Earnings Details
1st Quarter July 2019
Tuesday, August 20, 2019 4:15:00 PM
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La-Z-Boy (LZB) reported 1st Quarter July 2019 earnings of $0.42 per share on revenue of $413.6 million. The consensus earnings estimate was $0.33 per share on revenue of $415.7 million. The Earnings Whisper number was $0.35 per share. Revenue grew 7.5% on a year-over-year basis.

La-Z-Boy Inc through its subsidiaries manufactures, markets, imports, distributes and retails upholstery furniture products.

Reported Earnings
Earnings Whisper
Consensus Estimate
Reported Revenue
$413.6 Mil
Revenue Estimate
$415.7 Mil
Earnings Growth
Revenue Growth
Power Rating
Earnings Release

La-Z-Boy Reports Fiscal 2020 First-Quarter Results

MONROE, Mich., Aug. 20, 2019 (GLOBE NEWSWIRE) -- La-Z-Boy Incorporated (NYSE: LZB) today reported its operating results for the fiscal 2020 first quarter ended July 27, 2019.

Fiscal 2020 first quarter versus Fiscal 2019 first quarter:

  • Consolidated sales for the first quarter increased 7.5% to $413.6 million
    • La-Z-Boy Furniture Galleries® stores:
      • Written same-store sales for the La-Z-Boy Furniture Galleries® network increased 4.7%
      • Delivered same-store sales for company-owned Retail segment increased 3.5%
    • Consolidated sales include the impact of Joybird and the nine Arizona La-Z-Boy Furniture Galleries® stores acquired in fiscal August 2018
  • Consolidated operating margin:
    • GAAP: 5.7% versus 6.0%
    • Non-GAAP*: 6.3% versus 6.1%
  • Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
    • GAAP:  $0.38 versus $0.39
    • Non-GAAP*: $0.42 versus $0.39, with fiscal 2020 excluding $0.02 for purchase accounting and a $0.02 charge related to the company’s recently announced supply chain optimization initiative  
  • Cash generated from operating activities was $19.3 million; the company returned $18.4 million to shareholders through share purchases and dividends

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, “Our results for the quarter demonstrate the strength of the La-Z-Boy brand within today’s challenging home furnishings environment, as well as the power of our world-class supply chain. Our company-owned Retail segment delivered strong sales momentum and also nearly doubled operating profit.  The broader La-Z-Boy Furniture Galleries® network posted increases in first-quarter written same-store sales on a one-, two-, and three-year basis.  In addition, our wholesale Upholstery segment turned in a GAAP operating margin of 9.0%, even with sales challenged for our England subsidiary and international businesses.”

Consolidated sales in the first quarter of fiscal 2020 increased 7.5% to $413.6 million, driven by strong Retail performance, including organic growth and sales from the Arizona-based La-Z-Boy Furniture Galleries® stores, acquired in August 2018, as well as sales from Joybird, acquired in fiscal August 2018. Consolidated GAAP operating margin was 5.7% versus 6.0% in the prior-year quarter.  Non-GAAP operating margin increased to 6.3% in the current-year quarter versus 6.1% in last year’s first quarter, reflecting improvement in our Upholstery and Retail segments, offset partially by the impact of the company’s evolving business mix.  Non-GAAP results exclude $1.3 million of purchase accounting charges and a $1.5 million charge for severance related to the company’s supply chain optimization initiative announced earlier in August 2019.

For the quarter, sales in the company’s Upholstery segment were flat at $293.4 million, primarily reflecting challenges in the company’s England subsidiary and the international businesses.   GAAP operating margin improved to 9.0% from 8.1% in last year’s first quarter, and non-GAAP operating margin increased to 9.5% versus 8.2% in last year’s first quarter, excluding a $1.5 million charge for severance related to the supply chain optimization initiative in fiscal 2020 Q1 and $0.1 million of purchase accounting charges in fiscal 2019 Q1.  Operating margin improved primarily due to lower commodity costs and supply chain efficiencies.  In the Casegoods segment, sales decreased 4.4% to $27.1 million and operating margin was 9.6% compared with 10.9% in the prior-year period, also reflecting challenging trends in the non-branded furniture environment.

