La-Z-Boy Inc. (ticker: LZB), a leading furniture manufacturer and retailer, recorded a $10.3 million impairment charge for one of its investments during fiscal 2023. According to the company’s latest SEC report, this charge was recorded as a component of other income (expense), net, in the consolidated statement of income. No impairment charges were recorded in fiscal 2022 or 2021.
La-Z-Boy generates revenues primarily by manufacturing, importing, and delivering upholstery and casegoods (wood) furniture products to independent furniture retailers, independently-owned La-Z-Boy Furniture Galleries® stores, or the end consumer. The company recognizes its revenue when control of the promised goods or services is transferred to its customers. For fiscal 2023, the company recorded gross advertising expenses of $159.0 million, an increase from $126.8 million in fiscal 2022 and $94.6 million in fiscal 2021.
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Growth and Acquisitions
The company remains committed to growing its company-owned retail business and leveraging its integrated retail model. Notable retail acquisitions during recent fiscal years include the Baton Rouge, Louisiana business in 2023, which operates one independently-owned La-Z-Boy Furniture Galleries® store and one distribution center, for $5.0 million; and the Barboursville, West Virginia business in 2022, which operates two stores, for $2.7 million.
Financial Performance
In terms of financial performance, La-Z-Boy’s research and development costs increased slightly from $9.0 million in fiscal 2022 to $9.1 million in fiscal 2023. The company’s selling, general, and administrative (SG&A) expenses consist mainly of commissions, advertising, warranty, bad debt expenses, and compensation and benefits for employees performing sales functions. Additionally, the occupancy costs for retail facilities and warehousing costs for distribution centers are included as components of SG&A.
La-Z-Boy uses a combination of insurance and self-insurance for various risks such as workers’ compensation, general liability, vehicle liability, and the company-funded portion of employee-related health care benefits. The company’s deductibles generally do not exceed $2.5 million.
Accounting Policies
La-Z-Boy continues to monitor its investments and accounting policies, ensuring compliance with recent accounting pronouncements. While the company has adopted certain Accounting Standards Updates (ASUs) in the past, it did not adopt any ASUs during fiscal 2023. However, La-Z-Boy is set to adopt ASUs related to investments, Equity Method and Joint Ventures (Topic 323) and Business Combinations (Topic 805) in fiscal 2025 and 2024, respectively. The company believes these changes will not have a material impact on its accounting policies or consolidated financial statements and related disclosures.
Conclusion
Overall, La-Z-Boy maintains a solid financial position while focusing on growth efforts in its retail segment and ongoing investments. Despite the $10.3 million impairment charge in fiscal 2023, the company continues to prioritize researching and developing new products, expanding its advertising efforts, and ensuring compliance with accounting standards to provide continued value for its shareholders.
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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