La-Z-Boy Inc., the leading global producer of reclining chairs and the second-largest manufacturer/distributor of residential furniture in the United States, spent $5.0 million to repurchase 0.2 million shares during the quarter ended April 29, 2023. As of this date, 7.3 million shares remained available for repurchase under the board authorization. The company’s management expects to continue repurchasing shares with the operating cash flows anticipated to be generated in fiscal 2024.
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Company Overview and Growth Drivers
The company’s Wholesale and Retail segments have been driving growth in the past fiscal years. The La-Z-Boy Furniture Galleries® store network, consisting of 349 stores, and the La-Z-Boy Comfort Studio® locations, with 522 dedicated spaces, position La-Z-Boy as the third largest retailer of single-branded furniture in the United States. In addition to the La-Z-Boy branded products, the company also sells upholstery furniture products under the England, Kincaid®, and Joybird® tradenames, as well as accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames.
Strategic Plan and Goals
La-Z-Boy’s strategic plan, known as the Century Vision, aims to grow sales and market share while strengthening operating margins. Key strategies include expanding the La-Z-Boy brand reach through enhanced marketing efforts, growing the La-Z-Boy Furniture Galleries® store network, and profitably growing the Joybird brand, which primarily sells products online. The plan also involves enhancing the company’s enterprise capabilities, including an agile supply chain and modern technology for consumers and employees, to support future growth and potential acquisitions.
Pandemic Impact and Sales Performance
Despite encountering challenges brought on by the COVID-19 pandemic, La-Z-Boy’s sales demand remains strong. During fiscal 2023, the company managed to work through the majority of its backlog built up in previous periods, resulting from increased demand for home furnishings. However, the company experienced a decline in delivered unit volume, prompting them to take pricing and surcharge actions in response to rising costs related to inflation.
La-Z-Boy’s consolidated sales in fiscal 2023 decreased by 0.3% compared to fiscal 2022, primarily due to the additional week in the fiscal year, which resulted in $48.9 million of additional sales. Excluding this extra week, sales in fiscal 2023 increased by 2% compared to the previous year. Moreover, the company’s operating margin improved by 20 basis points in fiscal 2023 compared to fiscal 2022 due to significant changes in its business mix and the realization of pricing surcharge actions.
Outlook and Expectations
Overall, La-Z-Boy Inc. has demonstrated resilience and adaptability in the face of industry challenges during the pandemic. The company’s strategic plans coupled with its anticipated operating cash flows in fiscal 2024 are expected to support its continued growth and ongoing stock repurchase initiatives to further enhance shareholder value.
Income Statement
Financials in millions USD. Fiscal year is May – April. source
| Year | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 – 1997 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 | Revenue | 2349.43 | 2356.81 | 1734.24 | 1703.98 | 1745.4 | 1583.95 | 1520.06 | 1525.4 | 1425.4 | 1357.32 | Upgrade |
| 1 | Revenue Growth (YoY) | -0.31% | 35.90% | 1.78% | -2.37% | 10.19% | 4.20% | -0.35% | 7.02% | 5.02% | 6.55% | Upgrade |
