Earnings call transcript Q3 2023

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Operator

Greetings! And welcome to the La-Z-Boy Fiscal 2023 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

I will not turn the conference over to your host, Director of Investor Relations Kathy Liebmann.

begin. may You

Kathy Liebmann

President And and and joining Kelly. quarter will one everyone thank will Officer. Whittington, and With Bob you to be Officer; Thank then and view open through. the available Chief accompany week speak the this the this Lucian, to of good questions. to available call, discuss a for for performance our presentation Financial La-Z-Boy’s segment through beginning Melinda are be us this replay We’ll afternoon. Slides will may third will Chief them our call webcast you Executive us year, and open you, financials call which Melinda morning will morning the and close one fiscal results. telephone Bob midway link, XXXX and for and

I’d the in La-Z-Boy’s remind Before matters. other today’s presentation, include that made future forward-looking call we like statements about some and statements to begin performance you

statements these are described our risk on affect results future believe The actual our factors our that we annual significant materially. differ to Form in report most Although, could could results reasonable, XX-K. be

those you other information Also, well includes included of Investor the also as in our and of as We to deck. of website, key the filings. is our certain risk the it call are end our slide reconciliations Events our as SEC available conference an release which on tab encourage detailed earnings non-GAAP under review and factors appendix News at Relations measures page

President and Officer. turn over the that, to now Whittington, Melinda? call With Executive I La-Z-Boy’s Melinda Chief will

Melinda Whittington

total, we for fiscal and company-owned period excellent following results. third our sales and and the XXXX in for Kathy same-store with good earnings Yesterday Highlights you morning record retail non-GAAP for positive close profit of the written for margin performance sales, operating enterprise segment segment. afternoon, delivery market retail reported the Thank and the cash included quarter everyone.

Gallery stores. quarter. Furniture La-Z-Boy owned All-in great company Our a

supply service continued chain completed productivity benefiting delivery and majority we customers improve of consumers to business. gains, particularly the backlog retail With and of our our

now custom a of our lead promise; speed As we selling on furniture to brand getting we're to which differentiator highlight times, with improves and in our the market, proposition normal key capitalize marketplace. as close

sales written retail X% period. for versus positive X% year's comp up a same-store our quarter, last written Total and were segments at the for third sales

sales business We pre-pandemic Against even are segment deliver headwinds. written extremely were written to sustained economic with third for company our up sales pleased fiscal XX% year our the versus up and owned of were retail strengthening positive for challenging the reflecting total written same-store XXXX stores. ago quarter, retail the XX% results

strategic while owned move year-on-year sales. month ticket of to the with make Our we average other stores negative retail design consumers execution Traffic in ticket each quarter. through trends higher marketing average stores, in traffic. still are company and drive once improved channels as continues team deliver to and investments outperforming and retail And improved progressively we as increase enter conversion our our superb

on third our were company enterprise's us for down owned an against network experience entire our independently Furniture quarter. sales pre but continues prior including end-to-end the retail inspirational X% year same-store retail La-Z-Boy’s strategy to pandemic up Written profitability. growth against Galleries galleries period Vision X% and the overall stores a XXXX the Century make of Quarter to contribution to allow significant segment deliver fiscal

with where times, marketing by ensure consideration customers selling competitive all remains proposition. environment. faster by awareness great wholesale wholesale certain more channels. into we're We're playing we're delivery across and to promotions our additional a increase challenging And needed. to on also offering leaning impacted But [Indiscernible] values business the selective offering offense products

levels. And to inventory they indicate customers with see number normal customers. order momentum positive are closer we've Additionally, a wholesale begun our moving historic of to

third they XX% many sales XXXX still Turning pandemic pre written Written reflect to fiscal versus experienced to trends were down while home QX sequentially similar those XX% challenging versus were up traffic online results furnishing last across but improved a brands. quarter, versus Joybird, year's QX.

