La-Z-Boy Incorporated Reports Solid First Quarter Results

La-Z-Boy Incorporated, a global leader in the retail and manufacture of residential furniture, reported first quarter results for the period ended July 27, 2024. For the quarter, sales totaled $496 million, an increase of 3% against the prior year comparable period. Operating margin was 6.5% for the quarter on a GAAP basis and 6.6% on a Non-GAAP⁽¹⁾ basis. Diluted earnings per share totaled $0.61 on a GAAP basis and $0.62 on a Non-GAAP⁽¹⁾ basis. Operating cash flow was $52 million, twice as high as last year’s first quarter.

Fiscal 2025 First Quarter Highlights:

• Consolidated delivered sales of $496 million
  • Up 3% versus prior year
• Wholesale segment sales increased 5% on growth to external customers
• Delivered sales and Non-GAAP⁽¹⁾ operating margin in line with guidance
• GAAP diluted EPS of $0.61
  • Non-GAAP⁽¹⁾ diluted EPS of $0.62
• Generated $52 million in operating cash flow for the quarter

Written sales remained steady, with first quarter total written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^®) up 4% versus a year ago, and written same-store sales down 3% versus a year ago. Written same-store sales for the entire La-Z-Boy Furniture Galleries^® network also decreased 3% versus the year ago period. Trends were strongest around the Memorial Day holiday and softened towards the end of the quarter. Written sales results outperformed the broader furniture and home furnishings industry for May and June, which was also down 3% for the quarter. Across the industry, the consumer continues to be challenged and to pull back spending outside of key holidays.

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “We continue to deliver positive results amidst a challenging macroeconomic backdrop. We were pleased to return to delivered sales growth in the quarter, led by our Wholesale segment, which benefited from higher delivered volume supported by Century Vision’s channel expansion strategy. While the Retail business currently continues to wrestle with depressed traffic trends experienced across our industry, we again delivered strong execution. Conversion rates and design average ticket sales both improved again year-over-year and our in-store teams remain laser focused on providing the highest level of customer service and showcasing our industry leading product assortment. Over the past five years, our Retail business has grown at an impressive 7% compound annual sales growth. Our high quality offering of comfortable, custom furniture with quick delivery is resonating in a challenging marketplace. And while we expect industry fundamentals to be volatile for the foreseeable future, we remain confident in our ability to outperform the market and gain share longer term.”

Whittington added, “We remain committed to investing in our business for the long term, as we navigate the near-term headwinds in the furniture industry. As an iconic brand with a storied near 100-year history, we have the proven ability to adapt, with a strong balance sheet to support our strategy. Near-term market disruptions are likely to continue pressuring the fiscal year, but we are well positioned to disproportionately benefit when industry tailwinds re-emerge. With our Century Vision strategy, we are actively investing in growing our core Retail segment through strengthening in-store execution, opening new stores, and acquiring independent La-Z-Boy Furniture Galleries^® stores when we are able, as we believe our vertically integrated model offers superior returns over the longer term. This will uniquely position us to continue to outperform the industry and grow share.”

Second Quarter Outlook:

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “The overall macroeconomic and consumer spending environment remains challenging. Despite this, we delivered on our guidance and saw modest sales growth in line with our outlook. Looking forward, our industry will remain under pressure in the near term as the market contends with still high interest rates, muted housing turnover, and an uncertain economic and geopolitical environment. Considering these factors, we expect sales in the second quarter of fiscal 2025 to improve modestly versus the first quarter supported by seasonality. Further, we continue to invest in our Century Vision strategy and build the business for the long term. As such, we expect fiscal second quarter sales to be in the range of $495-515 million and Non-GAAP operating margin⁽²⁾ to be in the range of 6-7%.”

Fiscal 2025 First Quarter Results versus Fiscal 2024 First Quarter:

• Consolidated sales in the first quarter of Fiscal 2025 increased 3% to $496 million versus last year, primarily driven by higher delivered volume within our Wholesale segment
• Consolidated GAAP operating margin was 6.5% versus 7.2%
  • Consolidated Non-GAAP⁽¹⁾ operating margin decreased 40 basis points to 6.6% versus 7.0%, due to reduced fixed cost leverage in Retail, partially offset by gross margin expansion
• GAAP diluted EPS decreased to $0.61 from $0.63 and Non-GAAP⁽¹⁾ diluted EPS totaled $0.62 versus $0.62 last year in the comparable period

Retail Segment:

• Sales:
  • Written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^® stores) increased 4% 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 3%, driven by lower traffic and softer industry-wide demand, partially offset by strong execution that drove higher conversion rates
  • Delivered sales decreased 3% to $202 million versus last year, as the prior year benefited from the delivery of residual backlog related to component shortages
• Operating Margin:
  • GAAP operating margin and GAAP operating income was 10.2% and $21 million, versus 14.1% and $29 million, respectively
    • Non-GAAP⁽¹⁾ operating margin and Non-GAAP⁽¹⁾ operating income were 10.3% and $21 million, down 380 basis points and 29%, respectively, driven by fixed cost deleverage on lower delivered sales and fixed cost increases supporting our long-term strategy of growing our Retail business through new and acquired stores

Wholesale Segment:

• Sales:
  • Sales increased 5% to $351 million, primarily due to higher delivered volume to our external customers, partially offset by lower intercompany sales to our Retail segment and lowered delivered volume in our casegoods business
• Operating Margin:
  • GAAP operating margin was 6.8% versus 7.0%
    • Non-GAAP⁽¹⁾ operating margin increased to 6.9%, up 10 basis points from the year ago period driven by gross margin expansion primarily from lower input costs (reduced commodity prices, improved sourcing, and favorable duty expense) partially offset by channel mix related to higher non-La-Z-Boy Furniture Galleries^® delivered sales

Corporate & Other:

• Joybird written sales increased 9% and delivered sales decreased 3% to $35 million
• Joybird operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability

Balance Sheet and Cash Flow, Fiscal 2025 First Quarter:

• Ended the quarter with $342 million in cash⁽³⁾ and no external debt
• Generated $52 million in cash from operating activities versus $26 million in last year’s first quarter
• Invested $16 million in capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels), and upgrades at our manufacturing facilities and market showrooms
• Returned approximately $42 million to shareholders, including $34 million in share repurchases and $8 million in dividends

Dividend:

On August 20, 2024, the Board of Directors declared a quarterly cash dividend of $0.20 per share on the common stock of the company. The dividend will be paid on September 16, 2024, to shareholders of record on September 5, 2024.

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