| 2 | Cost of Revenue | 1340.73 | 1440.84 | 993.98 | 982.54 | 1042.83 | 961.2 | 910.76 | 940.42 | 920.9 | 892.86 | Upgrade |
| 3 | Gross Profit | 1008.7 | 915.97 | 740.26 | 721.45 | 702.57 | 622.75 | 609.3 | 584.98 | 504.49 | 464.45 | Upgrade |
| 4 | Selling, General & Admin | 797.26 | 709.21 | 603.52 | 575.82 | 572.9 | 493.38 | 475.96 | 459.65 | 401.33 | 375.16 | Upgrade |
| 5 | Other Operating Expenses | 0 | 0 | 0 | 26.86 | 0 | 0 | 2.51 | 0 | 0 | 0 | Upgrade |
| 6 | Operating Expenses | 797.26 | 709.21 | 603.52 | 602.68 | 572.9 | 493.38 | 478.47 | 459.65 | 401.33 | 375.16 | Upgrade |
| 7 | Operating Income | 211.44 | 206.76 | 136.74 | 118.76 | 129.67 | 129.37 | 130.83 | 125.33 | 103.17 | 89.3 | Upgrade |
| 8 | Interest Expense / Income | 0.54 | 0.9 | 1.39 | 1.29 | 1.54 | 0.54 | 1.07 | 0.49 | 0.52 | 0.55 | Upgrade |
| 9 | Other Expense / Income | 6.39 | 2.68 | -9.5 | 3.81 | 34.37 | 0.67 | 0.08 | 1.51 | -5.09 | 2.31 | Upgrade |
| 10 | Pretax Income | 204.51 | 203.18 | 144.85 | 113.66 | 93.76 | 128.16 | 129.68 | 123.33 | 107.73 | 86.44 | Upgrade |
| 11 | Income Tax | 53.85 | 53.16 | 38.38 | 36.19 | 25.19 | 47.3 | 43.76 | 44.08 | 36.95 | 31.38 | Upgrade |
| 12 | Net Income | 150.66 | 150.02 | 106.46 | 77.47 | 68.57 | 80.87 | 85.92 | 79.25 | 70.77 | 55.06 | Upgrade |
| 13 | Net Income Growth | 0.43% | 40.91% | 37.42% | 12.97% | -15.20% | -5.88% | 8.42% | 11.98% | 28.55% | 18.68% | Upgrade |
| 14 | Shares Outstanding (Basic) | 43 | 44 | 46 | 46 | 47 | 48 | 49 | 50 | 52 | 52 | Upgrade |
| 15 | Shares Outstanding (Diluted) | 43 | 44 | 46 | 47 | 47 | 48 | 49 | 51 | 52 | 54 | Upgrade |
| 16 | Shares Change | -2.38% | -4.47% | -0.79% | -1.26% | -1.67% | -2.70% | -2.55% | -3.02% | -2.76% | 0.27% | Upgrade |
| 17 | EPS (Basic) | 3.49 | 3.41 | 2.31 | 1.67 | 1.46 | 1.69 | 1.75 | 1.57 | 1.36 | 1.04 | Upgrade |
| 18 | EPS (Diluted) | 3.48 | 3.39 | 2.30 | 1.66 | 1.44 | 1.67 | 1.73 | 1.55 | 1.34 | 1.02 | Upgrade |
| 19 | EPS Growth | 2.65% | 47.39% | 38.55% | 15.28% | -13.77% | -3.47% | 11.61% | 15.67% | 31.37% | 20.00% | Upgrade |
| 20 | Free Cash Flow Per Share | 3.16 | 0.06 | 5.91 | 2.55 | 2.19 | 1.67 | 2.61 | 1.79 | 0.32 | 1.09 | Upgrade |
| 21 | Dividend Per Share | 0.693 | 0.630 | 0.360 | 0.540 | 0.500 | 0.460 | 0.420 | 0.360 | 0.280 | 0.200 | Upgrade |
| 22 | Dividend Growth | 10.00% | 75.00% | -33.33% | 8.00% | 8.70% | 9.52% | 16.67% | 28.57% | 40.00% | 150.00% | Upgrade |
| 23 | Gross Margin | 42.93% | 38.86% | 42.68% | 42.34% | 40.25% | 39.32% | 40.08% | 38.35% | 35.39% | 34.22% | Upgrade |
| 24 | Operating Margin | 9.00% | 8.77% | 7.88% | 6.97% | 7.43% | 8.17% | 8.61% | 8.22% | 7.24% | 6.58% | Upgrade |
| 25 | Profit Margin | 6.41% | 6.37% | 6.14% | 4.55% | 3.93% | 5.11% | 5.65% | 5.20% | 4.97% | 4.06% | Upgrade |
| 26 | Free Cash Flow Margin | 5.80% | 0.10% | 15.68% | 6.94% | 5.86% | 5.01% | 8.40% | 5.89% | 1.15% | 4.21% | Upgrade |
| 27 | Effective Tax Rate | 26.33% | 26.17% | 26.50% | 31.84% | 26.86% | 36.90% | 33.74% | 35.74% | 34.30% | 36.31% | Upgrade |
| 28 | EBITDA | 321.75 | 316.79 | 244.83 | 213.81 | 126.45 | 160.47 | 159.88 | 150.34 | 130.53 | 110.17 | Upgrade |
| 29 | EBITDA Margin | 13.69% | 13.44% | 14.12% | 12.55% | 7.24% | 10.13% | 10.52% | 9.86% | 9.16% | 8.12% | Upgrade |
| 30 | Depreciation & Amortization | 116.7 | 112.71 | 98.59 | 98.87 | 31.15 | 31.77 | 29.13 | 26.52 | 22.28 | 23.18 | Upgrade |
| 31 | EBIT | 205.05 | 204.08 | 146.24 | 114.95 | 95.3 | 128.7 | 130.75 | 123.82 | 108.25 | 86.99 | Upgrade |
| 32 | EBIT Margin | 8.73% | 8.66% | 8.43% | 6.75% | 5.46% | 8.13% | 8.60% | 8.12% | 7.59% | 6.41% | Upgrade |
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