La-Z-Boy Incorporated (LZB) pleasantly surprised investors with its fourth-quarter fiscal 2024 results, as both earnings and sales came in higher than the Zacks Consensus Estimate. While the year-over-year metrics witnessed a decline, attributed to reduced spending on furniture and home furnishings and a drop in overall store visits, the company showcased its strength with record-high conversion rates and increasing average sales per customer. La-Z-Boy appears undeterred by the current market challenges, confident in its ability to outperform competitors and expand its market share gradually over time.
The upcoming fiscal year may continue to present hurdles, with an industry-wide decline of up to 5% expected. Nevertheless, potential interest rate cuts are anticipated to rejuvenate the housing market activity in the latter part of the year. Despite the headwinds, La-Z-Boy aims to outshine the industry in the fiscal 2025, eyeing modest year-over-year sales growth through the implementation of its Century Vision strategy, which includes the opening of 12-15 new La-Z-Boy Furniture Galleries stores in the latter part of the fiscal year.
A Closer Look at the Quarter
Detailing the quarter, La-Z-Boy reported adjusted earnings of 95 cents per share, surpassing the Zacks Consensus Estimate of 68 cents per share. However, there was a 4% decline from the previous year’s earnings of 99 cents per share.
Revenue Performance
Consolidated sales amounted to $554 million, exceeding the consensus estimate of $519 million by 6.7%. Despite this beat, the figure was 1% lower than the sales reported in the same quarter of the previous year.
Segment Insights
In the Retail segment, sales decreased by 6% to $228 million compared to the previous year but saw a significant increase from pre-pandemic levels. On the Wholesale front, sales went down by 1% to $392 million, though the segment’s non-GAAP operating margin contracted slightly year over year. The Corporate & Other segment witnessed a 2.4% decline in sales.
Financial Snapshot
As of the end of fiscal 2024, La-Z-Boy had $341.1 million in liquidity, backed by $341.1 million in cash and equivalents. Cash from operations during the quarter stood at $53 million. Looking ahead to the first quarter of fiscal 2025, the company anticipates delivered sales within a range of $475 million to $495 million.
Guidance and Investor Picks
Providing guidance for the upcoming quarter, La-Z-Boy expects a range of challenges, consistent with seasonal declines, and its annual plant shutdown. Investors might consider other promising picks from the Consumer Discretionary sector, including Strategic Education, Royal Caribbean Cruises, and Netflix.
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