La-Z-Boy Reports Record Full Year Operating Income and EPS

La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported solid fourth quarter and full year results for the period ending April 29, 2023.

Fourth Quarter 2023 Financial Highlights:

• Consolidated sales of $561 million
  • -12% adjusting for the 53rd week in the fourth quarter of fiscal 2022, versus last year, which benefited from a strong backlog
• Retail segment sales increased 4% to $243 million
  • +12% adjusting for the 53rd week in the fourth quarter of fiscal 2022
  • Written same-store sales were essentially flat
• GAAP operating income decreased by 31%
  • Non-GAAP operating income decreased by 15%
  • GAAP operating margin decreased 190 basis points to 9.6%
  • Non-GAAP operating margin increased 40 basis points to 9.8%
• GAAP diluted EPS of $0.79, with Non-GAAP diluted EPS of $0.99, a 7% decrease
• Cash generated from operating activities was $78 million

Fiscal 2023 Financial Highlights:

• Consolidated sales of $2.3 billion
  • +2% adjusting for the 53^rd week in fiscal 2022
• Retail segment sales increased 22% to $982 million
  • Record sales, operating profit, and operating margin
• GAAP operating income increased by 2%
  • Non-GAAP operating income increased by 17%
  • GAAP operating margin increased 20 basis points to 9.0%
  • Non-GAAP operating margin increased 140 basis points to 9.5%
• Record diluted EPS
  • GAAP diluted EPS increased by 3% to $3.48
  • Non-GAAP diluted EPS increased by 24% to $3.86
• Cash generated from operating activities more than doubled to $205 million

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “I would like to congratulate and thank our entire organization for delivering another strong year, with record Retail segment sales and operating profit, and record consolidated diluted EPS. We achieved these results through disciplined supply chain investments and solid execution in our company owned retail stores, reflecting the strength of our vertically integrated Retail and Wholesale model. We are pleased with our strong finish in the fourth quarter, where we were able to maintain roughly flat written same-store sales despite the declining macro environment.”

Whittington added, “Our results were enabled by our strong portfolio of iconic brands, collaboration and leadership of our talented employees, and execution of our value proposition – comfortable custom furniture with quick delivery – as our backlog has returned to more normalized historical levels. Our playbook is working, with our Retail penetration increasing through new store growth and independent Furniture Galleries^® store acquisitions. We are confident in our ability to advance our business in an uncertain macro environment with our strong debt free balance sheet allowing us to invest in our Century Vision strategy to drive future growth. The foundation is set through Century Vision to expand brand reach and we continue to target sales growth exceeding the industry growth rate and double-digit operating margins over the long term. We look forward to executing this business strategy to create long-term shareholder value.”

FY23 Q4 Results vs. FY22 Q4:

Consolidated Results:

• Consolidated sales in the fourth quarter of fiscal 2023 decreased 18% (-12% adjusting for the 53rd week in fiscal 2022) to $561 million, with the realization of pricing and surcharge actions and the positive effects of a favorable product and channel mix more than offset by lower delivered unit volume versus last year’s backlog driven sales
• Consolidated GAAP operating margin was 9.6% versus 11.5%
• Consolidated non-GAAP⁽¹⁾ operating margin was 9.8% versus 9.4%
  • Improved operating margin was driven primarily by strong Retail performance
• GAAP diluted EPS decreased 41% to $0.79 from $1.33; non-GAAP⁽¹⁾ diluted EPS decreased 7% to $0.99 from $1.07

Retail Segment:

• Sales:
  • Delivered sales increased 4% (+12% adjusted for the 53rd week in fiscal 2022) to $243 million; delivered same-store sales were relatively flat
  • Total written sales for the Retail segment (company owned La-Z-Boy Furniture Galleries^® stores) increased 4%
• Written same-store sales for the Retail segment were essentially flat as strong store execution mitigated lower consumer traffic
• Operating Performance:
  • Non-GAAP⁽¹⁾ operating margin and operating income was 15.5% and $38 million, respectively, up 250 basis points and 24%, respectively, primarily driven by higher delivered sales relative to selling expenses and fixed costs

Wholesale Segment:

• Sales:
  • Decreased 23% (-17% adjusted for the 53rd week in fiscal 2022) to $395 million driven primarily by a decline in delivered volume as the backlog returned to pre-pandemic levels, partially offset by pricing and favorable channel and product mix
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin decreased to 8.7%, down 10 basis points; pricing and surcharge actions along with declining raw material and freight costs were essentially offset by fixed cost deleveraging on lower unit volume

Corporate & Other:

• Joybird delivered sales decreased 31% (-25% adjusted for the 53rd week in fiscal 2022) to $37 million, and written sales declined 24%, reflecting slowing e-commerce trends and industry demand challenges

Balance Sheet and Cash Flow, Fiscal 2023 Full Year

• Ended the fiscal year with $347 million in cash⁽²⁾ and no external debt
• Generated $205 million in cash from operating activities, including $78 million in the fourth quarter, versus $79 million in full fiscal year 2022 and $34 million in last year’s fourth quarter
• Invested $69 million in capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels), Joybird store projects, and upgrades at our manufacturing and distribution facilities
• Returned $35 million to shareholders, including $30 million in dividends and $5 million in share repurchases

Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “Excluding the impact of delivering backlog sales (approximately $300 million), normalized La-Z-Boy consumer demand in fiscal 2023 was 17% higher that it was in pre-pandemic fiscal 2019. In fiscal 2024, we expect to grow ahead of the industry from this normalized base, with the back half of our fiscal year stronger than the front half, in line with pre-pandemic seasonality trends. For our first quarter of fiscal 2024, which is generally the lowest sales quarter in the fiscal year, we expect sales to be in the range of $470 to $490 million and operating margin to be in the range of 6.5% 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:

Mark Becks – CFA – mbecks@la-z-boy.com – (734) 457-9538

Source: La-Z-Boy Incorporated