La-Z-Boy Incorporated Reports Strong Second Quarter Results

La-Z-Boy Incorporated, a global leader in the retail and manufacture of residential furniture, reported strong second quarter results for the period ended October 26, 2024. For the quarter, sales totaled $521 million, growing 2% against the prior year comparable period. Operating margin was 7.4% for the quarter on a GAAP basis and 7.5% on a Non-GAAP⁽¹⁾ basis. Diluted earnings per share totaled $0.71 on a GAAP and Non-GAAP⁽¹⁾ basis. The company returned $70 million to shareholders through the first two quarters, nearly double last year’s comparable period.

Fiscal 2025 Second Quarter Highlights:

• Consolidated delivered sales of $521 million
  • Up 2% versus prior year
• Retail segment sales increased 3%
  • Led by independent La-Z-Boy Furniture Galleries^® acquisitions, new stores, and record Labor Day sales results
• GAAP and Non-GAAP⁽¹⁾ diluted EPS of $0.71
• Delivered sales and Non-GAAP⁽¹⁾ operating margin ahead of guidance
• Company-owned La-Z-Boy Furniture Galleries^® network grew by five stores, with three new stores, two newly acquired independent La-Z-Boy Furniture Galleries^® stores, and an additional two-store acquisition signed and expected to close in the third quarter
• Quarterly dividend increased to $0.22, 10% higher than the previous dividend

Written sales trends also remained solid, with second quarter total written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^®) up 6% versus a year ago and written same-store sales (which exclude the impact of newly opened stores and newly acquired stores) down a modest 1% versus a year ago. Written same-store sales for the entire La-Z-Boy Furniture Galleries^® network also decreased 1% versus the year ago period. Trends were strongest during the Labor Day period, with solid results driven by accelerated consumer traffic and superior in-store execution. Furniture and Home Furnishings advance monthly retail sales growth as reported by the U.S. Census Bureau was +1% for our fiscal quarter driven by growth in home furnishings, sundry items for the home that are outside of our primary focus. The industry remains challenged with home-related spending impacted by higher mortgage rates and a lack of housing affordability and availability.

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “Our second quarter results demonstrate the continued progress we are making against our strategic pillars and our strong execution throughout the enterprise. We were pleased to deliver a second consecutive quarter of sales growth across our business despite the continued challenging macroeconomic trends. The combination of our iconic brand, strong product portfolio particularly in reclining and motion furniture, and our talented team again produced steady results against persistently weak consumer demand. In our company-owned La-Z-Boy Furniture Galleries^®, conversion rates, average ticket, and design sales all improved again year-over-year. We are consistently solving for the unique needs of our consumers and transforming houses into homes with our high quality, comfortable custom furniture solutions.”

Whittington added, “While our Retail segment continues to lead the way, our Wholesale and Joybird businesses similarly made steady progress in the quarter. With our long heritage of made in North America manufacturing, customers continue to gravitate towards our handcrafted, customized product offering. Additionally, our Joybird brand is making meaningful improvements on its path to sustained profitable growth. Our Century Vision strategy continues to deliver and we have considerable runway ahead as we transform for the next hundred years. What will endure is the comfort, quality, and customization for which our iconic La-Z-Boy brand is known. We view these as our true differentiators, which will uniquely position us to continue to outperform the industry and grow share over the longer term.”

Third Quarter Outlook:

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “Our strong performance in the quarter is another proof point of controlling what we can control and driving positive outcomes in a challenged industry. We outperformed our guidance with strong performance particularly around the Labor Day holiday, impressive execution, and a resolute focus on improving the agility of our operations. Furniture and home furnishings related spending continues to be soft, but we are outperforming the industry in a sustainable manner. Our expectation is for industry sales trends to remain under pressure, though we expect our growth to continue to outpace the industry. Taking those factors into account, we expect fiscal third quarter sales to be in the range of $505-525 million (an increase of 1-5% year-over-year) and Non-GAAP operating margin⁽²⁾ to be in the range of 6-7%.”

Fiscal 2025 Second Quarter Results versus Fiscal 2024 Second Quarter:

• Consolidated sales in the second quarter of Fiscal 2025 increased 2% to $521 million versus last year, primarily driven by higher delivered volume within our Retail segment and Joybird business
• Consolidated GAAP operating margin was 7.4% versus 6.6%
  • Consolidated Non-GAAP⁽¹⁾ operating margin decreased 40 basis points to 7.5% versus 7.9%, due to demand challenges in our casegoods import business and a significant temporary customer disruption in our international wholesale business
• GAAP diluted EPS increased to $0.71 from $0.63 and Non-GAAP⁽¹⁾ diluted EPS totaled $0.71 versus $0.74 last year in the comparable period

Retail Segment:

• Sales:
  • Written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^® stores) increased 6% with growth from new and acquired stores, more than offsetting slightly lower same-store sales compared to the year ago period
    • Written same-store sales decreased 1%, driven by lower traffic from softer industry-wide demand, partially offset by strong execution driving higher conversion rates
  • Delivered sales increased 3% to $222 million versus last year, primarily due to growth from new and acquired stores
• Operating Margin:
  • GAAP operating margin and GAAP operating income were 12.6% and $28 million, versus 13.0% and $28 million, respectively
    • Non-GAAP⁽¹⁾ operating margin and Non-GAAP⁽¹⁾ operating income were 12.6% and $28 million, down 40 basis points and flat, respectively, driven by an increase in selling expense and fixed costs supporting our long-term strategy of growing our Retail business through new and acquired stores, partially offset by gross margin improvements resulting from a favorable shift in product mix

Wholesale Segment:

• Sales:
  • Sales were roughly flat at $364 million, as higher sales to our Retail segment mostly offset lowered delivered sales in our international wholesale business
• Operating Margin:
  • GAAP operating margin was 6.7% versus 5.9%
    • Non-GAAP⁽¹⁾ operating margin was 6.8%, down 90 basis points from the year ago period driven by demand and macroeconomic challenges in our casegoods import business and fixed cost deleverage on lower sales in our international wholesale business due to a significant temporary customer disruption

Corporate & Other:

• Joybird written sales increased 1% and delivered sales increased 20% to $39 million on stronger sales trends in both our online and retail businesses
• Joybird operating margin performance saw year-over-year improvement from higher gross margins driven by favorable product mix and fixed cost leverage on higher sales leading to breakeven operating margin

Balance Sheet and Cash Flow, Fiscal 2025 Second Quarter:

• Ended the quarter with $303 million in cash⁽³⁾ and no external debt
• Generated $16 million in cash from operations versus $31 million in the second quarter of last fiscal year. Year to date, cash flow from operations was $68 million, up 20% from last year’s comparable period
• Invested $17 million in capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels)
• Returned approximately $28 million to shareholders, including $19 million in share repurchases and $8 million in dividends. Year to date, $70 million has been returned to shareholders, nearly double the same period last year

Dividend:

On November 19, 2024, the Board of Directors declared a quarterly cash dividend of $0.22 per share on the common stock of the company, a 10% increase over the previous dividend. The dividend will be paid on December 16, 2024, to shareholders of record on December 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