 7-8%.”

FY24 Q2 Results vs. FY23 Q2

Consolidated Results:

• Consolidated sales in the second quarter of fiscal 2024 decreased 16% to $511 million, primarily reflecting lower delivered unit volume versus last year’s results that included delivery of backlog but increased 14% versus the most recent pre-pandemic second quarter in fiscal year 2020
• La-Z-Boy Furniture Galleries^® network written same-store sales increased 1%
• Consolidated GAAP operating margin was 6.6% versus 10.1%
  • Consolidated Non-GAAP operating margin decreased 210 basis points to 7.9% versus 10.0%, driven primarily by fixed cost deleverage
• GAAP diluted EPS decreased to $0.63 from $1.07 and Non-GAAP diluted EPS decreased to $0.74 from $1.05 

Retail Segment:

• Sales:
  • Written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^® stores) increased 3% driven primarily by acquired stores
    • Written same-store sales for the Retail segment were essentially flat
  • Delivered sales for the Retail segment decreased 15% to $214 million versus last year’s sales, which included delivery of pandemic related backlog, but increased 44% versus the most recent pre-pandemic second quarter in fiscal year 2020
• Operating Margin:
  • Non-GAAP⁽²⁾ operating margin and operating income was 13.0% and $28 million, respectively, down 350 basis points and 33%, respectively, primarily driven by fixed cost deleverage

Wholesale Segment:

• Sales:
  • Decreased 18% to $365 million driven primarily by a decline in delivered volume versus the year ago period, which benefited from pandemic backlog production and deliveries
• Operating Margin:
  • Non-GAAP⁽²⁾ operating margin decreased to 7.7%, down 90 basis points; gross margin improvement from lower raw material cost and duty expense was more than offset by fixed cost deleverage and increased marketing investments to support the launch of our “Long Live the Lazy” brand campaign

Corporate & Other:

• Joybird written sales increased 5% and delivered sales decreased 15% to $32 million, reflecting sequential improvement in both metrics. E-commerce trends remain challenging following the broad industry slowdown, which began in prior year’s second quarter. 

Balance Sheet and Cash Flow, Second Quarter Fiscal 2024

• Ended the second quarter with $333 million in cash⁽³⁾ and no external debt
• Generated $31 million in cash from operating activities versus a use of $2 million in the second quarter of last fiscal year. Year to date, cash flow from operations was $57 million, up 84% from last year’s comparable period
• Invested $13 million in capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels), and projects at our manufacturing and distribution facilities
• Returned $18 million to shareholders, including $10 million in share repurchases and $8 million in dividends

Dividend

On November 29, 2023, the Board of Directors declared a quarterly cash dividend of $0.20 per share on the common stock of the company, a 10% increase over the previous dividend. The dividend will be paid on December 18, 2023, to shareholders of record on December 11, 2023.

For the complete press release, click here.

About La-Z-Boy

La-Z-Boy Incorporated is a global leader in the manufacture and retail of residential furniture, marketing furniture for every room of the home. The Wholesale segment includes La-Z-Boy, England, American Drew^®, Hammary^®, Kincaid^® and the company’s international wholesale and manufacturing businesses. The company-owned Retail segment includes 175 of the 351 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 351 stand-alone La-Z-Boy Furniture Galleries^® stores and 521 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 https://www.la-z-boy.com/.

Contact:

Mark Becks – Investor Relations Contact – mark.becks@la-z-boy.com – (734) 457-9538

Source: La-Z-Boy Incorporated