Press release·02/19/2025 02:32:02

La-Z-Boy’s Steady Growth and Strategic Initiatives

La-Z-Boy Incorporated, the iconic furniture company, has reported its financial results for the third quarter and first nine months of fiscal year 2025. The company’s performance showcases steady growth, strategic initiatives, and a focus on enhancing its enterprise capabilities to support the expansion of its consumer brands.

Financial Highlights

In the third quarter of fiscal 2025, La-Z-Boy’s consolidated sales increased by 4.3% to $521.8 million, compared to the same period a year ago. This growth was driven by strong performance in the company’s Retail segment, with delivered same-store sales growth, as well as higher delivered volume in the Joybird business. For the first nine months of fiscal 2025, sales increased by 3% to $1.54 billion.

The company’s operating margin, which measures operating income as a percentage of sales, improved by 20 basis points in both the third quarter and first nine months of fiscal 2025, compared to the same periods a year ago. This was primarily due to an increase in gross margin, which was driven by favorable changes in the company’s product mix, lower input costs, and improved sourcing.

Segment Performance

La-Z-Boy’s reportable segments include the Retail segment and the Wholesale segment.

Retail Segment The Retail segment, which consists of the company’s 197 company-owned La-Z-Boy Furniture Galleries stores, saw a sales increase of 11.2% in the third quarter and 3.9% in the first nine months of fiscal 2025, compared to the same periods a year ago. This growth was primarily driven by higher delivered same-store sales and incremental sales from retail store acquisitions.

The Retail segment’s operating margin decreased by 20 basis points in the third quarter and 150 basis points in the first nine months of fiscal 2025, compared to the same periods a year ago. This was due to a slight decrease in gross margin and an increase in SG&A expenses as a percentage of sales, primarily due to higher selling expenses and fixed costs resulting from retail store acquisitions and expansion.

Wholesale Segment The Wholesale segment, which includes the company’s La-Z-Boy, England, American Drew, Hammary, and Kincaid brands, saw a sales increase of 1.9% in the third quarter and 2.2% in the first nine months of fiscal 2025, compared to the same periods a year ago. The sales growth was driven by a favorable shift in product mix towards higher-priced products, as well as increased sales volume in the core North America La-Z-Boy branded upholstery business.

The Wholesale segment’s operating margin improved by 10 basis points in the third quarter and 30 basis points in the first nine months of fiscal 2025, compared to the same periods a year ago. This was primarily due to an increase in gross margin, driven by lower input costs, improved sourcing, and favorable fluctuations in the Mexican peso relative to the U.S. dollar.

Corporate and Other The Corporate and Other segment, which includes the company’s global trading company, Joybird, and other insignificant operating segments, saw a sales increase of 6.6% in the third quarter and 6.1% in the first nine months of fiscal 2025, compared to the same periods a year ago. This was primarily driven by higher delivered volume and a favorable shift in product mix at Joybird.

The operating loss in the Corporate and Other segment increased by 3.1% in the third quarter but decreased by 16.5% in the first nine months of fiscal 2025, compared to the same periods a year ago. The improvement in the first nine months was due to Joybird’s operating profit improvements and favorable intercompany inventory profit elimination adjustments, partially offset by lower intercompany operating profit from the global trading company.

Strategic Initiatives

La-Z-Boy’s strategic plan, known as the “Century Vision,” aims to drive disproportionate growth of its two consumer brands, La-Z-Boy and Joybird, by delivering the transformational power of comfort with a consumer-first approach. The company is pursuing several key initiatives to achieve this goal:

Expanding the La-Z-Boy Brand Reach La-Z-Boy is focused on leveraging its connection to comfort and reinvigorating its brand with a consumer-centric approach and an expanded omni-channel presence. The company launched a new brand campaign, “Long Live the Lazy,” in fiscal 2024 to increase brand recognition and appeal to a broader consumer base.

La-Z-Boy is also growing its network of La-Z-Boy Furniture Galleries stores, both through acquisitions of existing stores and the opening of new locations. The company believes this will drive growth in both its Retail and Wholesale segments.

Additionally, La-Z-Boy is expanding the reach of its wholesale distribution channels, including the La-Z-Boy Comfort Studio locations and other independent retailers, to provide consumers with more opportunities to experience the brand.

Profitably Growing the Joybird Brand Joybird, the e-commerce retailer and manufacturer of upholstered furniture that La-Z-Boy acquired in 2019, is a key focus area for the company. La-Z-Boy’s strategic initiatives for Joybird include increasing digital marketing spend to drive awareness and customer acquisition, investing in technology, expanding the product assortment, and opening additional small-format stores in key urban markets to enhance the omni-channel experience.

Enhancing Enterprise Capabilities To support the growth of its consumer brands and enable potential acquisitions, La-Z-Boy is focused on enhancing its enterprise capabilities, including an agile supply chain, modern technology for consumers and employees, and a human-centered employee experience.

Outlook and Future Considerations

La-Z-Boy’s financial performance and strategic initiatives demonstrate the company’s commitment to driving long-term growth and value for its shareholders. The company’s focus on expanding its brand reach, profitably growing Joybird, and enhancing its enterprise capabilities position it well for continued success.

However, the company faces some potential challenges, such as the impact of a significant customer transition in its international wholesale business, which has resulted in fixed cost deleverage and higher SG&A expenses as a percentage of sales. Additionally, the company’s effective tax rate has increased, which could impact its bottom line.

Overall, La-Z-Boy’s steady financial performance, strategic initiatives, and focus on enhancing its capabilities suggest a positive outlook for the company’s future. As it continues to execute its Century Vision strategy, investors and consumers can expect to see the company’s iconic brand and innovative products reach an even wider audience.