La-Z-Boy Reports First Quarter Fiscal 2024 Results

La-Z-Boy Incorporated (“La-Z-Boy”), a global leader in the manufacture and retail of residential furniture, today reported first quarter results for the period ended July 29, 2023. Sales totaled $482 million, in line with guidance of $470 to $490 million, and a decrease of 20% against a year ago period that benefited from delivery of pandemic related backlog. Company owned Retail written same-store sales for the first quarter increased 2% versus a year ago, led by strong store execution. Written sales for the entire La-Z-Boy Furniture Galleries^® network also increased by 2%. Operating margin was 7.2% in the quarter on a GAAP basis and 7.0% on a Non-GAAP basis. Earnings per diluted share totaled $0.63 on a GAAP basis and $0.62 on a Non-GAAP basis.  

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “As demonstrated by our positive written same-store sales, the La-Z-Boy brand continues to outperform in a challenging home furnishings environment. These results are reflective of the strength of the La-Z-Boy brand and focus on execution in our stores. Further, we continued to execute on our Century Vision strategy, increasing our company owned Retail store count by four to 175 and opening incremental distribution via an enhanced channel strategy during the quarter. We remain confident we will consistently grow faster than the industry and deliver double digit operating margins over the long term.”  

Whittington added, “While our delivered results reflect comparison versus delivery of record pandemic related backlog levels in last year’s results, we are encouraged by positive written trends in both our company owned Retail segment and the broader La-Z-Boy Furniture Galleries^® network during the quarter, which accelerated from May to July. Looking forward, given the overall macro-economic environment, we expect the furniture market to remain challenged. However, we are expecting some improvement in the back half of our fiscal year consistent with historic seasonality of consumers’ furniture purchases. As we navigate the challenging environment, we are focused on controlling what we can control, leveraging our brand and strong product offerings, and strengthening conversion levels. We are particularly pleased to introduce our new brand campaign, “Long Live the Lazy,” which launched two weeks ago across TV and social media. We look forward to capitalizing on this new brand campaign and executing our business strategy to deliver solid results in the near term and drive our Century Vision over the long term.”

Second Quarter Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “Despite the macroeconomic headwinds facing La-Z-Boy and our peers in the industry, we delivered on our guidance. Looking forward, we expect consumer trends to remain soft and sales trends remain challenged against last year, which benefited from an elevated pandemic backlog. Considering these trends, and historical seasonality, we expect sales in the second quarter of fiscal 2024 to be slightly higher than the first quarter. Further, we expect Q2 operating margin to be similar to the first quarter, as we increase marketing investment in support of our new “Long Live the Lazy” campaign, which started in August. As such, we expect fiscal second quarter sales to be in the range of $490-$510 million and operating margin⁽³⁾ to be in the range of 6.5%-7.5%.”

Metric	Guidance
Consolidated Sales	$490-$510 million
Operating Margin	6.5%-7.5%

First Quarter Fiscal 2024 Financial Highlights

• Consolidated delivered sales of $482 million
• Company owned Retail written same-store sales increased 2%
• La-Z-Boy Furniture Galleries^® network written same-store sales increased 2%
• GAAP operating income decreased by 34%. Non-GAAP operating income decreased by 37%
  • GAAP operating margin decreased 150 basis points to 7.2% and Non-GAAP operating margin decreased 190 basis points to 7.0%
• GAAP diluted EPS of $0.63, with Non-GAAP diluted EPS of $0.62
• Cash generated from operating activities was $26 million

FY24 Q1 Results vs. FY23 Q1

Consolidated Results

• Consolidated sales in the first quarter of fiscal 2024 decreased 20% to $482 million, largely driven by lower delivered unit volume versus last year’s backlog driven sales, partially offset by favorable product mix
• Consolidated GAAP operating margin was 7.2% versus 8.7%
• Consolidated non-GAAP⁽¹⁾ operating margin was 7.0% versus 8.9%, driven primarily by fixed cost deleverage
• GAAP diluted EPS decreased to $0.63 from $0.89 and Non-GAAP⁽¹⁾ diluted EPS decreased to $0.62 from $0.91

Retail Segment

• Sales:
  • Delivered sales for the company owned Furniture Galleries^® Retail segment decreased 12% to $208 million, versus last year’s delivery of pandemic related backlog
  • Total written sales for the Retail segment increased 8% driven by positive same-store sales, new stores, and acquired stores
  • Written same-store sales for the Retail segment increased 2% primarily driven by strong store execution, including improved conversion and an increase in design sales despite lower consumer traffic
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin and operating income was 14.1% and $29 million, respectively, down 210 basis points and 23%, respectively, primarily driven by fixed cost deleverage

Wholesale Segment

• Sales:
  • Decreased 25% to $333 million driven primarily by a decline in delivered volume versus the year ago period, which benefited from an elevated backlog, partially offset by favorable product mix
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin increased to 6.8%, up 70 basis points; favorable raw material costs and product mix were partially offset by fixed cost deleverage on lower unit volume and foreign currency headwinds from a stronger Mexican peso relative to the U.S. dollar

Corporate & Other

• Joybird written sales declined 17% and delivered sales decreased 17% to $36 million, reflecting slowing e-commerce trends and industry demand challenges

Balance Sheet and Cash Flow, First Quarter Fiscal 2024

• Ended the first quarter with $340 million in cash⁽²⁾ and no external debt
• Generated $26 million in cash from operating activities versus $33 million in the first quarter of last fiscal year
• Invested $13 million in capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels), and upgrades at our manufacturing and distribution facilities
• Returned $18 million to shareholders, including $10 million in share repurchases and $8 million in dividends

Dividend

On August 22, 2023, the Board of Directors declared a quarterly cash dividend of $0.1815 per share on the common stock of the company. The dividend will be paid on September 15, 2023, to shareholders of record on September 6, 2023.

For the full first quarter 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 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