La-Z-Boy Reports Record Sales and Operating Income for the Fiscal 2022 Fourth Quarter and Full Year

La-Z-Boy Incorporated, a global leader in residential furniture, reported record sales and operating income for the fiscal 2022 fourth quarter and full year ended April 30, 2022.

Fiscal 2022 full year versus Fiscal 2021 full year:

• Consolidated sales increased 36% to a record $2.4 billion
  • +33% adjusting for the 53^rd week in fiscal 2022
• Retail segment sales increased 31% to $804 million
  • Record sales, operating profit, and operating margin
• Joybird sales increased 62% to a record $176 million
  • Written sales for Joybird increased 27%
• Consolidated operating margin:
  • GAAP: 8.8% versus 7.9%
  • Non-GAAP⁽¹⁾: 8.1% versus 9.0%
• Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
  • GAAP: $3.39 versus $2.30
  • Non-GAAP⁽¹⁾: $3.11 versus $2.62
• $118 million returned to shareholders through share repurchases and dividends

Fiscal 2022 fourth quarter versus Fiscal 2021 fourth quarter:

• Consolidated sales increased 32% to a record $685 million
  • +22% adjusting for the 53^rd week in fiscal 2022
• Retail segment sales increased 20% to $233 million
  • Record sales, operating profit, and operating margin
• Joybird sales increased 40% to a record $53 million
• Consolidated operating margin:
  • GAAP: 11.5% versus 9.6%
  • Non-GAAP⁽¹⁾: 9.4% versus 10.0%
• Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
  • GAAP: $1.33 versus $0.81
  • Non-GAAP⁽¹⁾: $1.07 versus $0.87
• $22 million returned to shareholders through share repurchases and dividends

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy, said, “In what was a dynamic and volatile year marked by strong consumer demand for home furnishings, significant global supply chain challenges, and now macroeconomic and geopolitical uncertainty, La-Z-Boy Incorporated delivered record sales and operating income driven by powerful consumer brands, vast distribution, and the hard work of our passionate team. Our company-owned Retail segment posted record sales for the year, in addition to record operating profit which more than doubled, while sales for direct-to-consumer Joybird increased 62% to a record $176 million. Our Wholesale segment delivered record sales, with strong sequential improvement on production execution and margins. We had a great finish to the year, including sequential quarterly improvement in operating margin.”

Whittington added, “In the near term, we remain focused on increasing our agility to work down our backlog and improve service to customers and consumers with shorter lead times. Longer-term goals are centered on sustained profitable growth through our Century Vision strategic investments, even as we weather continued expected macroeconomic volatility. We expect our strong balance sheet and significant backlog will allow us to move through the current uncertain period and make important investments in our future as we deliver returns to all stakeholders.”

Consolidated sales in the fourth quarter of fiscal 2022 increased 32% to $685 million versus the fiscal 2021 fourth quarter, reflecting higher production, pricing and surcharge actions, and the extra week in the fiscal 2022 quarter which increased sales by approximately $49 million based on the average weekly sales for the quarter.

Consolidated GAAP operating margin was 11.5% versus 9.6% in the prior-year fourth quarter. Consolidated non-GAAP⁽¹⁾ operating margin was 9.4% versus 10.0% in the prior-year fourth quarter. Operating margin for the current-year period was impacted by raw material inflation and plant inefficiencies related to increasing manufacturing capacity, partially offset by pricing and surcharge actions, and fixed-cost leverage on higher volume.

GAAP diluted EPS increased to $1.33 for the fiscal 2022 fourth quarter versus $0.81 in the prior-year quarter. Non-GAAP⁽¹⁾ diluted EPS increased 23% to $1.07 versus $0.87 in the prior-year fourth quarter.

Wholesale Segment:

• Sales:
  • Increased 34% (+24% adjusting for the 53^rd week) to a record $513 million in the fiscal 2022 fourth quarter compared with the fiscal 2021 fourth quarter driven by realized pricing and surcharge actions as well as increased volume
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin in the fiscal 2022 fourth quarter was 8.8% versus 10.2% for the prior-year period, primarily reflecting higher raw material and freight costs, differences in channel mix, and plant inefficiencies related to increasing manufacturing capacity; these factors were partially offset by pricing and surcharge actions
  • Sequentially from the fiscal 2022 third quarter, operating margin improved 230 basis points in the fourth quarter of fiscal 2022

Retail segment:

• Delivered sales:
  • Increased 20% (+12% adjusting for the 53^rd week) to a record $233 million in the fourth quarter of fiscal 2022 compared with the prior-year fourth quarter
  • Delivered same-store sales increased 16% in the fiscal 2022 fourth quarter versus the year-ago period
• Written same-store sales for the company-owned La-Z-Boy Furniture Galleries^® stores decreased 9% in the fiscal 2022 fourth quarter, reflecting near-term consumer impacts of inflation and geopolitical concerns
• Operating Performance:
  • Non-GAAP⁽¹⁾ operating margin increased to a record 13.0%, or $30 million in operating profit, in the fiscal 2022 fourth quarter versus 12.2%, or $24 million in operating profit, in the fiscal 2021 fourth quarter, primarily driven by fixed-cost leverage on higher delivered sales volume

