Upholstery manufacturer La-Z-Boy Incorporated has reported a record second quarter as sales surpassed $600m for a second consecutive quarter.
According to its latest trading update ended 29 October 2022, Q2 sales increased 6% to $611m from $575.8m, with retail segment sales up 31% to $252m and wholesale revenues rising 2% to $446m.
La-Z-Boy said the growth reflected the realisation of pricing and surcharge actions and the positive effects of a favourable product and channel mix, which offset lower delivered unit volumes.
The company added that improved operating margin was driven primarily by a focus on manufacturing and delivering its consumer sold backlog for its company-owned retail stores and the benefit of pricing and surcharge actions, partially offset by higher input costs and marketing investments. Operating margin was 10.1% versus 9.4%, with net income resulting at $46m, up from $39.5m.
Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said: “We delivered record second-quarter sales and operating performance in a challenging environment led by our company-owned Retail business. Strong supply chain execution in the period allowed us to reduce our backlog and improve service to customers and consumers as we continue to shorten lead times and move closer to delivering on our brand promise — quality custom furniture with speed to market. On the strength of that value proposition, our business remains larger than pre-pandemic levels as consumers continue to place a value on the comfort of their homes and entrust La-Z-Boy to deliver it.
“As we face near-term macroeconomic and geopolitical headwinds that have slowed the pace of written sales, we are operating from a position of brand and financial strength. We remain focused on the long term, controlling what we can, and positioning the company to move through this period with ongoing operational excellence. We are pivoting quickly to respond to market dynamics, including proactively aligning our cost structure with demand, and making prudent investments to drive long-term profitable growth through Century Vision. As we tackle what lies ahead, we are confident we will navigate the environment well, build for the future, and emerge stronger while increasing market share throughout these challenging times.”
Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, added: “As we successfully reduce our backlog to enable pre-pandemic consumer lead times, we expect the second half of our fiscal year to be impacted by continued external headwinds on consumer demand. As a result, we estimate delivered sales for the fiscal 2023 third quarter to be in a range of about $525 million to $535 million, and consolidated non-GAAP operating margin to be in a range of about 7.0% to 7.5%.”