For challenges consumers more a mind top it network smaller, some near keep to the brand XXX with because an fewer compared stores. business is because impactful Joybird, it term a the environment brand economic newer to has and established La-Z-Boy, of are of locations for

external offense mindful and playing reach prudently strengthen we the environment, while focused the Century to expanded Joybird company, realistic for return Vision. growth Across our La-Z-Boy through remain to on the long-term to and profitable macro drive investing business profitable and capabilities We're about drive branded growth.

heritage capitalizing we're of brand and investing comfort and La-Z-Boy, on our in durability. For

to meeting As are our marketplace, challenging brands people to good strategies the honing right also in ensure marketing, return points us in where times. refining products working history tells in fragmented to investing targeted opportunities, a consumers distribution and sharpening highly We're and we they expand message, channel strong execution. We're want with shop. price to ensuring

our the and time, ourselves to against insulate we're improving controlling efficiencies recessionary costs operations At manufacturing same in trends.

Greenfield to initiative, made and the backlog. manufacturing the nine our operations locations As Recall decision at and close sew facility. the [ph] service tutorial part in cut quarter, of Ramos month of Mexico, open in we to our during COVID, we height facility this manufacturing Mexico added three our during overall

shift their [ph] to packages the now come to the we are transition during based at thank and are Mexico was other to last With Young able comprehensive providing them this of Torreón for time. only to larger support locations. gained We production. of company Troy production online efficiencies Torreón the for dedication La-Z-Boy smallest employees X% branded operations, our and and the to accounted facility

company own the stores, stores quality through this company our we of of year, our structure XX our controlling retail end-to-end through added margin. company and we business, wholesale fiscal dealers to the profits experience acquired we're new stores have we the from business, grow size side Gallery independent have retail the the eight In retail portfolio, leverage to own the and as stores. improve owned and stores delivering enterprise On Again, fixed or and our integrated and its cost consumer from the La-Z-Boy increase relocation. acquired and stores remodels more five new relocated and to will benefit Furniture continue will of remodeled

outlet the Louisiana, second acquire in During Rouge, Furniture an own Barboursville the market La-Z-Boy also store Columbus, opened to spring. La-Z-Boy Chicago third independent quarter, in Ohio, our this acquired West with the agreement dealer store open plan Virginia we Gallery, Baton signed to in first a by and another

brands aligns to market our this All share. of activity and strategy expand with Century our Vision grow

expect service to climate pivot and to ability uncertain, investments be customers we consumers near-term, fund, external clients and believe financial a provide the excellent position. as we'll We external the drive our growth and to to For needed. strong in remain to prepared maintain

even La-Z-Boy navigate will agility with emerge stronger. Incorporated will We ahead and challenges confident are

let Bob call over me Now, more turn to the Bob? third our review to in quarter detail. results

Bob Lucian

morning Thank Melinda and you good everyone.

we on As better believe reflects both GAAP basis. our a performance a trends the We non-GAAP and the business. underlying and of results reminder, present operating non-GAAP presentation

our appendix in section call which items results exclude the detailed our slides. Non-GAAP in tables of conference the press and in release are

and to our results non-GAAP related excluded the lease quarter, reflecting Mexico of charge manufacturing share closure Torreón $X.XX the assets. a of per of primarily the For facility, non-cash equipment impairment

to and prior quarter third a XXXX basis, of by lower quarter quarter $XXX pricing increased $XX third effects a with consolidated and unit positive and channel actions an income increased million versus XX% increased the record performance year for strong product operating mix sales of On volume. Consolidated retail income surcharge and GAAP to a primarily year our offsetting fiscal to $XX driven million segment. million, and versus in last non-GAAP quarter, operating increase third the

non-GAAP margin quarter in year X.X% last to quarter. the increased XXXX to margin from third X.X% versus $X.XX for Consolidated increased the X.X% GAAP year's X% operating diluted in fiscal GAAP $X.XX third EPS and operating to quarter. prior increased from

Non-GAAP XX% last current to in the third $X.XX quarter. year's diluted quarter EPS year in increased versus $X.XX

