La-Z-Boy(LZB)2023-02-22 17:22Financial Data and Key Metrics Changes - Consolidated sales for fiscal 2023 third quarter increased to $573 million, compared to the prior year quarter, driven by pricing and favorable product mix despite lower unit volume [34] - GAAP diluted EPS increased to $0.74 for the fiscal 2023 third quarter versus $0.65 in the prior year quarter, while non-GAAP diluted EPS increased 40% to $0.91 [22][60] - Consolidated GAAP operating margin increased to 7.5% from 6.9%, and non-GAAP operating margin increased to 9.3% from 7% in the previous year [22] Business Line Data and Key Metrics Changes - Retail segment delivered sales increased by 27% to $251 million, with same-store sales up 23% year-over-year, contributing 83% of the enterprise's operating income [23] - Wholesale segment delivered sales were $408 million, a 4% decline compared to the prior year, primarily due to a decline in delivered volume [6] - Joybird's delivered sales decreased 35% to $29 million versus the prior year third quarter, reflecting slowing e-commerce trends [62] Market Data and Key Metrics Changes - Total written sales for the retail segments were up 8% versus last year's third quarter, with same-store written sales comp at a positive 3% [30] - Written same-store sales for the entire La-Z-Boy's Furniture Galleries network, including independently owned galleries, were down 2% against the prior year period but up 7% against pre-pandemic fiscal 2020 [31] - Joybird's written sales were up 80% versus a pre-pandemic fiscal 2020 third quarter but down 21% versus last year's Q3 [32] Company Strategy and Development Direction - The company is focused on investing prudently to strengthen capabilities and drive long-term profitable growth through the Century Vision strategy [5] - Strategic investments in marketing and expanding the La-Z-Boy branded business are aimed at returning Joybird to profitable growth [5][20] - The company is refining channel strategies to expand distribution opportunities and meet consumer demands effectively [19] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the external macro environment but is optimistic about the company's ability to navigate challenges and emerge stronger [58][67] - The company acknowledges short-term uncertainty and is managing the business prudently while prioritizing investments in brands and capabilities [67] - Management noted that while some competitors are rolling back prices due to lower freight costs, the company is maintaining competitiveness through strategic pricing actions [99] Other Important Information - Consolidated gross margin for the quarter increased 480 basis points versus the prior year, primarily due to the retail segment's growth [38] - The company ended the period with $284 million in cash and no debt, reflecting strong cash generation and reduced inventory levels [39] - Year-to-date, the company returned $27 million to shareholders through dividends and share repurchases, with a temporary pause on share repurchases due to the uncertain macroeconomic environment [65] Q&A Session Summary Question: What are the trends in written sales? - Management noted positive trends in written sales, with improvements continuing into the fourth quarter [71] Question: How does the company view the competitive pricing environment? - Management indicated that while some competitors are rolling back prices, the company is sharpening price points to remain competitive without a broad reduction across the industry [99] Question: Are there notable differences in performance by region? - Management stated there are no dramatic differences by region, with trends leveling out across the board [76] Question: What is the outlook for margins considering input costs? - Management acknowledged that while some input costs are decreasing, labor costs remain a concern, and the ability to capture these benefits will depend on industry pricing behavior [90]