La-Z-Boy(US:LZB)2024-06-18 17:10Financial Data and Key Metrics Changes - Consolidated delivered sales for Q4 2024 were $554 million, up 22% compared to the pre-pandemic fourth quarter but down 1% year-over-year due to the previous year's pandemic backlog deliveries [17][61] - For the full fiscal year, consolidated delivered sales were just over $2 billion, roughly flat year-over-year when adjusted for pandemic-related backlog deliveries [18][34] - Non-GAAP operating margin for Q4 was 9.4%, with non-GAAP EPS at $0.95, while GAAP diluted EPS was $0.91 [7][31] - Cash flow from operations was $158 million for the year, down from the previous year due to lower sales after fulfilling the pandemic backlog [8][37] Business Line Data and Key Metrics Changes - Retail segment delivered sales decreased by 6% year-over-year to $228 million, but were 50% higher than the pre-pandemic fourth quarter [62] - Wholesale segment delivered sales declined by 1% to $392 million, with growth in external wholesale sales offset by decreases in freight revenue [63] - Joybird's delivered sales were roughly flat at $37 million, with improvements in profitability due to lower freight and warranty expenses [64] Market Data and Key Metrics Changes - Written same-store sales for the entire La-Z-Boy Furniture Galleries network declined by 3% in Q4, outperforming the industry which contracted by 8% [51] - Written same-store sales for the company-owned retail segment decreased by 5% year-over-year [20] - The overall Furniture and Home Furnishings industry is facing challenges due to high mortgage rates and low housing turnover, impacting store traffic [53] Company Strategy and Development Direction - The company aims to drive disproportionate growth over the long term, targeting sales growth at double the market rate and consistent double-digit operating margins [11][69] - The Century Vision strategy focuses on expanding the company-owned retail network, which now represents over 53% of the total La-Z-Boy Furniture Galleries network [24] - The company is enhancing brand awareness through the "Long Live the Lazy" campaign and is committed to developing consumer-relevant products [26][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging macroeconomic environment but remains optimistic about outperforming the market and achieving modest growth in fiscal 2025 [29][39] - The company expects industry challenges to persist, with potential improvements in demand anticipated later in fiscal 2025 as interest rates may decrease [39][128] - Management emphasizes the importance of maintaining a strong balance sheet and continuing share repurchases and dividends as part of their capital allocation strategy [38][71] Other Important Information - The company returned approximately $85 million to shareholders in fiscal 2024, including $33 million in dividends and repurchasing 1.6 million shares [68] - The effective tax rate for fiscal 2024 was 24.8%, down from 26.2% in the previous year, primarily due to non-taxable gains and increased R&D tax credits [36] Q&A Session Summary Question: How is the restructuring process progressing? - Management indicated that the restructuring is on track and expects a 50 to 60 basis points improvement in wholesale margin [46] Question: What are the expectations for same-store sales in the upcoming quarters? - Management expressed optimism about improving same-store sales, particularly following a solid start in May, despite the typically slow summer period [84][86] Question: What initiatives are expected to drive business growth? - Management highlighted the focus on expanding the company-owned retail network and improving supply chain agility as key drivers for growth [89][107] Question: How will margins be managed in a challenging environment? - Management noted that operational adjustments in plant hours and store staffing could help protect margins if the economic situation worsens [91] Question: What is the outlook for cash flow and capital expenditures? - Management expects capital expenditures to be in the range of $70 million to $80 million for fiscal 2025, with a focus on strengthening the company for future growth [71][125]