La-Z-Boy(US:LZB)2023-11-28 16:00Financial Performance - Consolidated sales decreased by $99.9 million, or 16%, in the second quarter of fiscal 2024 compared to the same period last year, and by $222.3 million, or 18%, in the first six months[104]. - Operating income for the second quarter of fiscal 2024 was $33.6 million, a decrease of 45.7% from $61.9 million in the same quarter last year[103]. - The operating margin decreased to 6.6% in the second quarter of fiscal 2024, down from 10.1% in the same quarter last year, reflecting a 350 basis point decline[103][105]. - Retail segment sales decreased by $37.8 million (15%) in Q2 and $65.6 million (13%) in the first six months of fiscal 2024, primarily due to a decline in same-store sales[109]. - Operating income for the Retail segment fell by 32.7% in Q2 and 28.2% in the first six months of fiscal 2024 compared to the same periods last year[108]. - Wholesale segment sales decreased by $81.3 million (18%) in Q2 and $189.6 million (21%) in the first six months of fiscal 2024, reflecting a decline in delivered unit volume[115]. Cost and Margin Analysis - Gross margin increased by 270 basis points in Q2 and 360 basis points in the first six months of fiscal 2024 compared to the same periods last year, driven by a favorable product mix and lower input costs[24]. - Gross margin for the Wholesale segment increased by 250 basis points in Q2 and 360 basis points in the first six months of fiscal 2024, aided by favorable input costs[117]. - SG&A expenses as a percentage of sales increased by 620 basis points in Q2 and 610 basis points in the first six months of fiscal 2024, primarily due to lower delivered sales[112]. Strategic Initiatives - The company closed its manufacturing facility in Torreón, Mexico, resulting in charges totaling $9.2 million in SG&A expenses and $1.6 million in cost of sales related to severance[91]. - Further actions to optimize manufacturing capacity included shifting upholstery production from Ramos, Mexico, leading to $3.6 million in cost of sales and $3.0 million in SG&A expenses for accelerated depreciation[92]. - The strategic plan, Century Vision, aims to grow sales and market share while strengthening operating margins by 2027[95]. - The company aims to enhance its enterprise capabilities to support growth and potential acquisitions, focusing on an agile supply chain and modern technology[98]. - The company expects to grow its Retail segment through increased company-owned store count and upgrading existing locations to new concept designs[100]. Cash Flow and Investments - Net cash provided by operating activities was $56.9 million in the first six months of fiscal 2024, an increase of $25.9 million compared to the prior year[127]. - Net cash used for investing activities in the first six months of fiscal 2024 was $25.3 million, a decrease of $18.8 million compared to the prior year due to lower capital expenditures and higher proceeds from asset sales[128]. - Capital expenditures for the period were $26.5 million, down from $40.4 million in the same period last year, with full-year expectations of $60 to $70 million[130]. - Cash used for acquisitions was $7.3 million, primarily for retail businesses in Colorado Springs and Lafayette[130]. - Cash from operations, along with available credit facilities, is expected to provide adequate liquidity for business operations over the next 12 months[129]. Shareholder Returns - Cash paid to shareholders in quarterly dividends was $15.6 million, with the board expected to continue declaring regular dividends[136]. - The company repurchased 0.7 million shares for $20.0 million in the first six months of fiscal 2024, with 6.6 million shares remaining available for repurchase[130]. - Net cash used for financing activities increased to $43.9 million, up $17.9 million from the prior year, primarily due to higher share repurchases[130]. Balance Sheet and Tax - Cash, cash equivalents, and restricted cash totaled $333.5 million as of October 28, 2023, down from $346.7 million at April 29, 2023[125]. - The effective tax rate was 26.5% for both Q2 and the first six months of fiscal 2024, compared to 25.8% and 26.2% for the same periods last year[123]. - The company has no borrowings outstanding under its $200 million unsecured revolving credit facility as of October 28, 2023[128]. - There were no material changes to the company's critical accounting policies during the six months ended October 28, 2023[134].