La-Z-Boy(LZB) - 2025 Q4 - Annual Results

Financial Highlights & Outlook La-Z-Boy reported strong Q4 and full-year fiscal 2025 results, with consolidated sales growing 3% to $571 million and $2.1 billion respectively, alongside robust operating cash flow and increased shareholder returns Fourth Quarter & Full Year Fiscal 2025 Highlights La-Z-Boy achieved strong Q4 and full-year fiscal 2025 results, with consolidated sales growing 3% to $571 million and $2.1 billion respectively, alongside robust operating cash flow and increased shareholder returns Fiscal 2025 Fourth Quarter Financial Highlights | Metric | Value ($ millions) | Change vs. Prior Year | | :--- | :--- | :--- | | Consolidated Delivered Sales | $571 | +3% | | Retail Segment Delivered Sales | - | +8% | | Wholesale Segment Delivered Sales | - | +2% | | GAAP Operating Margin | 5.2% | - | | Adjusted Operating Margin | 9.4% | Flat | | GAAP Diluted EPS | $0.36 | - | | Adjusted Diluted EPS | $0.92 | - | | Operating Cash Flow | $62 | +17% | Fiscal 2025 Full Year Financial Highlights | Metric | Value ($ millions) | Change vs. Prior Year | | :--- | :--- | :--- | | Consolidated Delivered Sales | $2,100 | +3% | | Retail Segment Delivered Sales | - | +5% | | Wholesale Segment Delivered Sales | - | +2% | | Joybird Delivered Sales | - | +5% | | GAAP Operating Margin | 6.4% | -20 bps | | Adjusted Operating Margin | 7.6% | - | | GAAP Diluted EPS | $2.35 | - | | Adjusted Diluted EPS | $2.92 | - | | Operating Cash Flow | $187 | +18% | | Returned to Shareholders | $113 | - | - The company-owned La-Z-Boy Furniture Galleries store base grew to 203 stores, now representing 55% of the total network[4][6] - For the full year, the company added 11 new stores and acquired 7 independent stores[4][6] Management Commentary Management attributes strong performance to the Century Vision strategy, expanding direct-to-consumer reach and supply chain efficiency, confident in outperforming peers despite economic uncertainty - The company is executing its Century Vision strategy, focusing on growing its direct-to-consumer business and owning the end-to-end consumer experience[6] - The company-owned store footprint has grown to over 200 stores, nearly doubling in the last 10 years and now representing 55% of the total network[6] - The core North America La-Z-Boy wholesale business achieved sales growth and margin expansion for four consecutive quarters in fiscal 2025[6] - Despite expecting continued economic uncertainty, management is confident in the business model's strength to outperform peers, leveraging its 98-year history, strong balance sheet, and agile supply chain[6] First Quarter Outlook For Q1 fiscal 2026, La-Z-Boy anticipates outperforming the industry with modest sales growth and an adjusted operating margin of 5.5% to 7.0%, despite temporary pressures and distribution network investments Q1 Fiscal 2026 Guidance | Metric | Guidance Range ($ millions) | | :--- | :--- | | Delivered Sales | $490 - $510 | | Adjusted Operating Margin | 5.5% - 7.0% | - The company expects to outperform the industry, driven by growth in its company-owned Retail segment and core North America La-Z-Boy wholesale business[7] - Q1 adjusted operating margin will be impacted by transitory pressure from UK and Joybird businesses and investment in a distribution and home delivery redesign project[7] Detailed Financial and Segment Performance This section provides a detailed breakdown of the company's consolidated and segment-specific financial results for the reported periods Consolidated Financial Results For Q4 FY2025, consolidated sales grew 3% to $571 million, while GAAP operating income fell 41% to $29.5 million due to a goodwill impairment charge, and adjusted operating income rose 3% to $53.6 million Q4 Fiscal 2025 vs. Q4 Fiscal 2024 | Metric | Q4 FY2025 ($ millions) | Q4 FY2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Sales | $570.9 | $553.5 | +3% | | GAAP Operating Income | $29.5 | $50.1 | -41% | | Adjusted Operating Income | $53.6 | $52.1 | +3% | | GAAP Diluted EPS | $0.36 | $0.91 | -60% | | Adjusted Diluted EPS | $0.92 | $0.95 | -3% | Full Year Fiscal 2025 vs. Full Year Fiscal 2024 | Metric | FY2025 ($ millions) | FY2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Sales | $2,109.2 | $2,047.0 | +3% | | GAAP Operating Income | $135.8 | $150.8 | -10% | | Adjusted Operating Income | $160.8 | $159.4 | +1% | | GAAP Diluted EPS | $2.35 | $2.83 | -17% | | Adjusted Diluted EPS | $2.92 | $2.98 | -2% | Retail Segment Performance The Retail segment reported an 8% increase in delivered sales to $247 million in Q4, driven by new and acquired stores and positive same-store sales growth, though adjusted operating margin decreased due to new store investments - Delivered sales increased 8% to $247 million, primarily due to growth from acquired and new stores[12] - Written sales for company-owned stores increased 3%, but written same-store sales decreased 5%, as weak industry traffic was partially offset by higher average ticket and design sales[11] - Adjusted operating margin was 13.1%, down 110 basis points from the prior year, due to investment in new stores[12] Wholesale Segment Performance The Wholesale segment's sales increased 2% to $402 million in Q4, driven by the core North America business, with adjusted operating margin remaining flat at 8.5% due to offsetting factors including an international customer transition - Sales increased 2% to $402 million, driven by growth in the core North America La-Z-Boy wholesale business[17] - Performance was partially offset by the continued impact of a significant customer transition in the international wholesale business[17] - Adjusted operating margin was flat at 8.5% versus the prior year, as