La-Z-Boy(US:LZB)2025-08-20 13:30Financial Data and Key Metrics Changes - Consolidated sales for the quarter were $492 million, down slightly from the prior year, with a 1% decrease compared to the previous year [7][18] - Consolidated GAAP operating income was $22 million, and adjusted operating income was $23 million, with an adjusted operating margin of 4.8% [19][22] - The company maintained a strong balance sheet with $319 million in cash and no external debt, generating $36 million in cash from operating activities [7][23][24] Business Line Data and Key Metrics Changes - In the Retail segment, delivered sales increased by 2% to $207 million, driven primarily by new and acquired stores, while written sales decreased by 4% in same-store sales [6][19] - The Wholesale segment saw delivered sales grow by 1% to $353 million, with an adjusted operating margin of 7.5%, up from 6.9% [20][22] - Joybird's delivered sales were down 20% to $28 million, with a noted increase in operating loss due to lower delivered volume [21][22] Market Data and Key Metrics Changes - Industry traffic remains depressed, with housing transactions near thirty-year lows, affecting store traffic and same-store sales [10] - Retail public company peers reported same-store sales ranging from down low to mid-single digits, while broader industry data showed recently downwardly revised figures but still in the positive mid-single digit range [10] Company Strategy and Development Direction - The company is focused on its Century Vision strategy to drive long-term shareholder value, including expanding its direct-to-consumer business and enhancing its retail footprint [11][12] - A significant acquisition of a 15-store network in the Southeast U.S. is expected to close in October, which will be the largest independent La Z Boy Furniture Galleries acquisition in the company's history [11][26] - The company is transforming its distribution network to improve supply chain agility, reducing the number of distribution centers from 15 to 3 centralized hubs [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to grow sales and outperform the industry while navigating the current consumer environment [8][30] - The company anticipates fiscal second-quarter sales to be in the range of $510 million to $530 million, with adjusted operating margins expected between 4.5% to 6% [27][28] - Management acknowledged the challenges posed by an increasingly pressured consumer and emphasized the importance of prudent navigation through these conditions [36][46] Other Important Information - The company was recognized by Newsweek as one of America's best retailers in 2025, ranking number one in the furniture category [12] - The company plans to open approximately 15 new company-owned and independent La Z Boy Furniture Gallery stores during the year, with a focus on maximizing store productivity [28][29] Q&A Session Summary Question: Can you provide additional color on the sequential improvement in trends during the quarter? - Management noted that there was a sequential traffic improvement through the first quarter, which has continued into early August, but emphasized that it is too early to call it a trend [34][35] Question: How should we think about the ramp of new stores to maturity and its relation to margins? - New stores typically drag on profitability in year one, with improvements expected in year two and becoming neutral to accretive by year three [37] Question: What are you hearing from wholesale customers regarding order hesitancy due to tariffs and pricing uncertainty? - Management indicated that while there is hesitancy among customers, the company benefits from its North American supply chain, allowing it to provide a steady supply of products [39][40] Question: Did you see notable geographic differences in traffic and sales in North America? - Management reported no significant geographic differences, although Canadian sales were impacted by tariffs, leading to a decrease in units sold offset by pricing [44] Question: Can you expand on the evaluation of alternatives to address financial pressure from non-core parts of the business? - The company is focused on expanding the La Z Boy brand and improving performance in challenged areas like Joybird and international business [45][46] Question: How are you thinking about the pace of new store openings and distribution transformation in light of uneven demand? - Management emphasized the importance of playing offense even in challenging times, while also committing to monitor the situation prudently [47][48] Question: Is the higher promotional activity in case goods expected to continue? - Management indicated that the promotional activity was more transitory, aimed at working through non-performing inventory ahead of the key buying season [49]