La-Z-Boy Incorporated Reports Solid Fourth Quarter and Full Year Results

La-Z-Boy Incorporated, a global leader in the manufacture and retail of residential furniture, reported fourth quarter and full year results for the period ended April 27, 2024. For the quarter, sales totaled $554 million, a decrease of 1% against a year ago period that benefited from pandemic backlog deliveries and 22% above the pre-pandemic fourth quarter of Fiscal 2019. Operating margin was 9.1% in the quarter on a GAAP basis and 9.4% on a Non-GAAP⁽¹⁾ basis. Diluted earnings per share totaled $0.91 on a GAAP basis and $0.95 on a Non-GAAP⁽¹⁾ basis.

Fiscal 2024 Fourth Quarter Highlights

• Consolidated delivered sales of $554 million
  • Up 22% versus most recent pre-pandemic fourth quarter (Fiscal 2019 Fourth Quarter)
  • Down 1% versus prior year
• GAAP diluted EPS of $0.91
  • Non-GAAP⁽¹⁾ diluted EPS of $0.95
• Generated $53 million in operating cash flow for the quarter
• Grew company-owned La-Z-Boy Furniture Galleries^® network by three stores (including two acquired independent La-Z-Boy Furniture Galleries^® stores)

Fiscal 2024 Highlights

• Consolidated delivered sales of $2.05 billion
• Gross margin expansion on GAAP and Non-GAAP⁽¹⁾ basis, across all segments
• GAAP diluted EPS of $2.83
  • Non-GAAP⁽¹⁾ diluted EPS of $2.98
• Generated $158 million in operating cash flow for the year
• Strong balance sheet with $341 million in cash and no external debt
• Opened six company-owned and acquired 11 independent La-Z-Boy Furniture Galleries^® stores
  • Retail (company-owned) stores now represent over half of the total La-Z-Boy Furniture Galleries^® network for first time in company history
• Returned $85 million to shareholders through share repurchases and dividends
  • Increased prior quarterly dividend by 10% to $0.20 in third quarter

Written sales again outperformed the industry, with fourth quarter total written sales for the Retail (company-owned La-Z-Boy Furniture Galleries^®) segment up 1% versus a year ago, and written same-store sales down 5% versus a year ago. Written same-store sales for the entire La-Z-Boy Furniture Galleries^® network decreased 3% versus the year ago period. Trends were strongest in the first half of the quarter around key holiday events and recovery from January weather events. Written sales results continue to outperform the broader industry, which was down 8% for the quarter, as furniture and home furnishings spending remains depressed with overall traffic trends challenged and housing activity down due to continued higher interest rates.

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “We are pleased with our strong finish to the fiscal year as fourth quarter results exceeded expectations. Wholesale unit volumes improved in the quarter and recovery from weather and related disruptions in January also provided a tailwind. The industry continues to grapple with higher for longer interest rates and housing turnover near 30-year lows negatively impacting store traffic. However, our execution is the strongest it has ever been, including conversion rates at all-time highs and average ticket and design sales trending up for the year. We expect industry fundamentals to remain volatile for the near term, but remain confident in our ability to outperform the market and gain share longer term. Our first quarter is off to a good start and we are encouraged by our solid Memorial Day results as we believe our assortment and best-in-class motion offerings are resonating with consumers in the marketplace.”

Whittington added, “During the year we made great progress on our Century Vision strategy increasing both the total La-Z-Boy Furniture Galleries^® store network and the number of company-owned stores. We opened six new company-owned stores and acquired 11 independent Furniture Galleries^® stores. We also invested in both our stores and manufacturing operations through remodels and improving the agility of our supply chain. As a market leader in comfortable custom furniture with quick delivery, we are positioned to continue to outperform the industry and grow share. Our focus remains on executing our proven playbook of expanding our Retail segment through new and acquired stores, delivering sales growth double the industry, and driving margin expansion. I want to thank all of our dedicated employees for their strong contributions throughout the year. The momentum in our business is palpable, particularly with our strong merchandising offerings and new “Long Live the Lazy” brand campaign building awareness, consideration, and purchase intent. We are excited to build further on this foundation in Fiscal 2025.”

