The recliner maker reported revenue and profit above Wall Street’s targets, boosted by new stores.
- La-Z-Boy reported revenue and profit above Wall Street’s targets, boosted by new stores.
- Shares gained 7.5% in the after-market session.
- The company also raised its quarterly dividend by 10%, and guided Q3 sales slightly above expectations.
La-Z-Boy Inc.’s shares gained 7.5% in the after-market session on Tuesday, following the recliner and sofa company’s upbeat results.
Revenue grew 0.3% to $522.5 million in the second quarter, topping analyst estimates of $517.6 million. Sales were largely driven by new stores, with retail sales growing 4%.
Same-store sales, which strip out the effect of newly opened or acquired locations, fell 2%. The company acknowledged that the broader consumer and macroeconomic backdrop remains challenging. Adjusted earnings per share (EPS) were $0.71, handily beating Wall Street’s estimate of $0.54.
“We are investing in the business for the long term, as highlighted by the opening of 15 new company-owned stores in the last 12 months and the advancement of our distribution and home delivery transformation project,” CEO and Board Chair Melinda Whittington said in a statement.
Retail’s View Neutral
On Stokctwits, the retail sentiment for LZB shifted to ‘neutral’ as of late Tuesday from ‘extremely bearish’ the prior day, with ‘extremely high’ message volume. User comments were mixed.
“Don’t expect this pop to last tbf,” said one user.
“$LZB closed it out for a sweet gain, enough to pay for a new recliner. Nice overnight trade,” said a user, with another saying the stock should be at least $40.
LZB had closed at $29.59 on Tuesday, and has declined 32% so far this year.
Growth Initiatives
La-Z-Boy said it is exiting certain non-core businesses, such as Kincaid and American Drew casegoods and Kincaid upholstery, and has made changes to the top management and workforce. Those initiatives will be substantially completed by the end of the fiscal year and will reduce sales by about $30 million while boosting margins, the company said.
Unlike many peers, roughly 90% of La-Z-Boy’s finished goods are produced in the United States, leaving the company largely unaffected by U.S. tariff policy. In fact, the company said it is considering closing its UK manufacturing facility.
La-Z-Boy bumped its quarterly dividend by 10% to just over $0.24 a share (payable on Dec. 15), and guided third-quarter sales that were marginally above analysts’ expectations.
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