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01/11 03:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed sentiment. Basic financial performance shows stable EPS but declining margins. Product development is positive with new stores and partnerships, but offset by friction costs. Market strategy is cautious, focusing on existing partners and prudent expansion. Expenses are managed well, with no debt and cash reserves. Shareholder returns are positive with dividend increases. However, the Q&A highlights uncertainties in demand trends and vague management responses. The stock's small market cap suggests potential volatility, but overall, the sentiment is neutral due to balanced positive and negative factors.
Total Delivered Sales $522 million, up slightly from prior year. Growth driven by Retail and Wholesale segments, partially offset by lower delivered volume in Joybird business.
Retail Segment Delivered Sales $222 million, increased slightly. Growth attributed to new and acquired stores, but impacted by lower delivered same-store sales.
Wholesale Segment Delivered Sales $369 million, increased 2% year-over-year. Growth driven by core North America La-Z-Boy branded wholesale business.
Joybird Delivered Sales $35 million, down 10% year-over-year. Decline due to lower delivered sales volume.
GAAP Operating Margin 6.9%, with adjusted operating margin at 7.1%. Adjusted margin benefited from a 110 basis point improvement due to a change in dealer warranty arrangements.
Operating Cash Flow $50 million, tripled compared to last year's comparable period. Improvement driven by better working capital and higher customer deposits.
Dividend Increase 10% increase, marking the fifth consecutive year of double-digit increases.
Adjusted Operating Margin for Wholesale Segment 8.1%, up from 6.8% last year. Improvement driven by lower warranty expense and solid operating trends, partially offset by distribution transformation costs and increased advertising expenses.
Retail Adjusted Operating Margin 10.7%, down from 12.6% last year. Decline due to fixed cost deleverage on lower delivered same-store sales and investments in new stores.
Diluted EPS $0.70 on a GAAP basis and $0.71 adjusted, flat compared to last year.
Cash and Debt $339 million in cash and no externally-funded debt.
New Joybird Stores: Opened 15th Joybird store in Easton Town Center, Columbus, Ohio. Plan to open 3-4 new Joybird stores this fiscal year.
La-Z-Boy Product Launch: Launched La-Z-Boy products at Costco in over 350 locations and on costco.com.
Southeast U.S. Expansion: Acquired 15-store network in Southeast U.S. (Atlanta, Orlando, Jacksonville, Knoxville). Expected to add $80 million in annual retail sales and $40 million net to the company.
Wholesale Channel Expansion: Added Living Spaces (40+ stores in Western states) and Farmers Home Furniture (260+ stores in Southeast) as partners.
Distribution Network Transformation: Consolidated 2 additional distribution centers, reducing total centers to 3 centralized hubs. Expected benefits include 30% reduction in warehouse square footage, 20% reduction in inventory mileage, and 50-75 basis points improvement in wholesale margin.
Portfolio Optimization: Exiting non-core businesses (Kincaid casegoods, American Drew casegoods, Kincaid upholstery) and closing U.K. manufacturing facility. Expected to improve operating margin by 75-100 basis points.
Century Vision Strategy: Focused on vertically integrated North American upholstery business. Increased company-owned stores to 60% of the network, up from 45% five years ago.
Brand Repositioning: Rolled out new brand identity to appeal to millennials and Gen X, receiving positive media and consumer feedback.
Consumer Trends: Consumer trends remain challenging for the industry, with mixed results in early November and a decrease in written same-store sales by 2% for the quarter.
Joybird Sales: Joybird experienced a 10% decline in delivered sales, primarily due to lower delivered sales volume, leading to increased operating losses.
Macroeconomic Conditions: The company faces uncertain macroeconomic conditions, which could impact consumer spending and overall business performance.
Portfolio Optimization: Exiting noncore businesses such as Kincaid casegoods, American Drew casegoods, and Kincaid upholstery, as well as the proposed closure of the U.K. manufacturing facility, may lead to transitional challenges and potential disruptions.
Retail Segment Performance: Lower delivered same-store sales and investments in new stores led to retail margin deleverage, impacting profitability.
Supply Chain Transformation: The multiyear project to transform the distribution network and home delivery program involves friction costs and operational adjustments, which could temporarily affect efficiency.
Competitive Pressures: The company is navigating a competitive landscape, including the need to expand brand reach and maintain market share through partnerships and acquisitions.
Fiscal 2026 Q3 Sales Guidance: Expected sales range of $525 million to $545 million, representing 1% to 4% year-over-year growth.
Adjusted Operating Margin Guidance for Q3: Expected to be in the range of 5% to 6.5%, reflecting ongoing strategic initiatives and macroeconomic conditions.
New Store Openings: Approximately 15 new La-Z-Boy stores (majority company-owned) and 3 to 4 new Joybird stores expected to open in fiscal 2026.
Capital Expenditures: Expected to be in the range of $90 million to $100 million for fiscal 2026, focusing on new stores, remodels, distribution network transformation, and manufacturing investments.
Strategic Initiatives Impact: Expected annual impact of strategic initiatives (15-store acquisition, casegoods exit, U.K. facility closure, management reorganization) includes a $30 million net sales decrease but a significant adjusted operating margin improvement of 75 to 100 basis points.
Dividend Increase: The company announced a 10% dividend increase, marking the fifth consecutive year of double-digit increases.
Share Repurchase: The company repurchased 23,000 shares during the quarter, leaving 3.4 million shares available under the existing share repurchase authorization.
Capital Allocation: Year-to-date, $31 million was returned to shareholders through dividends and share repurchases, including $18 million paid in dividends.
The earnings call reveals a mixed sentiment. Basic financial performance shows stable EPS but declining margins. Product development is positive with new stores and partnerships, but offset by friction costs. Market strategy is cautious, focusing on existing partners and prudent expansion. Expenses are managed well, with no debt and cash reserves. Shareholder returns are positive with dividend increases. However, the Q&A highlights uncertainties in demand trends and vague management responses. The stock's small market cap suggests potential volatility, but overall, the sentiment is neutral due to balanced positive and negative factors.
The earnings call presents a mixed picture. Basic financial performance shows slight declines, and Joybird's losses are concerning. However, strong cash reserves and no debt are positives. The market strategy involves expansion and investment, yet short-term margin pressure is expected due to new stores and supply chain rework. Shareholder return plans are balanced, but no new repurchase or dividend hikes were announced. The Q&A highlights uncertainties in consumer demand and non-core business performance. Overall, the sentiment is neutral, with no strong catalysts for significant stock price movement.
The earnings call presents a mixed outlook. While there are positive elements like increased shareholder returns and a solid cash position, there are also concerns. Declines in same-store sales and macroeconomic uncertainties negatively impact sentiment. The Q&A reveals management's uncertainty about future pricing and tariff impacts, which could worry investors. The overall financial performance shows modest growth but is offset by competitive pressures and weak margins. Given the market cap, the stock is likely to see a neutral movement in response to these mixed signals.
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