by Improvements in retail and wholesale segments of the business drive a 4% gain in quarterly revenues
MONROE, Mich. – Driven by strong sales across its retail and wholesale network, La-Z-Boy Inc. reported a 4% increase in revenues during its fiscal third quarter ended Jan. 25.
Sales totaled $521.8 million, up 4% from $500.4 million the same period last year. Net income also rose to $28.9 million, or 69 cents per share, compared with $28.6 million, or 67 cents per share, the same period last year.
The company said that retail sales rose 11% during the period, which was driven by same-store sales growth along with two newly acquired independent La-Z-Boy Furniture Galleries and three new stores. The company also had one store closure and said two more store acquisitions are expected to close in the fourth quarter.
In addition, total written store sales also increased 15% at company-owned La-Z-Boy Furniture Galleries and written same-store sales (excluding newly opened and newly acquired stores) were up 7% from the same period last year.
“Sales strength was broad based with all key markets posting positive same-store sales trends driven by strong execution and sequential improvements in traffic,” the company said, while also noting that written same-store sales for the entire retail store network rose 5% compared to the same period last year. “Performance continues to outpace the broader industry with market share gains in the quarter.”
By segment, the results were as follows:
+ The wholesale segment reported $363 million in sales, up 1.9% from $356.4 million the same period last year. Operating income totaled $23.6 million, up from $22.7 million last year. Operating margin in the segment was 6.5% compared with 6.4% last year.
+ The retail segment reported $227.7 million in sales, up 11.2% from $204.7 million the same period last year. Operating income totaled $24.5 million, up from $22.3 million a year ago. Operating margin was 10.7% compared with 10.9% last year.
+ Overall operating income was $35.2 million, compared with $32.6 million last year, and the overall operating margin for the quarter was 6.7% compared with 6.5% last year.
+ In the Joybird division, the company said, written sales increased 10% and delivered sales rose 9% to $37 million, “driven by improved retail traffic and strong execution.”
+ Meanwhile, it noted that the division’s operating margin saw year-over-year improvement “from higher gross margins driven by favorable product mix and SG&A leverage on higher sales leading to breakeven operating profit.”
Melinda D. Whittington, board chair, president and chief executive officer, said the company’s third quarter results “reflect the steady progress we have made to build a more agile business, create our own momentum and drive growth in what is still a challenged environment. We delivered sales growth across each of our segments, punctuated by strong retail same-store sales.”
She also noted that this was driven by improved conversion rates, average ticket and design sales.
“Additionally, within our wholesale segment, our core North America La-Z-Boy brand continues to post sales growth and margin expansion,” she said. “Our vertically integrated model reinforces the unique strength of our iconic brand and positions us to disproportionately benefit when the market rebounds. We are a trusted solution for a growing number of consumers and will remain steadfast in our mission of bringing the transformational power of comfort to people, homes and communities.”
“As we look to the future, our brand, and its well-known attributes of comfort and quality, will be further supported by our expanding consumer insights,” she added. “We believe this is creating a flywheel with improved innovation, strong speed to market, and improved brand reach and profitability. While underlying housing fundamentals remain challenged, we are focused on solving for the unique needs of the consumer with comfort and quality and controlling what we can control with strong execution. This is the foundation to what has led La-Z-Boy Inc. to be successful for the past century and will continue to be the cornerstone of our philosophy for our Century Vision strategy and next 100 years.”
Other highlights of the report were as follows:
+ The company said it ended the quarter with $315 million in cash and no external debt.
+ It also reported generating $57 million in cash from operations compared with $48 million in the same period last year. Year to date, it reported cash flow from operations of $125 million, up 19% from last year.
+ The company said it invested $19 million in capital expenditures, largely related to La-Z-Boy Furniture Galleries including new stores and remodels.
+ It also said it returned about $20 million to shareholders, including $11 million in share repurchases and $9 million in dividends. Year to date, it said, the company has returned $90 million to shareholders, about 40% more than the same period last year.
