Upholstery manufacturer La-Z-Boy Incorporated has reported a decline in second quarter sales.
According to its Q2 trading update for the period ended 28 October 2023, total sales fell 16% to $511.4m from $611.3m in 2022.
“Sales totalled $511m, on the high end of guidance provided last quarter and a decrease of 16% against a year ago period that benefited from delivery of pandemic related backlog,” La-Z-Boy said.
Same-store sales for the entire La-Z-Boy Furniture Galleries® network increased 1% versus a year ago, with company-owned written same-store sales essentially flat against a ‘challenged consumer environment’.
Operating margin was 6.6% in the quarter, while net income stood at $27.1m, down 41% from $46m.
Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said: “In spite of a challenging macro environment and the continued soft home furniture industry, La-Z-Boy Incorporated continues to outperform. These results were achieved via strong execution, particularly in our retail stores and across our supply chain.
“We continue to make progress on our Century Vision strategy, highlighted by growth in our company-owned Retail store base, which now represents just over half of our entire network. Building on that foundation, we recently signed an agreement to acquire an additional six store network from an independent La-Z-Boy Furniture Galleries® dealer in the Midwest.
“We are excited about the potential of our new brand campaign, “Long Live the Lazy,” which was introduced in August. In the quarter, we activated our new marketing strategy, leveraging data based consumer insights and our brand heritage of comfort and quality to connect with a broader consumer base. Despite weakness in near-term industry traffic trends, we continue to take a long-term approach to investing in our business and are making steady progress toward building a more agile supply chain and optimizing our network.
“Although consumer traffic trends remain a headwind, La-Z-Boy remains well positioned to continue outperforming the industry due to our iconic brand, consumer preferred shopping experience, and long-term approach to investing in our business, enabled by the strength of our balance sheet. We are confident in our ability to grow at a pace double the industry and deliver double-digit operating margins over the long term.”
Bob Lucian, Chief Financial Officer of La-Z-Boy Incorporated, added: “Our second quarter results were roughly in line with the top end of sales guidance, and exceeded Non-GAAP operating margin expectations given strong execution, particularly in our Retail business. Looking forward, we expect consumer trends for our industry to remain challenging.
“With this in mind, we are prudently planning for sales in the third quarter of fiscal 2024 to be relatively consistent with the second quarter. Further, we expect third quarter Non-GAAP operating margin to be similar to the first half of the year. As such, we are forecasting fiscal third quarter sales to be in the range of $515-535 million and Non-GAAP operating margin to be in the range of 7-8%.”
