La-Z-Boy (LZB +1%) ended FY25 with mixed results. The furniture retailer's Q4 revenue rose 3.1% year-over-year to $570.9 million, surpassing the guidance range of $545-565 million. However, Q4 EPS missed slightly, and Q1 revenue guidance of $490-510 million fell short of analyst expectations. Typically, Q1 is La-Z-Boy's lowest sales and margin quarter.
- Retail Segment: Revenue increased by 8% year-over-year to $247 million, driven by new stores and acquisitions. La-Z-Boy opened its 200th company-owned store, now owning 55% of the network. However, same-store sales fell by 5%, a decline from previous quarters, due to weak industry traffic offset by higher average ticket and design sales.
- Wholesale Segment: Sales, including intersegment sales, rose 2% to $402 million, aided by growth in North America. However, international sales faced challenges due to a significant customer transition.
- Joybird Business: Written sales dropped 21% year-over-year in Q4. The segment is affected by rising macroeconomic uncertainty. However, physical Joybird stores showed stronger trends, allowing better consumer service.
- Economic Impact: High mortgage rates and economic volatility dampened consumer sentiment and industry traffic in Q4. La-Z-Boy anticipates continued economic challenges but remains confident in its iconic brand and strong balance sheet.
- Tariffs: Approximately 90% of La-Z-Boy's upholstered units sold in North America are US-produced, with Mexican operations handling the rest. Most Mexican products are US MCA compliant, avoiding tariff issues.
Overall, La-Z-Boy experienced a mixed quarter with stronger-than-expected sales but weak EPS and guidance. The constrained consumer market and slow housing sector pose challenges for the company.
