La-Z-Boy 2026 Q2 Earnings Beats Expectations Despite 2.9% Net Income Decline

La-Z-Boy (LZB) reported fiscal 2026 Q2 results that exceeded expectations, with revenue growth and margin expansion in key segments. The company raised its quarterly dividend by 10% and provided cautious guidance for the third quarter, reflecting ongoing strategic investments and macroeconomic uncertainties.

Revenue

La-Z-Boy’s total revenue rose 0.3% to $522.48 million in Q2 2026, driven by modest gains in its Wholesale and Retail segments. The Wholesale division contributed $369.44 million in sales, while Retail added $222.04 million. Corporate & Other revenue stood at $38.69 million, though Intersegment Eliminations reduced consolidated figures by $107.69 million. These results reflect the company’s focus on optimizing its retail footprint and improving operational efficiency.

Earnings/Net Income

The company’s EPS declined 2.8% to $0.70 in Q2 2026, with net income falling 2.9% to $28.99 million. While the adjusted EPS of $0.71 exceeded estimates by $0.17, the decline in operating income and margin pressures underscored the challenges of balancing strategic investments with profitability.

Post-Earnings Price Action Review

Following the earnings release, La-Z-Boy’s stock edged up 1.93% during the latest trading day but faced broader volatility, dropping 4.98% for the week and 8.11% month-to-date. The mixed performance highlights investor caution around macroeconomic risks and the company’s margin compression from portfolio optimization initiatives.

CEO Commentary

Melinda Whittington emphasized progress in the Century Vision strategy, including 15 new stores and supply chain enhancements, while acknowledging the impact of exiting non-core businesses. She remains optimistic about long-term growth, particularly as industry volumes recover.

Guidance

CFO Taylor Luebke guided to Q3 sales of $525-545 million (1-4% YoY growth) and an adjusted operating margin of 5.0-6.5%. The outlook accounts for friction costs from supply chain adjustments and a cautious macroeconomic environment.

Additional News

La-Z-Boy announced a 10% dividend increase to $0.242 per share, marking the fifth consecutive double-digit hike. The company also completed the acquisition of a 15-store network in the southeastern U.S. and plans to exit non-core wholesale businesses, including Kincaid and American Drew. These moves are expected to reduce sales by $30 million but boost margins by 75-100 bps.

Key Strategic Moves

The company’s portfolio optimization includes the closure of its UK manufacturing facility and strategic exits of non-core operations. These actions align with its focus on North American manufacturing and margin expansion, despite short-term sales headwinds.

Financial Health

With a 43.8% gross margin and a current ratio of 1.91, La-Z-Boy maintains strong liquidity. However, its operating margin has declined to 6.94%, reflecting the costs of transformation projects and competitive pressures in the furnishings sector.

Market Positioning

As a leader in the U.S. upholstery market, La-Z-Boy’s Century Vision strategy aims to leverage its wholesale dominance and retail expansion to outperform industry trends. The company’s recent performance suggests resilience in a challenging economic climate, though execution risks remain.