Key Highlights
- Fourth quarter adjusted earnings per share reached $1.26, significantly exceeding analyst predictions of $0.82 by $0.44
- Quarterly revenue totaled $570 million, matching consensus expectations of $569 million
- Shares surged up to 17% during pre-market hours following Tuesday’s 7.2% decline
- Adjusted operating margin improved to 9.9%, up from 9.4% in the same quarter last year
- First quarter revenue guidance ranges from $490–$510 million, with the midpoint topping analyst forecasts of $495 million
Shares of La-Z-Boy (LZB) experienced a substantial rally during Wednesday’s pre-market session, jumping as high as 17% to reach $40.69 following the company’s impressive fourth quarter results that significantly exceeded analyst projections.
The furniture manufacturer delivered adjusted earnings of $1.26 per share, soundly beating the Wall Street consensus of $0.82. Quarterly revenue hit $570 million, essentially aligned with analyst expectations of $569 million.
The strong performance came on the heels of a difficult trading session Tuesday, when LZB shares dropped 7.2%. Wednesday’s pre-market surge represented a significant rebound from those losses. Despite the rally, the stock remained down approximately 5.9% year-to-date through Tuesday’s close.
Bradley B. Thomas, an analyst at KeyBanc who maintains an Overweight rating and $46 price target on LZB, characterized the results as reassuring following previous worries about weather-related sales headwinds.
“Encouragingly, total sales were in line with guidance and essentially in line with consensus,” Thomas noted in his analysis. “Recall, management previously noted that early February trends were impacted by weather events.”
CEO Melinda D. Whittington expressed optimism about the company’s trajectory. “We continue to drive our own momentum and are playing offense, led by our retail business expansion,” she commented.
Profitability Gains and Retail Momentum
The company’s adjusted operating margin climbed to 9.9% from 9.4% in the year-ago period. On a GAAP basis, operating margin showed a 200 basis point improvement, reaching 7.2%.
The retail division demonstrated particular strength, with written sales increasing 11% and delivered sales growing 9% to $270 million, fueled by newly acquired and opened locations. While same-store sales declined 2%, this represented a sequential improvement from the previous quarter.
La-Z-Boy currently operates 230 company-owned retail locations throughout North America, accounting for 61% of its 378-store network. This expansion reflects a strategic initiative to acquire independent dealer stores and strengthen the company’s direct retail presence.
Operational Restructuring Completed
The company finalized its departure from the American Drew and Kincaid wholesale casegoods operations in May. Additionally, it concluded a supply chain reorganization in the United Kingdom during April. These actions were part of a comprehensive strategy to optimize the business structure.
Looking ahead to the first quarter, management projected revenue between $490–$510 million. The $500 million midpoint slightly exceeds Wall Street’s $495 million forecast.
The company expects adjusted operating margin for the first quarter to fall between 4.0% and 5.5%. Management emphasized that the first quarter historically represents the company’s softest period due to seasonal factors and a scheduled annual manufacturing facility shutdown.
Futures for the S&P 500 showed a 0.1% gain ahead of Wednesday’s market opening.
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