by Written same-store sales for company-owned stores rose 2%, driven by strong individual store performance and an increase in design business
MONROE, Mich. — La-Z-Boy Inc. reported a 20% decline in consolidated sales for its first fiscal quarter 2024, ended July 29.
However, written same-store sales for its company-owned stores rose 2% during the same period — which officials attributed to strong execution in its retail segment — while written sales for the entire La-Z-Boy Furniture Galleries network also rose 2% compared to last year.
Consolidated sales for the quarter totaled $482 million, down from $604.1 million the same period last year. The company noted that this was largely driven by lower delivered unit volume compared to last year’s backlog-driven sales and partially offset by a favorable product mix. Despite the decline, the company said this fell within its guidance of $470 million to $490 million.
Net income totaled $27.5 million, or 63 cents per share, compared to net income of $38.5 million, or 89 cents per share, the same period last year.
Operating income totaled $171.2 million, compared to $178.4 million last year. Its operating margin was 7.2% on a GAAP basis, compared to 8.7% last year, and 7% on a non-GAAP basis, compared to 8.9%, which the company also said was in line with guidance.
By segment its results were as follows:
+ Delivered sales for the company-owned Furniture Galleries Retail segment totaled $208 million, down 12% from $236 million last year. This was due largely to the company’s delivery of pandemic-related backlog last year. Meanwhile, the company said, total written store sales rose 8%, which was driven by positive same-store sales, new stores and acquired stores.
+ Its total written same store-sales for the retail segment rose 2% driven by “strong store execution, including improved conversion and an increase in design sales despite lower consumer traffic.”
“As demonstrated by our positive written same-store sales, the La-Z-Boy brand continues to outperform in a challenging home furnishings environment,” said Melinda D. Whittington, president and chief executive officer. “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.”
“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,” Whittington added. “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.”
Other highlights in the report were as follows:
+ Sales in the wholesale segment totaled $333.5 million, compared to $441.8 million the same period last year, a 24.5% decrease. The company said this was driven primarily by a decline in delivered volume compared to the previous year, “which benefited from an elevated backlog, partially offset by a favorable product mix.”
+ Its Joybird division’s written sales declined 17% and delivered sales decreased 17% to $36 million, reflecting “slowing e-commerce trends and industry demand challenges.”
+ The company ended the quarter with $340 million in cash and no external debt.
+ It generated $26 million in cash from operating activities compared to $33 million in the first quarter of last year.
+ The company invested $13 million in capital expenditures, largely related to La-Z-Boy Furniture Galleries — both new stores and remodels — and upgrades at its manufacturing and distribution facilities.
+ It also returned $18 million to shareholders which included $10 million in share repurchases and $8 million in dividends.
