Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- La-Z-Boy Inc (LZB, Financial) reported a 2% increase in total delivered sales for the second consecutive quarter, reaching $521 million.
- The retail segment sales increased by 3%, driven by acquisitions, new store openings, and record Labor Day results.
- GAAP and non-GAAP diluted EPS were reported at $0.71, with a quarterly dividend increase of 10% to $0.22.
- The company made significant progress in its Century Vision growth strategy, including opening new stores and acquiring independent La-Z-Boy Furniture Galleries.
- La-Z-Boy Inc (LZB) maintained a strong balance sheet with $303 million in cash and no externally funded debt.
Negative Points
- The furniture industry remains challenged by higher mortgage rates and lack of housing affordability, impacting consumer spending.
- Consolidated non-GAAP operating margin decreased by 4% compared to the previous year, reflecting demand challenges in the case goods import business.
- Written same-store sales for the company-owned retail segment declined by 1% compared to the prior year.
- The wholesale segment faced margin compression due to demand challenges and a temporary customer disruption in the international business.
- Inventory levels increased by 8% from the previous year, which was higher than expected.
Q & A Highlights
Q: Can you discuss the impact of international transitions on the wholesale segment's year-over-year margin decline?
A: Robert Lucian, CFO, explained that roughly half of the margin decline was due to international transitions, particularly the shift from ScS to DFS in the UK, alongside challenges in the casegoods business. Melinda Whittington, CEO, added that the core La-Z-Boy branded North America business saw positive margin growth.
Q: Are the improvements in La-Z-Boy's core branded margins due to manufacturing efficiencies?
A: Robert Lucian, CFO, confirmed that the improvements are indeed a result of manufacturing efficiencies and that they are on track to achieve a 50 to 60 basis point improvement by early fiscal year 2026.
Q: How are dealers reacting to new products and the outlook for calendar year 2025?
A: Melinda Whittington, CEO, noted positive feedback from dealers about new products and the showroom experience. While the industry remains cautious due to consumer recovery uncertainties, La-Z-Boy's strong financial management and North American footprint are seen as advantageous.
Q: What is the strategy for Joybird now that it has reached breakeven?
A: Melinda Whittington, CEO, stated that Joybird is moving towards a growth phase, focusing on disciplined operations and consumer engagement. They plan to expand Joybird stores slowly and steadily, reflecting a cautious but optimistic approach.
Q: How does La-Z-Boy plan to manage potential tariff impacts?
A: Melinda Whittington, CEO, highlighted that La-Z-Boy is well-positioned due to its North American manufacturing base. While tariffs could affect operations in Mexico, past experiences suggest that costs can be passed through to customers, maintaining agility in response to tariff changes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
