by Written sales gains in retail segment help fuel overall revenue growth during the quarter
MONROE, Mich. — La-Z-Boy reported a 2% increase in sales for its second quarter ended Oct. 26, which was driven in part by new store acquisitions and record Labor Day sales along with a 20% increase in delivered sales in its Joybird business.
The company reported consolidated quarterly sales of $521 million, up 2% from $511.4 million the same period last year.
Net income totaled just over $30 million, or 71 cents per share, compared with $27.2 million, or 63 cents per share last year.
Operating income totaled $38.8 million, up 15% from $33.6 million, the same period last year. Operating margin was 7.4% up 80 basis points from 6.6% last year.
The company said that written sales for company owned La-Z-Boy retail Furniture Galleries were up 6% overall during the quarter, while written same-store sales were down 1% from last year, “driven by lower foot traffic from softer industry wide demand. It noted that this was partially offset by strong execution driving higher conversion rates.
It said written same store sales for the entire La-Z-Boy Furniture Galleries network also were down 1% compared with last year. Sales activity was strongest during the Labor Day period, “with solid results driven by accelerated consumer traffic and superior in-store execution.”
It also noted that delivered sales in the retail segment rose 3% from last year to $222 million, primarily related to growth from new and acquired stores.
In the wholesale segment, the company sale sales were flat at around $364 million “as higher sales in the retail segment mostly offset lowered delivered sales in our international wholesale business.”
Written sales in the Joybird e-commerce division rose 1% during the quarter, while delivered sales rose 20% to $39 million, “on stronger sales trends in both our online and retail business.” It also reported an improvement in its year-over-year Joybird operating margin “from higher gross margins driven by favorable product mix and fixed cost leverage on higher sales leading to breakeven operating margin.”
“Our second quarter results demonstrate the continued progress we are making against our strategic pillars and our strong execution throughout the enterprise,” said Melinda D. Whittington, president and chief executive officer. “We were pleased to deliver a second consecutive quarter of sales growth across our business despite the continued challenging macroeconomic trends. The combination of our iconic brand, strong product portfolio particularly in reclining and motion furniture, and our talented team again produced steady results against persistently weak consumer demand. In our company-owned La-Z-Boy Furniture Galleries, conversion rates, average ticket, and design sales all improved again year-over-year. We are consistently solving for the unique needs of our consumers and transforming houses into homes with our high quality, comfortable custom furniture solutions.”
She added that both the wholesale division and Joybird business made steady progress during the quarter.
“With our long heritage of made in North America manufacturing, customers continue to gravitate towards our handcrafted, customized product offering,” she said. “Additionally, our Joybird brand is making meaningful improvements on its path to sustained profitable growth. Our Century Vision strategy continues to deliver and we have considerable runway ahead as we transform for the next hundred years. What will endure is the comfort, quality, and customization for which our iconic La-Z-Boy brand is known. We view these as our true differentiators, which will uniquely position us to continue to outperform the industry and grow share over the longer term.”
For the six-month period, the company reported sales of $1.02 billion, up 23% from $993.1 million the same period last year. Net income totaled $56.6 million, or $1.34 per share, compared with $55.6 million or $1.27 per share the same period last year. Operating income for the six-month period totaled $71.1 million, compared with $68.1 million the same period last year.
Other highlights of the report were as follows:
+ The company said it ended the quarter with $303 million in cash and no external debt.
+ It said it generated $16 million in cash from operations compared with $31 million in the second quarter of last fiscal year.
+ Year-to-date it said that cash flow from operations was $68 million, up 20% from the same period last year.
+ It reported investing $17 million in capital expenditures during the second quarter, largely related to new La-Z-Boy Galleries stores and remodels.
+ It said it returned about $28 million to shareholders, including $19 million in share repurchases and $8 million in dividends. Year-to-date, it said it has returned $70 million to shareholders, nearly double the same period last year.
