La-Z-Boy Inc. Shuts Torre贸n Manufacturing Facility in Mexico, Streamlines Operations, and Optimizes Staffing Levels within its Plants

La-Z-Boy Inc. (LZB), a leading global producer of reclining chairs and the second largest manufacturer/distributor of residential furniture in the United States, filed their SEC report which included various updates on their business operations and financial results. Among the decisions made by the company in its third quarter of fiscal 2023 was the closure of its manufacturing facility in Torre贸n, Mexico, as part of an initiative to drive improved efficiencies through optimized staffing levels within its plants.

The SEC report states that Torre贸n was the last facility to begin operating as part of La-Z-Boy’s broader Mexico manufacturing expansion in fiscal 2021 and 2022, which aimed to meet pandemic-related upholstery demand. The Torre贸n facility accounted for approximately 3% of La-Z-Boy branded production. Due to the closure, the company recorded charges in the third and fourth quarters of fiscal 2023 totaling $9.2 million in selling, general, and administrative expense for the impairment of various assets, primarily long-lived assets, and $1.6 million in cost of sales, mostly related to severance.

La-Z-Boy’s supply chain operations currently consist of five major manufacturing locations and 12 distribution centers in the United States, four facilities in Mexico, a logistics company that distributes a portion of their products in the United States, and a wholesale sales office responsible for distributing their product in the United Kingdom and Ireland. The company also operates an upholstery manufacturing business in the United Kingdom and a global trading company in Hong Kong, which helps manage their Asian supply chain and identifies efficiencies and savings opportunities.

The 2023 SEC report also reveals the company’s participation in two consolidated joint ventures in Thailand, one that operates a manufacturing facility and another that operates a wholesale sales office. They additionally have contracts with several suppliers in Asia to produce products that support their pure import model for casegoods.

In the fiscal 2023, the prices for materials used in La-Z-Boy’s upholstery manufacturing process began to decrease relative to the historic highs experienced in previous years, but they still remained well above pre-pandemic levels. As the company starts fiscal 2024, they anticipate that prices will remain relatively consistent with those seen at the end of fiscal 2023, with potential increases due to economic volatility and price inflation in their core materials.

La-Z-Boy sells its products through multiple channels, including furniture retailers or distributors in the United States, Canada, and approximately 50 other countries, such as the United Kingdom, China, Australia, South Korea, and New Zealand. The company also sells directly to consumers through their company-owned retail stores and their websites, www.la-z-boy.com and www.joybird.com.

La-Z-Boy’s reportable operating segments include the Wholesale segment and the Retail segment. The Wholesale segment manufactures and imports upholstered and casegoods furniture and sells directly to La-Z-Boy Furniture Galleries庐 stores, operators of La-Z-Boy Comfort Studio庐 locations, England Custom Comfort Center locations, and various independent retailers. The Retail segment primarily sells upholstered furniture and other accessories through their company-owned La-Z-Boy Furniture Galleries庐 stores to end consumers.

The SEC report highlights that La-Z-Boy’s business operations and financial performance continue to evolve amid economic uncertainty and fluctuating demand, as well as challenges in the global supply chain. The company has made strategic decisions to streamline its operations, optimize staffing levels, and manage costs, positioning itself for continued growth in the future.

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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