La-Z-Boy Reports Strong Fiscal 2023 Third-Quarter

La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported excellent third-quarter results for the period ending January 28, 2023.

Fiscal 2023 third-quarter highlights versus prior-year third quarter:

• Consolidated sales increased to $573 million
• GAAP operating income increased by 8%
  • Non-GAAP operating income increased by 34%
  • GAAP operating margin increased 60 basis points to 7.5%
  • Non-GAAP operating margin increased 230 basis points to 9.3%
• Retail segment sales increased 27% to $251 million
  • Retail segment GAAP and non-GAAP operating income increased 83% to a record $44 million
  • Retail segment GAAP and non-GAAP operating margin increased 540 basis points to a record 17.6%
• Written same-store sales for the Retail segment increased 3%
• GAAP diluted EPS increased by 14%
  • Non-GAAP diluted EPS increased by 40%
• Cash generated from operating activities more than tripled to $96 million

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “We again delivered excellent results driven by productivity gains throughout our supply chain and superb performance in our company-owned Retail segment. During the quarter, we worked down the majority of our excess backlog, getting close to normal lead times, and continued to invest in marketing to increase awareness and consideration of the La-Z-Boy brand. I am particularly pleased with our positive written sales trends in our Retail stores, driven by strong execution of our value proposition — comfortable custom furniture with quick delivery.”

Whittington added, “Across La-Z-Boy, we are capitalizing on and investing in our brand heritage of comfort. We’re honing our messaging, investing in targeted marketing, sharpening price points, and ensuring strong execution. As we move through this uncertain economic environment, we will continue to employ agility, a consumer-first focus, and our strong financial position to make smart investments to drive capability and brand reach. I am confident we will emerge stronger and capture increased market share.”

FY23 Q3 Results vs. FY22 Q3

Consolidated Results:

• Consolidated sales in the third quarter of fiscal 2023 increased to $573 million, with the realization of pricing and surcharge actions and the positive effects of a favorable product and channel mix offsetting lower delivered unit volume
• Consolidated GAAP operating margin was 7.5% versus 6.9%
• Consolidated non-GAAP⁽¹⁾ operating margin was 9.3% versus 7.0%
  • Improved operating margin was driven primarily by strong Retail performance
• GAAP diluted EPS increased 14% to $0.74 from $0.65; non-GAAP⁽¹⁾ diluted EPS increased 40% to $0.91 from $0.65

Retail Segment:

• Sales:
  • Delivered sales increased 27% to $251 million; delivered same-store sales increased 23%, as we improved service to consumers and moved closer to pre-pandemic lead times
  • Total written sales for the Retail segment (company-owned La-Z-Boy Furniture Galleries^® stores) increased 8%
    • Written same-store sales for the Retail segment increased 3% and were 12% higher than pre-pandemic levels (FY20 Q3)
• Operating Performance:
  • Non-GAAP⁽¹⁾ operating margin and operating income increased to all-time records of 17.6% and $44 million, respectively, up 540 basis points and 83%, respectively, primarily driven by higher delivered sales relative to selling expenses and fixed costs

Wholesale Segment:

• Sales:
  • Decreased 4% to $408 million driven primarily by a decline in delivered volume, partially offset by pricing and favorable channel and product mix
• Operating Margin:
  • Non-GAAP⁽¹⁾ operating margin improved to 6.6%; pricing and surcharge actions along with declining freight costs were mostly offset by an increase in marketing spend to pre-pandemic levels

Corporate & Other:

• Joybird delivered sales decreased 35% to $29 million, and written sales declined 21%, reflecting both slowing e-commerce trends and a reduction in marketing spend to align with consumer behavior and focus on efficient return on advertising spending
• Joybird posted a loss for the period, primarily reflecting lower delivered volume due to the written sales decline in FY23 Q2

Balance Sheet and Cash Flow as of FY23 Q3

• Ended the quarter with $284 million in cash⁽²⁾ and no external debt
• Year to date, generated $127 million in cash from operating activities, including $96 million in the third quarter, versus $45 million in the prior-year nine-month period and $30 million in last year’s third quarter
• Year to date, spent $57 million on capital expenditures, primarily related to La-Z-Boy Furniture Galleries^® (new stores and remodels) and Joybird store projects, and upgrades at our manufacturing and distribution facilities
• Year to date, returned $27 million to shareholders, including $22 million in dividends and $5 million in share repurchases

Dividend

On February 21, 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 March 15, 2023, to shareholders of record on March 7, 2023.

Outlook

Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, said, “As we have essentially worked down our backlog to pre-pandemic levels, we anticipate that Q4 delivered sales will be at levels consistent with what we write, consistent with historical seasonality, and almost 20% above pre-pandemic. We estimate delivered sales for the fiscal 2023 fourth quarter to be in a range of $525 million to $545 million, and consolidated non-GAAP operating margin⁽³⁾ to be in a range of 7% to 9%.”

Last year’s fourth quarter included 14 weeks versus this year’s fourth quarter which will include a normal 13 weeks. Last year’s extra week contributed approximately $49 million in sales based on the average weekly sales for the quarter.

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