La-Z-Boy(US:LZB)2021-02-17 18:19Financial Data and Key Metrics Changes - Consolidated sales for Q3 2021 decreased 1.2% to $470 million primarily due to temporary supply chain impacts from COVID-19 [19] - Consolidated non-GAAP operating margin improved to 9.5% from 9.4% year-over-year, driven by strong performance from Joybird [19] - Non-GAAP EPS increased to $0.74 per diluted share from $0.72 in the prior year [19] - Cash generated from operating activities year-to-date reached $250 million, with cash at the end of the period totaling $393 million, more than double the previous year's $168 million [23] Business Line Data and Key Metrics Changes - Wholesale segment delivered sales declined 4% to $351 million, despite a backlog growth to over $600 million, reflecting COVID-19 production challenges [10][11] - Retail segment delivered sales decreased 1% to $166 million, while written same-store sales increased 9% [14] - Joybird reported a 30% increase in sales to $29 million, with written sales up 79% compared to the prior year [16] Market Data and Key Metrics Changes - Written same-store sales for La-Z-Boy furniture galleries increased 6.3% in Q3, with a year-to-date increase of 18% [9] - Average revenue per store increased to $4.4 million from $4.1 million in the previous year [9] Company Strategy and Development Direction - The company is focusing on expanding production capacity and investing in retail store upgrades, with over 20 projects planned for fiscal '21 and '22 [15] - A new manufacturing facility in Mexico was opened to enhance production capabilities [12] - The company aims to leverage its strong cash position for future growth opportunities while maintaining a conservative approach due to ongoing pandemic uncertainties [23][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business trajectory, expecting consolidated sales growth of 34% to 39% in Q4 compared to the prior year [30] - The company anticipates continued challenges from COVID-19 and global supply chain disruptions, but remains confident in its ability to manage these issues [29][30] - Management highlighted the importance of maintaining customer satisfaction despite extended backlog times due to high demand [45] Other Important Information - A leadership transition was announced, with Melinda Whittington succeeding Kurt Darrow as President and CEO at fiscal year-end [4][33] - The Board of Directors expanded to 10 members, adding Jim Hackett, a former CEO of Ford [17] Q&A Session Summary Question: Update on extended backlogs and cancellation rates - Management noted that cancellation rates have not materially changed, and demand remains high despite production challenges [45] Question: Fourth quarter sales guidance and supply chain challenges - Management confirmed that ongoing supply chain issues are impacting sales guidance, but they expect to increase production capacity [48][49] Question: January sales reacceleration and stimulus impact - Management indicated that various factors, including stimulus checks and improved consumer confidence, contributed to the sales uptick in January [58] Question: Joybird's growth rate and profitability sustainability - Management expressed confidence in Joybird's growth trajectory and plans to balance marketing investments with profitability [59] Question: Usage of record high cash balance - Management plans to invest in production capacity, retail store upgrades, and maintain a conservative approach due to pandemic uncertainties [61]