La-Z-Boy (LZB) Q4 FY2024 Earnings Exceed Expectations, Revenue Guidance Misses

Financial Highlights:

* Revenue: $521.8 million, surpassing analyst estimates by 1.2% (4.3% YoY growth)
* Adjusted EPS: $0.68, 2% above consensus
* Revenue guidance for Q1 FY2025: $555 million (1.6% below analyst projections)
* Operating Margin: 6.7%, aligned with Q4 FY2023
* Free Cash Flow Margin: 7.3%, comparable to Q4 FY2023

CEO Commentary:

Melinda D. Whittington, Chair, President, and CEO of La-Z-Boy, expressed pride in the company's resilience and growth amidst market challenges. She emphasized strong sales across all segments, driven by increased conversion rates, average ticket, and design sales.

Company Overview:

La-Z-Boy (NYSE: LZB) specializes in recliners, sofas, and seating solutions. The company's vertically integrated model provides them with a competitive advantage in a market influenced by shifting consumer preferences and increased online competition.

Sales Growth:

Over the past five years, La-Z-Boy's sales growth has been modest, averaging 3.2% annually. However, the company has experienced a decline in revenue over the past two years, with an 8% annualized drop.

Revenue Dynamics:

La-Z-Boy's revenue is primarily generated through its Wholesale and Retail segments, accounting for 61.5% and 38.5% of core revenues, respectively. In the past two years, Wholesale revenue has declined by an average of 9% YoY, while Retail revenue has decreased by an average of 4.4% YoY.

Cash Is King:

Despite strong earnings, La-Z-Boy's cash profitability has been weak over the past two years. Its free cash flow margin averaged 5.9%, indicating limited opportunities for capital return to shareholders.

Key Takeaways:

While La-Z-Boy exceeded revenue expectations in Q4 FY2024, its revenue guidance for Q1 FY2025 fell short of analyst estimates. The company's mixed performance highlights the importance of considering both short-term results and long-term business quality when evaluating investment opportunities.