First Quarter Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “Taken together, our third quarter and fourth quarter results were largely in line with our plans for the second half of Fiscal 2024. Recall, delivered sales in Fiscal 2023 included $300 million of backlog. Thus, our sales were roughly flat compared to last year, absent this backlog. Looking forward, in Fiscal 2025, we expect the industry to continue to be challenged, down by as much as 5%, with any improved industry trends occurring late in our fiscal year, towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity. We expect to continue to outperform the industry in Fiscal 2025, which should result in modest sales growth year-over-year. Growth will be supported by executing our Century Vision strategy, including the opening of 12 to 15 new La-Z-Boy Furniture Galleries^® stores, mainly in the second half of the fiscal. For the first quarter of Fiscal 2025, we expect delivered sales to be in the range of $475-495 million and Non-GAAP operating margin⁽²⁾ to be in the range of 6-7%. Also, as a reminder, our first quarter is generally the lowest sales and margin quarter in the fiscal year due to seasonally lower industry sales and our annual week-long plant shutdown in July.”

Fiscal 2024 Fourth Quarter Results versus Fiscal 2023 Fourth Quarter

• Consolidated sales in the fourth quarter of Fiscal 2024 decreased 1% to $554 million versus last year. Sales in the fourth quarter of Fiscal 2023 included the delivery of a significant backlog resulting from heightened demand in prior periods. Sales increased 22% versus the most recent pre-pandemic fourth quarter in Fiscal 2019
• Consolidated GAAP operating margin was 9.1% versus 9.6%
  • Consolidated Non-GAAP⁽¹⁾ operating margin decreased 40 basis points to 9.4% versus 9.8%, driven by lower gross margin from segment mix partially offset by lower SG&A spend
• GAAP diluted EPS increased to $0.91 from $0.79 and Non-GAAP⁽¹⁾ diluted EPS decreased to $0.95 from $0.99

Retail Segment

• Sales:
  • Written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^® stores) increased 1% with growth from acquired and new stores, more than offsetting lower same-store sales compared to the year ago period
    • Written same-store sales decreased 5%, driven by lower traffic and the challenging economic environment, partially offset by stronger conversion rates and higher design sales
  • Delivered sales decreased 6% to $228 million versus last year’s results that included delivery of pandemic-related backlog but increased 50% versus the most recent pre-pandemic fourth quarter in fiscal year 2019
• Operating Margin:
  • GAAP operating margin and GAAP operating income was 14.1% and $32 million, versus 15.5% and $38 million, respectively
    • Non-GAAP⁽¹⁾ operating margin and Non-GAAP⁽¹⁾ operating income were 14.2% and $32 million, down 130 basis points and 14%, respectively, driven by improved gross margin from favorable shift in product mix, more than offset by fixed cost deleverage on lower delivered sales

Wholesale Segment

• Sales:
  • Sales decreased 1% to $392 million, relatively flat versus the year ago period
• Operating Margin:
  • GAAP operating margin decreased to 8.1% versus 8.5%
    • Non-GAAP⁽¹⁾ operating margin decreased to 8.5%, down 20 basis points; gross margin declines were partially offset by lower SG&A expenses

Corporate & Other

• Joybird written sales decreased 1% and delivered sales were roughly flat at $37 million as sales trends have largely stabilized. Joybird again made meaningful progress on improving profitability in the quarter with lower freight and warranty expenses, improved product mix, and a higher return on advertising spending

Balance Sheet and Cash Flow, Fiscal 2024

• Ended the fiscal year with $341 million in cash⁽³⁾ and no external debt
• Generated $158 million in cash from operating activities, including $53 million in the fourth quarter, versus $205 million in Fiscal 2023 and $78 million in last year’s fourth quarter, which benefited from pandemic backlog deliveries
• Invested $54 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 approximately $85 million to shareholders, including $53 million in share repurchases and $33 million in dividends

For full results 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 184 of the 353 La-Z-Boy Furniture Galleries^® stores. The Corporate and Other segment includes Joybird, an e-commerce retailer and manufacturer of upholstered furniture that also has 12 stores in the U.S. The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 353 stand-alone La-Z-Boy Furniture Galleries^® stores and over 500 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, CFA – Investor Relations Contact – mark.becks@la-z-boy.com

Source: La-Z-Boy Incorporated