Corporate & Other:

• Joybird delivered sales increased 40% (+30% adjusting for the 53^rd week) to a record $53 million in the fiscal 2022 fourth quarter compared with the same quarter last year
• Joybird written sales increased 3% in the fiscal 2022 fourth quarter compared with the prior-year quarter
• Joybird profit for the quarter increased versus the prior-year period, reflecting an improved gross margin and continued increased marketing investments as the company builds brand awareness while continuing to increase web conversion, retail store traffic, average order value and average sales price

Balance Sheet and Cash Flow

For fiscal 2022, the company generated $79 million in cash from operating activities, after investing $72 million in higher inventory levels to protect against supply chain disruptions and to support increased production and delivered sales.

The company continued to make disciplined investments in the business, including $77 million in capital expenditures for the year, primarily related to store remodels, new upholstery manufacturing capacity in Mexico, plant upgrades, and technology upgrades.

The company returned $118 million to shareholders in fiscal 2022, including $28 million in dividends with $7 million paid in the fourth quarter, as well as $91 million in share repurchases, or approximately 2.5 million shares of stock, leaving approximately 7.5 million shares available for repurchase under its authorized share repurchase program as of April 30, 2022.

La-Z-Boy ended fiscal 2022 with $249 million in cash⁽²⁾ compared with $395 million in cash⁽²⁾ at the end of fiscal 2021. The company holds $27 million in investments to enhance returns on cash versus $32 million at the end of fiscal 2021.

Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “We are pleased with our strong fourth quarter execution, as we leverage our manufacturing investments to service our large backlog. We expect current macroeconomic and geopolitical uncertainty and its effect on consumer sentiment will likely cause demand trends to remain volatile for the foreseeable future. We are beginning to increase investments in marketing to drive demand for our strong brands to leverage their power in the marketplace, controlling the controllables, and improving our agility to navigate global supply chain disruptions. Taking all known factors into consideration, we expect delivered sales for the fiscal 2023 first quarter to be up 7% to 10% versus the first quarter of fiscal 2022, in a range of $560 million to $575 million, and consolidated non-GAAP operating margin to be in a range of 6.5% to 7.5%.”

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(1)Non-GAAP amounts for the fourth quarter of fiscal 2022 exclude:

• a purchase accounting net benefit related to acquisitions completed in prior periods totaling $3.4 million pre-tax, or $0.08 per diluted share, with $3.5 million included in operating income and $0.1 million included in interest expense
• a benefit of $10.7 million pre-tax, or $0.18 per diluted share, related to sale-leaseback transactions of three retail locations

Non-GAAP amounts for the fourth quarter of fiscal 2021 exclude:

• purchase accounting charges related to acquisitions completed in prior periods totaling $2.0 million pre-tax, plus related tax adjustments, or $0.06 per diluted share, primarily due to a write-up of the Joybird contingent consideration liability based on forecasted future performance, with $1.9 million included in operating income and $0.1 million included in interest expense

Non-GAAP amounts for the full fiscal 2022 year exclude:

• a purchase accounting net benefit related to acquisitions completed in prior periods totaling $1.7 million pre-tax, or $0.04 per diluted share, with $2.3 million included in operating income and $0.5 million included in interest expense
• a $3.3 million pre-tax, or $0.06 per diluted share, gain on the sale of the Newton, Mississippi facility related to the company’s business realignment, announced in June 2020. The company continues to operate a portion of this facility
• a benefit of $10.7 million pre-tax, or $0.18 per diluted share, related to sale-leaseback transactions of three retail locations

Non-GAAP amounts for the full fiscal 2021 year exclude:

• purchase accounting charges related to acquisitions completed in prior periods totaling $16.7 million pre-tax, or $0.33 per diluted share, primarily due to a write-up of the Joybird contingent consideration liability based on forecasted future performance, with $16.0 million included in operating income and $0.7 million included in interest expense
• a charge of $3.9 million pre-tax, or $0.07 per diluted share, related to the company’s business realignment initiative announced in June 2020
• income of $5.2 million pre-tax, or $0.08 per diluted share, related to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) recorded in other income related to the impact of employee retention credits

Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating the Non-GAAP measures used in this press release and a reconciliation to the most directly comparable GAAP measure.

⁽²⁾Cash includes cash, cash equivalents and restricted cash

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:

Kathy Liebmann – Media Contact – kathy.liebmann@la-z-boy.com – (734) 241-2438

Source: La-Z-Boy Incorporated