Sales in the Retail segment increased 19.9% to $143.0 million in the first quarter of fiscal 2020 on growth from the core-base stores, and $18.9 million of sales from recent acquisitions, primarily the Arizona stores.  GAAP operating margin for the Retail segment improved to 5.9% from 3.7% in last year’s first quarter. Non-GAAP operating margin increased to 6.0% in the current-year quarter from 3.8% in last year’s first quarter, and excluded purchase accounting charges in each period related to store acquisitions.  Operating margin improvement was driven by leveraging fixed costs on higher sales volume.  On the core base of 143 company-owned stores in last year’s first quarter, strong execution at the store level, including a higher average ticket and improved conversion, fueled a delivered same-store sales increase of 3.5%.   

In the Corporate & Other segment, Joybird, an e-Commerce retailer and manufacturer, acquired in fiscal August 2018, contributed $17.2 million in sales, but posted a larger operating loss than in the prior three quarters of ownership, due to seasonality and integration timing. The company continues to be optimistic about Joybird’s prospects to add long-term value and expects it to be profitable by the back half of fiscal 2020, excluding purchase accounting adjustments.

GAAP EPS was $0.38 for the fiscal 2020 first quarter versus $0.39 in the prior-year quarter. The fiscal 2019 first-quarter results included a benefit of $0.03 per share for currency changes. Non-GAAP EPS was $0.42 versus $0.39 in last year’s first quarter, with the fiscal 2020 first quarter excluding $0.02 per share for purchase accounting and a $0.02 per share charge related to the company’s recently announced supply chain optimization initiative.

Balance Sheet and Cash Flow

For the first quarter, the company generated $19.3 million in cash from operating activities, and ended the quarter with $113.6 million in cash, cash equivalents, and restricted cash, and $32.9 million in investments to enhance returns on cash. During the period, the company invested $12.3 million in the business through capital expenditures, paid $6.1 million in dividends, and spent $12.3 million purchasing 0.4 million shares of stock in the open market under its existing authorized share purchase program, leaving 5.5 million shares of purchase availability in the program. Additionally, the company adopted the new leasing standard required by the FASB, which resulted in an increase in assets and liabilities of $314 million


Darrow concluded, “The home furnishings environment remains somewhat challenging amid tariff uncertainty and other geopolitical concerns.  Against that backdrop, however, we continue to believe La-Z-Boy is competitively well positioned with a strong brand; multi-channel distribution, including a growing retail business; and a world-class supply chain, which we continue to work to optimize.  Additionally, we are optimistic about the long-term growth prospects for Joybird as our eCommerce strategy and business continue to evolve.  Our balance sheet remains healthy and we are making prudent investments to deliver long-term performance for all stakeholders.”

*Non-GAAP amounts for the first quarter of fiscal 2020 exclude pre-tax purchase accounting charges totaling $1.5 million, or $0.02 per diluted share, with $1.3 million included in operating income and $0.2 million included in interest expense. Also excluded from our Non-GAAP results is a pre-tax charge of $1.5 million, or $0.02 per diluted share, related to the company’s supply chain optimization initiative, including the closure of the company’s Redlands, California upholstery manufacturing facility and relocation of its Newton, Mississippi leather cut-and-sew operations. Non-GAAP amounts for the first quarter of fiscal 2019 exclude pre-tax purchase accounting charges of $0.1 million, all included in operating income, which did not impact EPS for the period. 

Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating Non-GAAP measures used in this press release and a reconciliation to the applicable GAAP measure.

Conference Call

La-Z-Boy will hold a conference call with the investment community on Wednesday, August 21, 2019, at 8:30 a.m. eastern time. The toll-free dial-in number is 844.602.0380; international callers may use 862.298.0970. 

The call will be webcast live, with corresponding slides, and archived on the Internet.  It will be available at https://lazboy.gcs-web.com/. A telephone replay will be available for a week following the call. This replay will be accessible to callers from the U.S. and Canada at 877.481.4010 and to international callers at 919.882.2331. Enter Replay Passcode: 52647. The webcast replay will be available for one year.

