Company said sales of $511 million were on the high end of prior guidance, with a 16% decrease that accounts for delivery of pandemic-related backlog last year
MONROE, Mich. — La-Z-Boy reported a double-digit drop in sales and net income for its second fiscal quarter 2024 ended Oct. 28.
Sales for the quarter totaled $511.4 million, down 16% from the $611.3 million reported the same period last year. The company said that this was at the high end of guidance from last quarter, with higher sales last year benefiting from the delivery of pandemic-related backlog.
Net income for the quarter totaled $27.2 million, or 63 cents per share, down 41% from last year’s net income of $46.1 million, or $1.07 per share.
For the full first half, the company reported sales of $993.1 million, down 18.3% from the $1.2 billion reported the same six-month period last year. Net income during the first half totaled $54.7 million, or $1.26 per share, compared to net income of $84.6 million, or $1.96 per share, the same period last year, a 35.3% decrease.
The company also said that same-store sales for the La-Z-Boy Furniture Galleries network increased 1% from last year, with company-owned same-store sales flat against what it described as a “challenged consumer environment.” It reported an operating margin of 6.6% during the quarter on a General Accepted Accounting Principles basis and 7.9% on a non-GAAP basis.
“In spite of a challenging macro environment and the continued soft home furniture industry, La-Z-Boy Incorporated continues to outperform,” said President and CEO Melinda D. Whittington. “These results were achieved via strong execution, particularly in our retail stores and across our supply chain. We continue to make progress on our Century Vision strategy, highlighted by growth in our company-owned retail store base, which now represents just over half of our entire network.”
She added that the company also recently signed an agreement to acquire an additional six-store network from an independent La-Z-Boy Furniture Galleries dealer in the Midwest.
The company said that delivered sales for the retail segment declined 15% to $214 million compared to last year, which reflected delivery of pandemic-related backlog. However, the company noted, this also increased 44% from the most recent pre-pandemic second quarter in fiscal year 2020. Non-GAAP operating margin and operating income were 13% and $28 million, respectively.
On the wholesale side of the business, sales fell 18% to $365 million, which was related to a drop in delivered volume versus a year ago, which the company said also benefited from pandemic-related backlog production and deliveries. Non-GAAP operating margin decreased to 7.7% which the company said was down 90 basis points. The company noted that gross margin improvement from lower raw materials costs and duty expenses was more than offset by fixed cost deleverage and increased marketing expenses related to the launch of the “Long Live the Lazy” brand campaign.
“We are excited about the potential of our new brand campaign, ‘Long Live the Lazy,’ which was introduced in August,” Whittington said. “In the quarter, we activated our new marketing strategy, leveraging data-based consumer insights and our brand heritage of comfort and quality to connect with a broader consumer base. Despite weakness in near-term industry traffic trends, we continue to take a long-term approach to investing in our business and are making steady progress toward building a more agile supply chain and optimizing our network. Although consumer traffic trends remain a headwind, La-Z-Boy remains well positioned to continue outperforming the industry due to our iconic brand, consumer preferred shopping experience, and long-term approach to investing in our business, enabled by the strength of our balance sheet. We are confident in our ability to grow at a pace double the industry and deliver double-digit operating margins over the long term.”
Other highlights of the report were as follows:
+ Written sales at Joybird increased 5% and delivered sales decreased 15% to $32 million which the company said reflected sequential improvements in both metrics. “E-commerce trends remain challenging following the broad industry slowdown, which began in the prior year’s second quarter.”
+ The company said that it ended the second quarter with $333 million in cash and no external debt. + The company said it generated $31 million in cash from operating activities compared to the use of $2 million in the second quarter of last year. Cash flow from operations was $57 million year to date, which is up 84% from the same period last year.
+ The company made $13 million in capital expenditures, largely related to La-Z-Boy Furniture Galleries including new stores and remodels as well as projects at its manufacturing and distribution facilities.
+ During the quarter, the company said it also returned $18 million to shareholders, including $10 million in share repurchases and $8 million in dividends.