La-Z-Boy(US:LZB)2024-02-21 19:08Financial Data and Key Metrics Changes - Consolidated delivered sales decreased 13% to $500 million compared to the prior year, which benefited from delivering above-normal pandemic backlog [21][142] - Non-GAAP gross margin improved by 140 basis points year-over-year, with gross margin expansion across all segments [13][43] - Non-GAAP operating margin was 6.6%, reflecting a 270 basis point decline versus last year primarily due to fixed cost deleverage on lower delivered sales [144][162] - Non-GAAP diluted EPS was $0.67, down from $0.91 in the prior year [161] Business Line Data and Key Metrics Changes - Retail segment delivered sales were $205 million, an 18% decrease over the prior year's third quarter [22] - Wholesale segment delivered sales declined to $356 million, a 13% decrease versus the prior year [23] - Joybird reported delivered sales of $34 million, an 18% increase versus the prior year quarter, driven by mix and pricing benefits [24] Market Data and Key Metrics Changes - Same-store sales for the La-Z-Boy Furniture Galleries network declined 6% versus the prior year, against a backdrop of a 7% industry contraction [7] - Written same-store sales across the entire network were down 1% for the first nine months of the fiscal year, while the industry was down 7% [49][153] Company Strategy and Development Direction - The company aims to grow top line at a pace double the market and deliver consistent double-digit operating margins over the long term as part of its Century Vision strategy [17][29] - The company is focused on expanding its La-Z-Boy brand reach through new stores, acquisitions, and remodels to enhance consumer experience [9][138] - The Long Live the Lazy brand campaign aims to connect with a broader consumer base and improve brand awareness [19][158] Management's Comments on Operating Environment and Future Outlook - The overall furniture and home furnishings industry is experiencing a slowdown due to low housing turnover and challenging interest rates [5] - Management expects a return to more normalized furniture demand in the latter half of fiscal 2025, driven by favorable demographics and anticipated interest rate reductions [8] - The company plans to prudently invest in the near term while preparing for long-term growth, expecting sales in the range of $505 million to $535 million for the fourth quarter [31][141] Other Important Information - The company ended the quarter with $333 million in cash and no externally funded debt, generating $48 million in cash from operating activities [145] - Capital expenditures for fiscal 2024 are expected to be in the range of $50 million to $60 million [146] - The company has made significant progress in optimizing its supply chain, including closing assembly plants in Mexico [159] Q&A Session Summary Question: What are the expectations for retail margins? - Management indicated that the third quarter typically has lower margins due to increased marketing spending and plant shutdowns, but they remain comfortable with low double-digit margin profiles for retail [56][58] Question: What is the outlook for acquisitions of independent dealers? - Management noted a combination of proactive engagement with independent dealers and favorable market conditions, leading to ongoing discussions about potential acquisitions [62][93] Question: How is pricing expected to evolve in the near future? - Management stated there are no plans for price declines and that pricing strategies are focused on maintaining competitiveness [67][79] Question: What is the impact of winter weather on sales? - Management acknowledged that winter weather negatively impacted traffic and sales in January, but trends improved in February [63][108] Question: Can you provide an update on the acquisition funnel? - Management expressed optimism about ongoing conversations with independent dealers and the potential for more acquisitions in the future [92][125]