Forward-looking Information

This news release contains, and oral statements made from time to time by representatives of La-Z-Boy may contain, “forward-looking statements.” With respect to all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 

Actual results could differ materially from those we anticipate or project due to a number of factors, including: (a) changes in consumer confidence and demographics; (b) the possibility of a recession; (c) changes in the real estate and credit markets and their effects on our customers, consumers and suppliers; (d) international political unrest, terrorism or war; (e) volatility in energy and other commodities prices; (f) the impact of logistics on imports and exports; (g) tax rate, interest rate, and currency exchange rate changes; (h) changes in the stock market impacting our profitability and our effective tax rate; (i) operating factors, such as supply, labor or distribution disruptions (e.g. port strikes); (j) changes in legislation, including the tax code, or changes in the domestic or international regulatory environment or trade policies, including new or increased duties, tariffs, retaliatory tariffs, trade limitations and termination or renegotiation of bilateral and multilateral trade agreements impacting our business; (k) adoption of new accounting principles; (l) fires, severe weather or other natural events such as hurricanes, earthquakes, flooding, tornadoes and tsunamis; (m) our ability to procure, transport or import, or material increases to the cost of transporting or importing, fabric rolls, leather hides or cut-and-sewn fabric and leather sets domestically or abroad; (n) information technology conversions or system failures and our ability to recover from a system failure; (o) effects of our brand awareness and marketing programs; (p) the discovery of defects in our products resulting in delays in manufacturing, recall campaigns, reputational damage, or increased warranty costs; (q) litigation arising out of alleged defects in our products; (r) unusual or significant litigation; (s) our ability to locate new La-Z-Boy Furniture Galleries® stores (or store owners) and negotiate favorable lease terms for new or existing locations; (t) the ability to increase volume through our e-commerce initiatives; (u) the impact of potential goodwill or intangible asset impairments; and (v) those matters discussed in Item 1A of our fiscal 2019 Annual Report on Form 10-K and other factors identified from time to time in our reports filed with the Securities and Exchange Commission  (the “SEC”). We undertake no obligation to update or revise any forward-looking statements, whether to reflect new information or new developments or for any other reason.

Additional Information

This news release is just one part of La-Z-Boy’s financial disclosures and should be read in conjunction with other information filed with the Securities and Exchange Commission, which is available at: https://lazboy.gcs-web.com/financial-information/sec-filings. Investors and others wishing to be notified of future La-Z-Boy news releases, SEC filings and quarterly investor conference calls may sign up at:  https://lazboy.gcs-web.com/.

Background Information

La-Z-Boy Incorporated is one of the world’s leading residential furniture producers, marketing furniture for every room of the home. The La-Z-Boy Upholstery segment companies are England and La-Z-Boy. The Casegoods segment consists of three brands: American Drew®, Hammary®, and Kincaid®. The company-owned Retail segment includes 155 of the 352 La-Z-Boy Furniture Galleries® stores.  Joybird is an e-commerce retailer and manufacturer of upholstered furniture.

The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 352 stand-alone La-Z-Boy Furniture Galleries® stores and 554 independent Comfort Studio® locations, in addition to in-store gallery programs for the company’s Kincaid and England operating units. Additional information is available at http://www.la-z-boy.com/.

Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), this press release also includes Non-GAAP financial measures. Management uses these Non-GAAP financial measures when assessing our ongoing performance. This press release contains references to Non-GAAP operating income, Non-GAAP operating margin, Non-GAAP income before income taxes, Non-GAAP net income attributable to La-Z-Boy Incorporated and Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share, each of which exclude purchase accounting charges and charges for our supply chain optimization initiative. The purchase accounting charges may include the amortization of intangible assets, incremental expense upon the sale of inventory acquired at fair value, amortization of employee retention agreements, fair value adjustments of future cash payments recorded as interest expense, and adjustments to the fair value of contingent consideration. The charges for our supply chain optimization initiative may include severance costs, accelerated depreciation expense, costs to relocate equipment and inventory, as well as other costs related to the closure and relocation of certain manufacturing operations. These Non-GAAP financial measures are not meant to be considered superior to or a substitute for La-Z-Boy Incorporated’s results of operations prepared in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of such Non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables.

Management believes that presenting certain Non-GAAP financial measures excluding purchase accounting charges and charges for the company’s supply chain optimization initiative will help investors understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. Management excludes purchase accounting charges because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions consummated. While the company has a history of acquisition activity, it does not acquire businesses on a predictable cycle, and the impact of purchase accounting charges is unique to each acquisition and can vary significantly from acquisition to acquisition. Similarly, the charges related to the company’s supply chain optimization initiative are dependent on the timing, size, number and nature of the operations being moved or closed, and the charges may not be incurred on a predictable cycle. Management believes that exclusion of these charges facilitates more consistent comparisons of the company’s operating results over time. Where applicable, the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” tables present the excluded items net of tax calculated using the effective tax rate from operations for the period in which the adjustment is presented. 


