La-Z-Boy (LZB) shares dip on mixed Q3 results

La-Z-Boy, the prominent furniture manufacturer and retailer, has unveiled its fiscal Q3 2024 earnings, culminating in January with a mixed financial performance. Despite the hurdles, the company's leadership maintains a positive outlook, banking on its reputable brand and strategic execution to steer through the economic turbulence.

The earnings snapshot revealed a slight shortfall in expectations, with earnings per share (EPS) landing at $0.67, just shy of the anticipated $0.72. Revenue took a hit, diminishing by 12.6% year-over-year to $500.4 million, against projections of $523.09 million. The Retail segment experienced a 2% dip in written sales, attributed to a decline in same-store sales, albeit somewhat cushioned by the addition of new and acquired stores. Adverse winter weather in January further strained same-store sales, plunging by 8%, reflecting broader consumer spending challenges.

However, it wasn't all gloomy for La-Z-Boy. The company saw an uplift in non-GAAP gross margins by 140 basis points year-over-year, a silver lining courtesy of reduced input costs, enhanced sourcing, and decreased commodity prices. Despite a dip in non-GAAP operating margins for Q3, projections for Q4 are more optimistic, with targets set at a 7-8% operational margin.

Kurt L. Darrow, La-Z-Boy's CEO, underscored the company's resilience and adaptability in these testing times, emphasizing their outperformance in an industry grappling with a 7% demand decline year-to-date. For Q4, the company forecasts revenue to hover between $505 million and $535 million, indicating a stable yet cautious outlook with a projected 7% year-over-year decrease. CFO Robert Lucian echoed the sentiment of a tough demand environment, more so than anticipated at the fiscal year's outset.

In essence, La-Z-Boy's latest earnings report paints a picture of resilience amid challenges, with a dip in revenue and a slight EPS miss. Nonetheless, the company's management remains steadfast in their strategic approach, focusing on cost management and operational efficiency to navigate through the economic headwinds. As La-Z-Boy endeavors to maintain its market position, its focus on leveraging its strong brand and execution capabilities may well ensure its stability and growth in the competitive furniture industry landscape.