La-Z-Boy (NYSE:LZB) reported mixed fiscal 2027 first-quarter results as growth in its company-owned retail business was offset by weaker wholesale volume and continued volatility at its Joybird unit.
Consolidated sales declined 3% from the prior year on a reported basis, or 1% excluding the impact of the company’s wholesale case goods divestiture completed in May. The company posted a GAAP operating loss of $2 million, or a negative 0.4% operating margin, including one-time plant-exit charges. Adjusted operating income was $19 million, with an adjusted operating margin of 3.9%, down from 4.8% a year earlier.
Retail sales and store expansion drive momentum
Retail was the company’s strongest segment in the quarter. Delivered retail sales increased 10% to $229 million, largely reflecting contributions from acquired and newly opened stores. Written retail sales rose 16%, while written same-store sales increased 3%. Delivered same-store sales were down slightly from the previous year.
Melinda Whittington, La-Z-Boy’s board chair, president and chief executive officer, said the written same-store sales gain represented a meaningful sequential improvement from the fourth quarter. She attributed the improvement to execution across marketing, product innovation and store operations, including gains in design sales, conversion rates and average ticket.
“No individual factor stands out,” Whittington said during the question-and-answer session. “It speaks to just really sound execution across the board.”
The company added four company-owned stores during the quarter, including one new location and three acquired locations, bringing its company-owned total to 234 stores, or 62% of the overall La-Z-Boy network. La-Z-Boy also signed an agreement to acquire two independent stores in Louisiana, with a closing expected in October.
Across North America, the company’s network totals about 380 locations, including company-owned and independently owned stores. Management continues to target 450 locations over time and expects to open roughly 10 new stores annually, primarily company-owned.
Retail adjusted operating margin increased to 6.5% from 6.3% a year earlier, aided by the effect of acquisitions.
Wholesale and Joybird weigh on results
Wholesale delivered sales fell 9% to $323 million, or 5% excluding the case goods divestiture. Luebke said the decline reflected the flow-through of uneven order patterns, though the company entered the second quarter with what management described as a solid backlog.
Wholesale adjusted operating margin declined to 6.8% from 7.5% in the prior-year quarter. The decrease reflected fixed-cost deleverage from lower delivered volume and friction costs associated with strategic investments. Those pressures were partly offset by a 240-basis-point favorable tariff impact, including IEEPA refunds and pricing actions net of tariff costs.
Whittington said the wholesale channel remains strategically important because it reaches consumers through multi-branded retailers who may not shop directly at a La-Z-Boy store. The company ended the quarter with more than 1,400 La-Z-Boy Comfort Studio and Branded Space locations at wholesale partners.
Joybird, which is reported within corporate and other, remained a drag on consolidated performance. Delivered sales at Joybird were $27 million, down 4% as lower sales volume continued amid a volatile consumer environment. Written sales in the business declined 17%.
La-Z-Boy is moving Joybird manufacturing into its established U.S. plant network by the end of the fiscal year. Management said the transition is creating near-term costs but is intended to improve the business’s cost structure and make it more resilient by reducing its reliance on a standalone manufacturing operation.
Supply chain investments and capital returns
La-Z-Boy continued to advance a series of supply-chain initiatives during the quarter. It completed production at one of two upholstery plants being consolidated into its broader U.S. network, with the second plant expected to close by fiscal year-end. More than 90% of the company’s upholstered furniture is produced domestically, which management said supports customized delivery times of four to six weeks and helps mitigate trade-policy volatility.
The company is also in the second year of a four-year distribution and home-delivery transformation. The project is designed to reduce the distribution footprint from 15 centers to three centralized hubs. Management expects the completed network to reduce miles traveled by 20%, reduce square footage by 30% and double the company’s delivery radius to consumers.
La-Z-Boy ended the quarter with $267 million in cash and no externally funded debt. It generated $16 million of operating cash flow, or $27 million excluding an $11 million payment related to terminating a legacy retirement plan. Capital expenditures totaled $23 million, while the company invested $16 million in a three-store acquisition.
The company returned approximately $35 million to shareholders during the quarter, up 62% from the prior year, through $25 million of share repurchases and $10 million in dividends. It had $291 million remaining under its repurchase authorization.
Second-quarter outlook
For the second fiscal quarter, La-Z-Boy expects sales of $500 million to $520 million, representing a range from a 1% decline to 2% growth excluding the case goods divestiture. The company forecast adjusted operating margin of 4% to 5.5%.
Management said second-quarter margins will reflect continued investment in advertising, digital transformation, the rollout of a new brand identity, strategic pricing, supply-chain projects and store expansion. Comparisons will also be affected by a one-time 110-basis-point benefit from a dealer warranty arrangement change in the prior-year second quarter that will not recur.
For the full fiscal year, La-Z-Boy expects capital expenditures of $90 million to $110 million, reflecting its distribution transformation, manufacturing investments, new stores and remodels. The company continues to expect a normalized effective tax rate of 26% to 27%.
About La-Z-Boy (NYSE:LZB)
La-Z-Boy Incorporated (NYSE: LZB) is a leading U.S. manufacturer and marketer of residential furniture, best known for its upholstered recliners, sofas, stationary chairs and sleeper sofas. The company offers a broad range of products in both fabric and leather, complemented by occasional tables, desks, lamps and other home furnishings through its branded retail network.
Founded in 1927 by cousins Edward Knabusch and Edwin Shoemaker in Monroe, Michigan, La-Z-Boy pioneered the modern reclining chair.