  Quarter Ended 
(Unaudited, amounts in thousands, except per share data) 7/27/19 7/28/18 
Sales $413,633  $384,695   
Cost of sales  245,921   236,173   
  Gross profit  167,712   148,522   
Selling, general and administrative expense  144,290   125,362   
  Operating income  23,422   23,160   
Interest expense  (318)  (104)  
Interest income  727   602   
Other income (expense), net  (760  892   
  Income before income taxes  23,071   24,550   
Income tax expense  5,083   5,599   
  Net income  17,988   18,951   
Net (income) loss attributable to noncontrolling interests  81   (648)  
  Net income attributable to La-Z-Boy Incorporated $18,069  $18,303   
Basic weighted average common shares  46,820   46,716   
Basic net income attributable to La-Z-Boy Incorporated per share $0.39  $0.39   
Diluted weighted average common shares  47,125   47,161   
Diluted net income attributable to La-Z-Boy Incorporated per share $0.38  $0.39   


(Unaudited, amounts in thousands, except par value) 7/27/19 4/27/19 
Current assets     
Cash and equivalents $111,622 $129,819 
Restricted cash  1,970  1,968 
Receivables, net of allowance of $2,177 at 7/27/19 and $2,180 at 4/27/19  134,379  143,288 
Inventories, net  197,701  196,899 
Other current assets  85,631  69,144 
Total current assets  531,303  541,118 
Property, plant and equipment, net  204,789  200,523 
Goodwill  184,675  185,867 
Other intangible assets, net  29,595  29,907 
Deferred income taxes – long-term  21,906  20,670 
Right of use lease asset  312,433   
Other long-term assets, net  77,449  81,705 
Total assets $1,362,150 $1,059,790 
Current liabilities     
Current portion of long-term debt $ $180 
Accounts payable  62,935  65,365 
Lease liability, short-term  64,158   
Accrued expenses and other current liabilities  168,757  173,091 
Total current liabilities  295,850  238,636 
Long-term debt    19 
Lease liability, long-term  262,264   
Other long-term liabilities  105,898  124,159 
Shareholders’ equity     
Preferred shares – 5,000 authorized; none issued     
Common shares, $1 par value – 150,000 authorized; 46,690 outstanding at 7/27/19 and 46,955 outstanding at 4/27/19  46,690  46,955 
Capital in excess of par value  311,207  313,168 
Retained earnings  329,096  325,847 
Accumulated other comprehensive loss  (3,728) (3,462)
Total La-Z-Boy Incorporated shareholders’ equity  683,265  682,508 
Noncontrolling interests  14,873  14,468 
Total equity  698,138  696,976 
Total liabilities and equity $1,362,150 $1,059,790 


  Quarter Ended 
(Unaudited, amounts in thousands) 7/27/19 7/28/18 
Cash flows from operating activities     
  Net income $17,988 $18,951 
  Adjustments to reconcile net income to cash provided by (used for) operating activities     
  Gain on disposal of assets  (536)  
  Change in deferred taxes  (677) (183)
  Provision for doubtful accounts  116  279 
  Depreciation and amortization  7,298  7,541 
  Equity-based compensation expense  1,675  2,040 
  Change in receivables  8,535  14,236 
  Change in inventories  (527) (11,092)
  Change in other assets  7,305  463 
  Change in payables  (1,391) 2,491 
  Change in other liabilities  (20,446) (2,572)
  Net cash provided by operating activities  19,340  32,154 
Cash flows from investing activities     
  Proceeds from disposals of assets  22  61 
  Proceeds from insurance  642  58 
  Capital expenditures  (12,299) (15,873)
  Purchases of investments  (5,288) (4,190)
  Proceeds from sales of investments  4,060  4,762 
  Acquisitions, net of cash acquired  (5,438)  
  Net cash used for investing activities  (18,301) (15,182)
Cash flows from financing activities     
  Payments on debt and finance lease liabilities  (47) (59)
  Stock issued for stock and employee benefit plans, net of shares withheld for taxes  (1,417) (2,009)
  Purchases of common stock  (12,313) (7,944)
  Dividends paid  (6,112) (5,625)
  Net cash used for financing activities  (19,889) (15,637)
Effect of exchange rate changes on cash and equivalents  655  (1,601)
Change in cash, cash equivalents and restricted cash  (18,195) (266)
Cash, cash equivalents and restricted cash at beginning of period  131,787  136,871 
Cash, cash equivalents and restricted cash at end of period $113,592 $136,605 
Supplemental disclosure of non-cash investing activities     
  Capital expenditures included in payables $2,416 $4,122 


