La-Z-Boy(LZB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated delivered sales for Q1 2025 were $496 million, an increase of 3% year-over-year [4][19] - Non-GAAP operating margin was 6.6%, with non-GAAP EPS at$ 0.62, unchanged from the prior year [4][19] - Operating cash flow was $52 million, double the amount from the previous year [4][23] - The company ended the quarter with$ 342 million in cash and no external debt [4][23] Business Line Data and Key Metrics Changes - Retail segment delivered sales decreased by 3% to $202 million, impacted by prior year backlog deliveries [20] - Wholesale segment delivered sales increased by 5% to$ 351 million, driven by higher volume to external customers [20][21] - Joybird reported delivered sales of $35 million, down 3% year-over-year, but showed improved operating performance [21][16] Market Data and Key Metrics Changes - Same-store sales for company-owned retail declined by 3%, consistent with industry trends [7][19] - The overall furniture and home furnishings industry also saw a 3% decline in sales for the quarter [7] Company Strategy and Development Direction - The company is focused on its Century Vision strategy, aiming for top-line growth at double the market rate and consistent double-digit operating margins [9][25] - Plans to expand the La-Z-Boy Furniture Galleries network to approximately 400 stores over the next several years [10] - The company is enhancing its channel strategy to increase brand reach and improve customer access [12] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the furniture industry due to high mortgage rates and economic uncertainty but expressed optimism about potential Fed rate cuts stimulating demand [5][18] - The company expects continued challenges in the macro environment but remains confident in outperforming the market [26][18] Other Important Information - The company returned$ 42 million to shareholders through dividends and share repurchases [24] - Capital expenditures for the quarter were $16 million, primarily for retail store openings and upgrades [24] Q&A Session Summary Question: Traffic trends at retail during the quarter - Management noted that traffic remains challenged but strengthened around major holidays like Memorial Day [32][33] Question: Progress on restructuring and margin expectations - Management is making progress on margin improvements but noted delays in hiring and productivity in Mexico [34] Question: Changes in advertising plans due to demand - Management is continuously optimizing advertising spend in response to current consumer demand [35] Question: Competitive landscape and pricing - Management highlighted opportunities to gain market share due to industry consolidation and noted that input costs remain high [38][40] Question: Retail margins outlook - Management expects retail margins to improve in the second half of the year, typically the strongest period for the segment [41] Question: Drivers of wholesale segment sales increase - Management attributed the increase to a return of external customers and new partnerships, such as with Rooms To Go [42][44] Question: Impact of casegoods business on margins - Management confirmed that surcharges have been implemented to offset higher container rates, but there may be a temporary mismatch in costs [53]