Leaving the lounging to its customers, well-known furniture maker La-Z-Boy (NYSE:LZB) is emerging from the tail end of the COVID-19 lockdowns with a surge of orders, sales, and growth.

Even though its stock price took an 11.7% hit after its latest earnings report on June 15 (the drop was possibly related to supply chain issues), the report showed that La-Z-Boy isn't just outdoing 2020's doldrums but is charging ahead of its successful 2019, too.

Here are three reasons its growth will likely continue on a medium and even long-term basis.

1. The market looks strong and La-Z-Boy is well-positioned

La-Z-Boy's recent performance isn't just a recovery from the dark days of the pandemic to "business as usual," but a sign of a long-term rise. In the short term, its fiscal fourth-quarter 2021, ending in late April, was a notable success. Its quarterly revenue rose 41.4% year over year to $519.5 million, exceeding Wall Street analysts' consensus expectations.

Hand lining up rising line of blocks spelling GROWTH.

Image source: Getty Images.

La-Z-Boy also beat on the bottom line, with adjusted earnings per share of $0.87 soaring 77% year over year from Q4 2020's $0.49 EPS and surpassing analyst forecasts by 17-plus percentage points.

These rises are perhaps unsurprising considering the thrashing La-Z-Boy and the rest of the economy took from COVID-19 during 2020's fiscal Q4. But Q4 and full-year fiscal 2021 results also matched the outcomes from fiscal 2019, and in some cases surpassed them:

Metric

Fiscal 2019

Fiscal 2021

Increase or (Decrease)

Revenue

$1.75 billion

$1.7 billion

(2.9%)

Earnings per share

$2.14

$2.62

22.4%

Cash from operations

$151 million

$310 million

105.3%

Cash at year's end

$130 million

$395 million

203.8%

Source: Company earnings reports.

La-Z-Boy also ended the year with zero debt.

Metric

Q4 Fiscal 2019

Q4 Fiscal 2021

Increase or (Decrease)

Revenue

$435.8 million

$519.5 million

19.2%

Earnings per share

$0.64

$0.87

35.9%

Source: Company earnings reports.

The company is also using the cash generated by these successes to continue its policy of providing value to shareholders through dividend payments and stock buybacks. Repurchases increased slightly year over year during fiscal 2021, though dividends were down from fiscal 2019 and fiscal 2020:

Fiscal Year

Share Repurchases

Dividends

Total

2019

$23 million

$23.5 million

$46.5 million

2020

$43.4 million

$25.1 million

$68.5 million

2021

$44 million

$17 million

$61 million

Source: Company earnings reports.

Dividends and share repurchases are on the path to a strong current fiscal year (2022) rise. With COVID-19 crimping early fiscal 2021 cash flow, the year's first three quarters only saw $11 million in dividends and stock buybacks, but powerful cash flow increases in Q4 enabled $50 million in repurchases and dividend payments. The company provided more money to shareholders in the most recently reported three months than in all of fiscal 2019.

2. It's producing more furniture, more efficiently and profitably

While the increased focus on the home caused by COVID-19 lockdowns and travel restrictions is a clear driver for the company's orders, La-Z-Boy responded to the pandemic's economic contraction and subsequent rising demand for home furnishings by streamlining its operations and boosting its production capacity.

During the recent Q4 2021 earnings conference call, CEO Melinda Whittington said La-Z-Boy "has been relentless in taking actions to increase capacity," with additional shifts, "overtime and weekend production at our U.S. plants," and the opening and expansion of multiple new production facilities in Mexico.

The furniture maker plans to invest between $55 million and $65 million in "updating our La-Z-Boy Furniture Galleries stores, updating and expanding our plants and investments in technology solutions," using its current cash windfall as a springboard to future expansion.

La-Z-Boy's strategy of internal reorganization appears to be succeeding, with margin changes tracking efficiency improvements. Its adjusted operating margin for the past three fiscal years shows profitability steadily rising:

Fiscal Year

Operating Margin

2019 (ended April 27, 2019)

7.8%

2020 (ended April 25, 2020)

8.2%

2021 (ended April 24, 2021)

9%

Source: Company earnings reports.

Zeroing in on fiscal Q4 2021, adjusted operating margin reached 10%, with the wholesale operating margin at 10.2% and retail at 12.2%. This may be a sign efficiency gains are strengthening rather than tailing off as the company moves forward into calendar 2021. The trend points toward fiscal year 2022 also witnessing an overall operating margin increase.

3. Future orders look robust, too

While La-Z-Boy's actual sales and deliveries up to this point have helped drive its revenue and earnings per share up for the recently ended quarter and year, it also has a large order backlog promising continued profits in fiscal 2022 and likely beyond.

Written same-store sales in Q4 2021 doubled year over year (100% increase), and jumped 29% compared to pre-pandemic fiscal Q4 2019, showing long-term energy, though recovery from last year's lows naturally accounts for part of the gain. Whittington put an objective figure on the rise by noting it represents "a compound annual growth rate of about 14% over the two years."

According to the company's CEO, "backlog is about 8 times higher than in pre-COVID and 16 times higher than at the end of last fiscal year." The company's expansion of its own retail locations should also help to keep order volume flowing through 2022.

While furniture sales have begun slowing slightly in recent weeks, they still surged 64.7% year over year in May 2021, according to National Retail Federation data reported by Home Textiles Today. Research by Fior Markets indicates wooden furniture demand will grow at a 4.73% compound annual growth rate (CAGR) from 2021 to 2028, Digital Journal reports, while other furniture types, including metal and outdoor furniture, are also seeing ongoing market growth in North America and Europe.

A word of caution about supply chains

One sour note amid the generally positive chorus of metrics is the abrupt growth in raw material prices caused by a combination of reviving economic activity, COVID-19 disruptions to shipping from abroad, higher freight costs, and inflation.

The company expects the biggest effect from these factors to occur in fiscal first-quarter 2022. During the earnings conference call, its executives said raw material and freight costs could depress margins by 300 basis points during Q1 and the second quarter, but that price increases will offset the pressure in Q2, the third quarter, and beyond.

Is La-Z-Boy sitting pretty for future growth?

Looking at the overall situation, La-Z-Boy's furniture sales and orders are on a solid upward trajectory showing vigorous growth not only from the COVID-19 trough, but also from its investments in increasing manufacturing capacity. These should help it turn this backlog into revenue moving forward. Its drive to create a leaner, more competitive organization, begun last June, is also apparently bearing fruit.

The company, in the words of CFO Robert Lucian during the Q4 2021 earnings call, intends "to continue investing in our business to ensure we play offense and strengthen the business and its brands for the long-term." Thriving sales, plus a generally positive long-term outlook, make this company's stock look like a potentially bullish choice for those investing in consumer durables stocks

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.