XX% EPS still of months, product QX, past the the customers ability year our non-GAAP warehouse versus third diluted ago to quarter period. number of quarter. the was a limited XX had their that delivery new $X.XX with wholesale a take increase the constraints consistent Over during In

us margin for own and business. delighting business dealer focus our strong retail during quarter, constraints These allowed through consumers fixed deliveries owned to operating retail leverage our costs term short more driving on the company again of

move stated to the on focus comments segment I discussion, otherwise. from As specifically here will unless my non-GAAP reporting our

to returning to with Starting million times. delivered we significant pre-pandemic our increased retail towards as progress lead by sales made segment, XX% $XXX

driven by XX.X% the quarter, selling the costs. operating income to high profit delivered best ago. relative expenses increased period. the sales delivered operating versus contributing the and For XX% in Retail year of for increased posted ever versus quarter, enterprise's dollars year record prior XX.X% XX% margin same-store to Operating higher sales fixed

an continues through proposition selling team as service improve design at high extraordinarily through increase our first execute to retail in an focus, well Our excellent our an times shorter level lead as position. in-stock consumer services, including and

from written our of All total team we QX has XX% as retail the were segment's sales performance. on-going and in outstanding to success QX, up this for contributed sequentially congratulate its

Century network As end-to-end key experience, delight growing element delivering more us will operating retail full La-Z-Boy growing is our Furniture margins. Melinda consumers a Vision. brand Gallery allow a owned with of company while a noted higher earlier, to Disproportionately

prior year million, wholesale quarter, the and decline driven channel primarily period, decline our delivered by segment For $XXX a delivered favorable in offset mix. sales volume, X% the were product a with and by pricing compared partially in

freight segment mostly increase pre-COVID third spend and Operating offset primarily to driven X.X% to marketing margin by declining SG&A in returning last for by with Pricing quarter. were levels. the wholesale X.X% costs versus an year's surcharge in along actions improved

Joybird’s quarter. of a in spend I’ll furnishings million that and orders year key trends XX% orders reflected campaign versus with is by which marketing moments were few decreased for negatively This deliver on and the home now execution delivery sales prior third corporate Joybird, other. impacted $XX slowing partner. issues to reported written e-commerce QX a

to trends positive. excuse On delivery conversion me for last loss Joybird Joybird’s the last period, quarters versus prior traffic the decline. a due period written sales reflecting principally year, year's posted lower was the for volume lower

overall saw we areas focusing all its the in costs to of and QX. synergies optimizing efficiencies improvement The profitability. across marketing the and team and business is versus QX Additionally, working environment distribution enterprise and performance production Joybird drive rocketing with enhance activation in to and on

markets omni-channel with sales. into an offer retail our of first activation hand. opportunity In a part the seeing lean Joybird consumer for increase in great stores, first experience brick significant brand we have to continue are locations strategy, and As mortar we to we where consumers to

and and Philadelphia a summer Seattle, During three second a stores additional store in in the Joybird the Angeles. to plan open Manhattan store opened seventh quarter, in we Los by

of slowing prudent impact year, sales For the fiscal and to marketing long-term locations we and in the loss, full retail continued e-commerce drive to post Joybird a expect reflecting growth. investments

making performance. are of with We areas growth line we'll and and business improvements the investments across model all balance bottom

Consolidated margin becoming from and versus quarter to larger XXX XX business basis prior points our business. the than QX, carrying the the retail mix year with a for sequentially higher period by primarily wholesale our consolidated driven points increased gross and basis changes gross portion increased a margin

points a growth level SG&A sales Consolidated which sales, a wholesale driven changes a Again, our than as this expense our of the of mix of percentage basis year's by versus last third in higher as of reflected business. primarily consolidated percentage SG&A business quarter. retail increased carries XXX

sales pre-COVID levels also to percentage due on marketing with to sales higher written along a higher selling sales. higher was of as to SG&A written expenses investments drive those restoring

of on Our was in state was fiscal XX.X% owned quarter. lower XXXX the effective effective fiscal gains a non-taxable quarter life third the and year’s insurance on tax GAAP taxes. basis last The XXXX versus rate third rate partially quarter for in due XX.X% to third tax corporate

taxes. rate tax federal statutory state primarily effective rate, from due varies Our XX% to a

in We for be the of XX% to XXXX. expect our effective XX% tax range rate fiscal to