margin expansion in the core North America business was offset by the international customer transition and incremental tariff expenses[17] Corporate & Other (including Joybird) In the Corporate & Other segment, Joybird's written sales decreased 21% and delivered sales decreased 2% to $36 million, primarily due to economic trends impacting its online consumer base, though its adjusted operating margin remained positive and relatively flat - Joybird written sales decreased 21% due to economic and industry trends impacting its online consumer base[17] - Joybird delivered sales decreased 2% to $36 million[17] - Joybird's adjusted operating margin was positive and relatively flat versus the prior year[17] Financial Position and Cash Flow This section details the company's strong financial position, including cash reserves, debt status, and cash flow activities for the fiscal year Balance Sheet and Cash Flow The company maintained a strong financial position, ending fiscal 2025 with $328 million in cash and no external debt, while operating cash flow increased 18% to $187 million, supporting capital expenditures and $113 million in shareholder returns - Ended the fiscal year with $328 million in cash and no external debt[17][35] Fiscal 2025 Cash Flow & Shareholder Returns | Metric | FY2025 ($ millions) | Change vs. FY2024 | | :--- | :--- | :--- | | Operating Cash Flow | $187 | +18% | | Capital Expenditures | $74 | +39% | | Free Cash Flow | $113 | +8% | | Share Repurchases | $78 | +48% | | Dividends | $35 | +7% | | Total Cash Returns | $113 | +32% | - The quarterly dividend was raised by 10% to $0.22 in the third quarter, representing the fourth consecutive annual dividend increase[4][17] Financial Statements and Reconciliations This section provides detailed financial statements and reconciliations of GAAP to adjusted financial measures, offering a comprehensive view of the company's financial performance and position Notes on Adjusted Financial Measures The company uses adjusted financial measures to assess ongoing performance by excluding certain items like a $20.6 million goodwill impairment charge and supply chain optimization charges, providing a clearer view of long-term profitability trends - Beginning in Q4 FY2025, the company renamed its Non-GAAP financial measures to 'adjusted' financial measures, with no change in calculation methodology[20] - Q4 FY2025 adjusted results exclude a $20.6 million pre-tax goodwill impairment charge related to the UK wholesale and manufacturing businesses[21] - Q4 FY2025 adjustments also include a $3.2 million pre-tax charge for UK supply chain optimization and $0.3 million in purchase accounting charges[21] - Full-year FY2025 adjusted results exclude the same UK goodwill impairment and supply chain charges, along with $1.2 million in purchase accounting charges[24][28] Consolidated Statement of Income The consolidated statement of income details the company's revenues, costs, and profits, showing sales of $2.11 billion and a net income of $99.6 million for the year ended April 26, 2025, impacted by a significant goodwill impairment charge Consolidated Income Statement Data (Year Ended) | (in thousands) | 4/26/2025 | 4/27/2024 | | :--- | :--- | :--- | | Sales | $2,109,207 | $2,047,027 | | Gross Profit | $926,418 | $881,670 | | Operating Income | $135,837 | $150,796 | | Goodwill Impairment | $20,581 | $0 | | Net Income Attributable to La-Z-Boy | $99,556 | $122,626 | | Diluted EPS | $2.35 | $2.83 | Consolidated Balance Sheet The consolidated balance sheet shows the company's financial position at year-end, with total assets of $1.92 billion, $328.4 million in cash, and total equity of $1.03 billion as of April 26, 2025 Consolidated Balance Sheet Data (Year-End) | (in thousands) | 4/26/2025 | 4/27/2024 | | :--- | :--- | :--- | | Cash and equivalents | $328,449 | $341,098 | | Total current assets | $805,688 | $836,808 | | Total assets | $1,922,162 | $1,913,442 | | Total current liabilities | $420,791 | $437,281 | | Total equity | $1,031,976 | $1,013,360 | | Total liabilities and equity | $1,922,162 | $1,913,442 | Consolidated Statement of Cash Flows For the fiscal year ended April 26, 2025, the company generated $187.3 million in net cash from operating activities, while using $98.4 million for investing and $102.6 million for financing activities, resulting in a $12.6 million decrease in cash Consolidated Cash Flow Data (Year Ended) | (in thousands) | 4/26/2025 | 4/27/2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,271 | $158,127 | | Net cash used for investing activities | ($98,389) | ($81,554) | | Net cash used for financing activities | ($102,612) | ($81,227) | | Change in cash | ($12,649) | ($5,580) | | Cash at end of period | $328,449 | $341,098 | Reconciliation of GAAP to Adjusted Financial Measures This section reconciles GAAP results to adjusted figures, showing how Q4 GAAP operating income of $29.5 million was adjusted by $24.1 million to $53.6 million, and full-year GAAP operating income of $135.8 million was adjusted by $25.0 million to $160.8 million, providing a clearer view of core operational performance Q4 FY2025 GAAP to Adjusted Reconciliation (Operating Income) | (in thousands) | Amount | | :--- | :--- | | GAAP operating income | $29,527 | | Purchase accounting charges | $256 | | Supply chain optimization charges | $3,247 | | Goodwill impairment | $20,581 | | Adjusted operating income | $53,611 | Full Year FY2025 GAAP to Adjusted Reconciliation (Operating Income) | (in thousands) | Amount | | :--- | :--- | | GAAP operating income | $135,837 | | Purchase accounting charges | $1,161 | | Supply chain optimization charges | $3,247 | | Goodwill impairment | $20,581 | | Adjusted operating income | $160,826 |