0000057131-25-000081
SEC filingRevenue slightly declined, operating margin contracted 200bps due to lower volume and higher supply chain costs.
In Q1 fiscal 2026, consolidated sales decreased $3.3 million (0.7%) to $492.2 million, compared with the same quarter last year. The decline was primarily driven by lower delivered volume in the international wholesale business due to a significant customer transition that began in Q2 fiscal 2025, along with lower volume at Joybird. These headwinds outweighed incremental sales from retail store acquisitions, new store openings, and growth in core North America La-Z-Boy branded wholesale (benefiting from strategic pricing and surcharges).
Operating income fell 32.1% to $22.0 million, and operating margin contracted 200 basis points to 4.5%. The margin compression reflected a 60 bps decline in gross margin and a 140 bps increase in SG&A as a percentage of sales. Gross margin was hurt by higher supply chain costs (distribution transformation and manufacturing overhead) and increased promotional activity on casegoods, partially offset by lower input costs (favorable inbound ocean freight and improved sourcing). SG&A deleveraged due to fixed costs in the Retail segment on lower same-store sales and expenses related to store expansion, partially offset by lower warranty and marketing costs.
Retail segment: Sales grew 2.4% to $207.2 million, bolstered by $8.4 million of incremental sales from fiscal 2025 store acquisitions and new store openings. However, delivered same-store sales declined, and operating margin plunged 390 bps to 6.3%. Gross margin slipped 30 bps on promotional activity, while SG&A as a percentage of sales soared 360 bps due to fixed cost deleverage and higher selling costs from adding 11 net new stores over the past year. Written same-store sales fell 4%, reflecting a challenging macroeconomic environment.
Wholesale segment: Total sales edged up 0.6% to $353.0 million, driven by growth in core La-Z-Boy branded wholesale from pricing and surcharge actions, along with a favorable product mix shift toward higher-priced items. Casegoods sales also increased from strategic pricing and promotions. These gains were partly offset by lower international wholesale volume due to the customer transition. Operating margin improved 30 bps to 7.1%. Gross margin decreased 60 bps as higher distribution costs (110 bps drag) and manufacturing overhead (40 bps drag) outweighed lower input costs (100 bps benefit). SG&A as a percentage of sales declined 90 bps, aided by lower warranty expense (60 bps) and reduced marketing spend (40 bps).
Corporate and Other: Sales dropped 19.3% to $31.2 million, led by a $6.8 million decline at Joybird from lower delivered volume. Joybird’s written sales decreased 14%, primarily from lower online sales. The segment’s operating loss widened to $16.3 million, exacerbated by lower La-Z-Boy royalty income.
Management expects capital expenditures of $90–$100 million for fiscal 2026, focusing on new stores, remodels, manufacturing investments, and the distribution/home delivery transformation. The company continues to execute its Century Vision strategy, aiming to grow La-Z-Boy’s brand reach through store expansion and the Joybird brand profitably. Key risks include macroeconomic pressures on consumer demand, the ongoing international wholesale customer transition, and supply chain costs. No specific revenue or earnings guidance was provided.
As of July 26, 2025, La-Z-Boy holds $318.5M in cash and equivalents, with no borrowings under its $200M revolving credit facility. The company also has $15.4M in investments (including marketable securities and held-to-maturity). Total shareholders' equity stands at $1.016B, with a strong current ratio (current assets $793.2M vs current liabilities $416.3M). Inventory is $252.1M, slightly down from $255.3M at year-end. Deferred revenue and customer deposits total $118.0M, up from $105.5M, indicating healthy order backlog.
No material purchase commitments or contractual obligations are disclosed in the Notes. The only long-term obligations are operating lease liabilities ($420.2M long-term, $81.5M short-term) and warranty liabilities ($29.1M total, with $21.2M current).
During the quarter, La-Z-Boy repurchased 300,000 shares for $12.5M (no new authorization disclosed). Dividends totaled $9.0M, at $0.22 per share, a 10% increase from $0.20 in the prior year quarter. The company had no debt activity; capital expenditures were $18.5M (3.8% of sales), focused on Wholesale ($8.4M) and Retail ($8.1M).
Wholesale segment revenue was $353.0M (incl. intersegment), up 0.6% YoY, with operating income of $25.2M (7.1% margin). Retail segment revenue was $207.2M, up 2.4%, but operating income fell sharply to $13.1M (6.3% margin) from $20.6M, reflecting higher SG&A. Corporate and Other reported a loss of $16.3M on $31.2M revenue. Geographically, 91% of sales are domestic, 5% Canada, 4% other.