million cash, year-to-date activities to in $XX year $XX QX million, $XX $XXX operating nine-month XXX% fiscal million [ph] in spring’s cash to the third Turning increase operating The versus million versus from in period. XXXX we cash in generated from prior quarter. activities a the

facilities. $XXX driven Strong the end cash by generation million Year-to-date, profit and performance in the of quarter debt. in cash quarter. was inventory with versus We no second progress reducing period and ended in the La-Z-Boy significant related the we and manufacturing store Furniture retail Joybird primarily spent reflected million me, distribution upgrades excuse capital Gallery well primarily as at new as and stores, to $XX have La-Z-Boy our and remodels, in

returned dividends $XX to share we and million repurchases. Year-to-date, shareholders through

maintain other business Given sheet. the and environment, prudent have temporarily macroeconomic a dilution share in the uncertain to offset we capital pause investment than balance repurchase, strong enable to

Melinda, the to mind will and keep comparisons and quarter in fiscal for year. sales year fourth and weekly against that The the will for $XX back year week a extra be me Before approximately fiscal several third turning based the of let be call XX-week XXXX. XXXX the contributed the XX-week, average on that last quarter. highlight fell in quarter important fiscal Please items sales million full in

worked write, seasonality XX% essentially be have historical pandemic consistent pre backlog delivered levels we sales we down As pre QX almost to will what and levels. consistent higher with our pandemic than with our

While our long-term remains uncertain. environment sales steady progress, macroeconomic we and maintain to margin and commitment volatile the

XX the weeks. for As quarter than million a of to $XXX million the quarter delivered result, which down to pandemic fourth the fiscal range higher fourth be sales of XXXX, XXXX we expect fiscal and included pre versus in again $XXX

X% We adjustments in the year to to $X.XX margin is range $X.XX share. per of charges to of Consolidated purchase be non-GAAP for be for accounting X%. range the in non-GAAP the anticipate to operating expected

the conserving we current demand uncertainty the Given environment and extended cash project economic lead have capital and ahead, are times.

to for the $XX making continue to range strategy. company with consistent smart Century the future capital of fiscal the which XXXX in be to million, our investments expenditures million $XX includes We Vision to expect strengthen for

back now And the to I call turn will Melinda.

Melinda Whittington

Bob. Thanks

remain As we acknowledge playing and XXXX, drive extremely underlying prioritizing profitable the uncertainty, the and undertaking Century business with short-term scenario our managing prudently last future through I and we're the Incorporated. first in capabilities quarter about conserving set same consumer Vision. of look to At fiscal to time, planning La-Z-Boy offense brands a cash. optimistic we're mind growth investments and our of appropriate we long-term

Our Thanks like our yet for the team delivered the this strength I morning. for And that team quarter. thank emerge through the for navigate again lie their results we thank stakeholders to us financial through being I'd will to with share. talented on challenges the support. ahead. and And increased carry stronger all have excellent amazing this market on-going call

turn back to Kathy. I'll it

Kathy Liebmann

the We the the instructions open question. Kelly review to questions. will ask queue into now getting Please queue to for

Operator

Certainly, first is conducting question. Instructions] Your James, your Please answer at at coming from be Bobby session. Raymond this time, will question question-and- Griffin the pose [Operator we

Your line is live.

Bobby Griffin

Good Thanks questions. morning, everybody. for taking my

thing first trends, was see the positive. to wanted written guess dive I So I those to nice a into improvement the move to

interesting of performance through your Day wise carry talk from you with February little was little bit, So anything the before? order maybe, set point like seeing stores to And kind can nice a a the we did were you can Presidents the period? improvement of in from in bit own glean price looks in recent there or anything a what

Melinda Whittington

how pleased a back I consumer, right. see down normal expense, it's gotten individual Yes, marketing the store we're I'd just execution, of sort in say the one just for consumer And to fundamentally, item, there. really are to definitely times proposition caring trends. end-to-end paying no then we're with because that We've care and improving, in we're levels traffic the its making, execution that positive that we're the would There's compelling our lead say is And execution. off. marketing the of with store, then giving investments to for

QX. Overall, trends we improvement fourth into Day. quarter improved President's saw strong with continued holiday a that And has a this strong through