 Quarter Ended 
 (Unaudited, amounts in thousands) 7/27/19 7/28/18 
Upholstery segment:     
  Sales to external customers $230,767 $240,054 
  Intersegment sales  62,649  53,344 
Upholstery segment sales  293,416  293,398 
Casegoods segment:     
  Sales to external customers  22,006  24,403 
  Intersegment sales  5,129  3,983 
Casegoods segment sales  27,135  28,386 
Retail segment sales  142,996  119,228 
Corporate and Other:     
  Sales to external customers  17,864  1,010 
  Intersegment sales  2,688  2,855 
Corporate and Other sales  20,552  3,865 
Eliminations  (70,466) (60,182)
  Consolidated sales $  413,633 $384,695 
Operating Income (Loss)     
Upholstery segment $26,267 $23,884 
Casegoods segment  2,597  3,080 
Retail segment  8,477  4,458 
Corporate and Other  (13,919) (8,262)
  Consolidated operating income  23,422  23,160 


 Quarter Ended 
 (Amounts in thousands, except per share data) 7/27/2019 7/28/2018 
GAAP gross profit $167,712 $148,522 
  Add back: Purchase accounting charges –
  incremental expense upon the sale of inventory
  acquired at fair value
  117  42 
  Add back: Supply chain optimization initiative  1,508   
Non-GAAP gross profit $169,337 $148,564 
GAAP SG&A $144,290 $125,362 
  Less: Purchase accounting charges – amortization of 
  intangible assets and retention agreements


Non-GAAP SG&A $143,098 $125,258 
GAAP operating income $23,422 $23,160 
  Add back: Purchase accounting charges  1,309  146 
  Add back: Supply chain optimization initiative  1,508   
Non-GAAP operating income $26,239 $23,306 
GAAP income before income taxes $23,071 $24,550 
  Add back: Purchase accounting charges recorded as
  part of gross profit, SG&A, and interest expense
  Add back: Supply chain optimization initiative  1,508   
Non-GAAP income before income taxes $26,081 $24,696 
GAAP net income attributable to La-Z-Boy

  Add back: Purchase accounting charges
  recorded as part of gross profit, SG&A, and
  interest expense


  Less: Tax effect of purchase accounting  (330) (33)
  Add back: Supply chain optimization initiative  1,508   
  Less: Tax effect of  supply chain optimization
Non-GAAP net income attributable to La-Z-Boy


GAAP net income attributable to La-Z-Boy
  Incorporated per diluted share


  Add back: Purchase accounting charges, net of tax,
  per share
  Add back: Supply chain optimization initiative, net
   of tax, per share
Non-GAAP net income attributable to La-Z-
  Boy Incorporated per diluted share




 Quarter Ended 
 (Amounts in thousands) 7/27/2019 % of sales 7/28/2018 % of sales 
GAAP operating income (loss)         
  Upholstery segment $26,267 9.0% $23,884 8.1% 
  Casegoods segment  2,597 9.6%  3,080 10.9% 
  Retail segment  8,477 5.9%  4,458 3.7% 
  Corporate and Other  (13,919)N/M  (8,262)N/M 
  GAAP Consolidated operating income $23,422 5.7%  23,160 6.0% 
Purchase accounting and supply chain optimization initiative affecting operating income         
  Upholstery segment $1,563   $104   
  Casegoods segment         
  Retail segment  117    42   
  Corporate and Other  1,137       
  Consolidated Non-GAAP charges affecting
  operating income

Non-GAAP operating income (loss)         
  Upholstery segment $27,830 9.5% $23,988 8.2% 
  Casegoods segment  2,597 9.6%  3,080 10.9% 
  Retail segment  8,594 6.0%  4,500 3.8% 
  Corporate and Other  (12,782)N/M  (8,262)N/M 
  Non-GAAP Consolidated operating income $26,239 6.3% $23,306 6.1% 
N/M – Not Meaningful         

Kathy Liebmann                  
(734) 241-2438                                                      

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Source: La-Z-Boy Incorporated