LA-Z-BOY INC Q3 FY2025 earnings call

• Steady progress in a challenged furniture industry with sales growth across segments, led by retail's strong same-store sales.
• Highlights include consolidated delivered sales of $522 million, up 4% y/y; non-GAAP operating margin expansion by 20 basis points; GAAP and non-GAAP diluted EPS of $0.68.
• Retail segment saw 11% sales growth, led by same-store sales, with acquisitions and new stores. Wholesale core North America La-Z-Boy brand posted sales growth and margin expansion. Joybird had strong written sales trends and improving operating performance.
• Century Vision strategy focus on expanding brand reach, growing company-owned retail segment, improving supply chain agility, and driving margin expansion. Examples include opening new stores, acquiring independent stores, and testing concept stores.
• Recognition awards: Named to Forbes list of America's best large employers for 2025 and Newsweek's list of America's responsible companies.

Retail segment: Delivered sales were $228 million, up 11% vs prior year's third quarter, driven by same-store sales growth, acquisitions, and new stores. Written same-store sales grew 7%. Non-GAAP operating margin was 10.7% vs 10.9% prior year. Wholesale segment: Delivered sales increased 2% to $363 million, driven by core North America La-Z-Boy brand. Non-GAAP operating margin was 6.5% vs 6.4% prior year. Joybird: Delivered sales grew to $37 million, up 9% vs prior year quarter, with operating performance improving and breakeven operating profit for the quarter.

• Fourth quarter delivered sales expected in the range of $545 million.
• Non-GAAP operating margin for fourth quarter expected to be in the range of 8.5% to 9.5%.
• Effective tax rate for full fiscal year expected to be in the range of 25.5% to 26.5%.
• Capital expenditures for fiscal 2025 expected to be in the range of $70 to $80 million.
• Presuming no significant worsening in macroeconomic trends, expect to continue share repurchases at dollar levels consistent with pre-COVID levels.

• Volatile environment in the furniture and home furnishings industry.
• Challenges in the housing market with existing home sales near thirty-year lows and steep mortgage rates.
• Impact of tariff and trade policy changes on operations.
• International business transition challenges, particularly the customer transition in the UK business as it moves to a new strategic partnership with DFS.

Q: Speak to cadence and trends throughout the quarter, including February and fourth quarter outlook A: Strength during holiday period, but February early and weather impacts; fourth quarter outlook includes impacts from international transition, new store openings, and weather phasing Q: Color on 8.5% to 9.5% operating margin for fourth quarter, low end and high end A: Core North America La-Z-Boy wholesale business margin progression, Joybird's breakeven, retail controlling costs; offset by international business volatility and new store impacts Q: Update on strategic partnerships and pipeline A: Focus on multi-branded retailers, comfort studios, expanding with existing partners like Rooms To Go and Gardner White, with pipeline for more partnerships Q: International transition progress and impact on FY26 wholesale margin A: Near-term impact, slow and steady improvement, rightsizing manufacturing capacity to help improve results Q: Guidance on price, trends, and Joybird's future growth A: Impact from international and new stores; Joybird has strong foundation, aiming for 3-4 stores next year with cautious growth while maintaining financial discipline