Bobby Griffin

if business, quarter, fourth back the or the Bob, more just for a Good. on normalized that get could flows mix end impact? it wide cost of That's, it pretty you function to of is profit a through retail does follow really have that's revenue, it with fixed the news. up which a maybe is nicely top is more move the leverage the guidance, EBIT range of more And there to good the that that

Bob Lucian

as if the to able on as we of give there overall wider an it, be retail might And able will to to see than impact things. There's That's gave And consolidated That's little additional we're lot could And perspective, get be that. you relative more just we next what perspective. both wanted on, volume going the going that the just at potential next to be think over range just to end the ourselves that it's manage both why those geopolitical a over bit nailed we happen if the see well that of a out on from clear, what to fact there's of volume, out volume, economic margin, things that quarter. to we a lot think a lower just then also less the we're products range. happening the a range help over the within be the volume that to just be this quarter. we

Bobby Griffin

I lastly, from a on some of that bit competitive it's happen. shipping me, environment? roll pricing to to call industry called more passed industry starting certain level for XX the through XX to or guess maybe hold last and materials, the it you raw in relief, the little material months? Okay, Are are a a see when reflect pricing bit just starting industry see their to guess, they over minor raw high We're the that that then back standpoint Or to little when changes the seeing companies of I in you I kind question. the that's started to

Bob Lucian

had from end some to companies certain going of some lower We've do point freight, I'll the at furniture industry down. prices, the And a are what call a freight of the, competitors those competitors seen some back with roll lot of there's that perspective. rates price ocean the the

that those haven't taking we lower seen reduction against we as that the of relates across of competitiveness the some a maintain some sharpening some products that competitors point industry. to of broad are some But we points opening done our reductions. price at taken action we've sell. we've that, entire of a to that As price result levels, it price And

to actions the fit pleased So get pretty we that prices continue pricing our to see out or that. strategy in And we competitive. we do we we our as with we're we price And saw policy take remain did is that and the And response quarter. that. of

Bobby Griffin

Thank High you. and at helpful upcoming Very here market. luck best Point furniture the of

Bob Lucian

you. Thank

Operator

Lebiedzinski is question. and pose Your Company. Sidoti next Please from question Anthony with coming your

is line live. Your

Anthony Lebiedzinski

moving direction. And Oh, good morning. about for in written the thank echo comp a yes. It's you positive see comments the Good really trends. sales questions. Bobby's that taking And I'll to

So just notable country? throughout basis describe on you their or trends wondering seeing the are have do regional you consistent seen any How differences that?

Melinda Whittington

I region. Anthony. by yes morning no Good dramatic would differences say real

Of course, this when Canada a or and a up point. Canada began little you bit trend leveled might out business sort so even year that at comps over of the change there. But last really of see has to opened recover,

Anthony Lebiedzinski

Okay, got you.

here. Okay. is But your your guys, the just for and that? assess you outlook the see you versus outperforming how would know, competitors? be And curious calendar do industry you what's industry? to How just how as like, as just, XXXX? then far do see here guidance overall I'd you wondering, give like, outlook perhaps this Obviously, quarter for guys for And

Melinda Whittington

ball crystal keep we for? old looking that It's Right, Anthony?

Anthony Lebiedzinski

Right.

Melinda Whittington

the little seen which the is a the tougher that going are middle for So can or think I, calendar you prognosticator you consumer. would we upper pretty on end this our a know, I assume a Thus year. more can, range as of sort consumer, consumer, that begun, we've what haven't just things And simply well wide give for get can, over as you continue to to is, that. have can I right. to of only us, you behind you is you Certainly that tell end of of, worst as find far

a range how Bob's And around, speaks of to even a of planning so, potential get might And prudently. to a question kind it wide point bad there. of relative kind out we're that outcomes Bobby's in

then our care with the how in and delivering own our Now head consumer, we're lead we're put of focused we're that they quarter month, across, said, our interact capabilities. in us, taking working when and that on trends, execution, times, supply and been execution to and particularly how how We've as to taking growing we're marketing the chain in quarter, and we've still that's and making and bucking down And shorter again, month investing, for sure investing retail. us. it and

to where So I I we can day. just over get exactly But none particularly say, external cautiously next optimistic, every that the guess recognize to control like, of stronger going that for year. things us we're what environment the we I'd think execution our that, is I'm know we the continue look total

Anthony Lebiedzinski

for a to manufacturing last kind Understood. closure Torreón me. of do was the additional or plan And I facility a facilities one-off? you close mean then any question

Melinda Whittington

what footprint Yes, on with with good what that we, we feel now see the have. about trends, we right we volume

Anthony Lebiedzinski

very it. of thank much, Well, you Got luck. best and

Melinda Whittington

you. Thank

Bob Lucian

Thank you.

