LZB Q1 Deep Dive: Retail Expansion and Supply Chain Initiatives Shape Outlook

Yahoo

20-06-2025

Furniture company La-Z-Boy (NYSE:LZB) reported Q1 CY2025 results topping the market's revenue expectations , with sales up 3.1% year on year to $570.9 million. The company expects next quarter's revenue to be around $500 million, close to analysts' estimates. Its non-GAAP profit of $0.92 per share was 1.1% below analysts' consensus estimates.
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Revenue: $570.9 million vs analyst estimates of $558.6 million (3.1% year-on-year growth, 2.2% beat)
Adjusted EPS: $0.92 vs analyst expectations of $0.93 (1.1% miss)
Revenue Guidance for Q2 CY2025 is $500 million at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 5.2%, down from 9.1% in the same quarter last year
Market Capitalization: $1.56 billion
La-Z-Boy's first quarter delivered sales growth amid a challenging consumer environment, with management highlighting the benefits of new store openings and acquisitions, particularly in the Retail segment. CEO Melinda Whittington credited the company's 'vertically integrated model and agile supply chain' for enabling continued growth despite persistent economic and industry volatility. Management noted that while company-owned store sales rose, same-store sales declined, reflecting broader consumer caution. The quarter's performance was further shaped by targeted pricing actions and swift operational responses to supply chain disruptions, including storm-related factory damage. CFO Taylor Luebke emphasized that improved sourcing and lower input costs helped offset tariff impacts and cost pressures.
Looking forward, La-Z-Boy's outlook is anchored by ongoing expansion of its direct-to-consumer retail footprint and a multiyear project to redesign its distribution and home delivery network. Management anticipates that continued consumer uncertainty will weigh on near-term demand, particularly impacting the Joybird online channel, but expects long-term benefits from operational investments and a refreshed brand identity. Whittington described the upcoming distribution redesign as key to supporting growth, saying it will 'cut time out of the system and less miles on product as well.' The company remains focused on agility in responding to trade policy shifts and cost inflation while maintaining prudent investment in both new stores and supply chain capabilities.
Management attributed the quarter's performance to retail network growth, improved supply chain execution, and targeted pricing actions to mitigate tariff and cost pressures.
Retail network expansion: New store openings and acquisitions in the company-owned Retail segment drove growth, with 11 new stores and 7 acquisitions completed over the past year. Management emphasized that direct ownership allows La-Z-Boy to control the end-to-end consumer experience and collect valuable customer insights, supporting its Century Vision strategy.
Supply chain agility: The company's predominantly U.S.-based manufacturing footprint and Mexican cut-and-sew facilities allowed it to minimize tariff exposure and maintain speed to market. Management cited its quick recovery from a storm-damaged Arkansas facility as evidence of operational resilience, with only a one-week production loss.
Joybird channel divergence: While physical Joybird stores showed relative strength, online sales for this segment declined. Management attributed this to greater macroeconomic sensitivity among Joybird's younger, urban customer base and is adjusting store growth plans accordingly, with 3–4 new stores planned for the coming year.
Margin management: Adjusted operating margins were supported by lower input costs and improved sourcing, but offset by higher fixed costs from new store openings and incremental tariff expenses. CFO Luebke noted that continued investment in distribution redesign is expected to provide further margin benefits over time.
Brand strategy evolution: La-Z-Boy is set to launch a refreshed brand identity, with updated look and tone to increase relevance in digital channels. This is part of a broader effort to modernize the brand and reach new audiences, building on the success of its 'Long Live the Lazy' campaign.
La-Z-Boy's outlook is shaped by a cautious consumer environment, continued investment in retail and supply chain, and efforts to manage industry-wide cost pressures.
Distribution network overhaul: The multiyear redesign of La-Z-Boy's distribution and home delivery system is expected to drive efficiency gains, reduce warehouse overhead, and improve delivery times. Management believes this project is essential for reaching long-term double-digit wholesale margins and supporting a growing retail footprint.
Tariff and trade policy management: The company is actively monitoring global trade developments and leveraging its U.S.-centric supply chain to mitigate new tariffs. Targeted, nominal pricing actions and inventory strategies are in place to offset cost impacts, but management remains cautious about potential effects on consumer demand.
Retail expansion and brand refresh: Continued investment in new company-owned stores and the upcoming brand identity update are central to management's growth strategy. The ability to control the in-store experience and adapt marketing for digital audiences is seen as key to gaining share in a fragmented market, though higher fixed costs and cautious consumers may present near-term challenges.
In the coming quarters, the StockStory team will be watching (1) the pace and effectiveness of La-Z-Boy's distribution network redesign, (2) ongoing performance of new and acquired company-owned stores, and (3) the impact of the brand refresh on customer engagement and sales trends. Additionally, developments in tariff policy and the trajectory of consumer demand will be pivotal in assessing the company's execution against its Century Vision strategy.
La-Z-Boy currently trades at $38.19, down from $38.79 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it's free).
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