Operator

pose Brad your Your next from KeyBanc. question. question is coming with Thomas Please

line Your live. is

Bradley Thomas

that from taking the the hoping one, Hi, some have. good your, question. at own potential you in of all, things partners, you to today you like stand just the may and couple ahead? wholesale of how everybody. and my And Great. around first where with over morning, number how talk out. perhaps I your those you and inventory and that's levels with think partners, one, then think about and wholesale change, could distribution, outside you Thanks channel, for your and how play And A be if Melinda, or year a if will, me, relationship little larger going the conversations bit was are going partners stores, that

Melinda Whittington

see of relief down and both, about the industry, offerings, always a in of were independently that general our levels all-time some have we're to from special lot half as by things they up by seeing the don't about that stock think then all good that shorter to our, inventory in that beyond have impacting that to a the An inventory. high begin wide important cases bit over up. choice of expect have galleries to lead their the they some we're consumer stock significant customers we have those last then we experienced ability selling of product. channels. much business, to of thing end fact for down we bit particularly us something variety in in I say lot and folks business we we in And, kind went demand even clear to to, because customer give is our that’s very we're ability And open is a our our up times, start our a deliver our just pandemic high furniture of a where all-time with partners more custom of of across of When their think overall, products. help kind are warehouses starting now we're on we're And holding slowing across just wholesale that portion would that customers, had benefited I bet manufacturers know stocked six to And sight or more even that Sure. the levels more, to the dealer a that the to but just inventory the bit. owned, more orders. months, we we

Bradley Thomas

do could How coming do things Melinda. this you is quarter labor? ocean could follow the probably coming and pressures What you major here. just major little than still think on Thanks, the on of be on think and margins, of inflationary like that I helpful. forward takes just and the this puts down, down, perhaps about outlook if takes kind select for thinking That's you like freight more lumber here? look puts And I a as there's margins other margins? Obviously, ask ahead but some broad about reaching for the a inputs, up mean, then

Bob Lucian

the hit you input freight, the for you will headwinds increases input. input that to is we're it some anything, relates involved, a sure kind of as in come But where down or waiver be or think And down. things to of Brad, of it requiring some anything seeing starting I down. tailwinds areas of ocean are whether ocean, their commodities there's costs, be mechanisms, labor coming a couple on costs some

are If the back help a to ability won't function to that who So pricing. in the relative industry generally is for all in react a folks can going industry to folks environment, the of to then for margin those us, that's the that I or those consumer, our think bring, positive, how given that speaking of be be overall how matter. capture to

we backlog do move be as to plant through, we've and efficiencies, we a we through undergoing going that margin couple see. going trying excess in what manage were that we've now and decline on that the in be than and efficiencies years. will going kind with, to to volume of how we're over offset as the volume we're had get be and we'll dealing we're able level that to the the As ourselves be as will That level backlog, last working the had, be our work well our of plant lower improve get of to we'll plants, headwind a sales we a combination to materials the input that

Bradley Thomas

Thanks That's so much. helpful.

Melinda Whittington

Brad. Thanks

Operator

of There we've the the closing any turn to question-and-answer this now end back Liebmann questions queue call are like the at in would over I reached time, Kathy and remarks. for session. no to

Kathy Liebmann

Thank morning. participating you meantime, for have our a In questions, great in Should in follow the this call please bye. be Bye day. you any have touch. up

Operator

today's conference disconnect does you you time. your for This at Thank conclude and Thank this may your participation. you. lines

La-Z-Boy (LZB) 22 Feb 232023 Q3 Earnings call transcript