What happened
Shares of La-Z-Boy (LZB 0.83%) rose 14% over the past week, according to data provided by S&P Global Market Intelligence, after the furniture maker delivered revenue and earnings that were significantly higher than investors expected.
So what
La-Z-Boy's retail segment sales surged 27% year over year to $251 million in its fiscal 2023 third quarter, which ended on Jan. 28. CEO Melinda Whittington said the strong performance was driven by the company's enticing value proposition of "comfortable custom furniture with quick delivery."
"Across La-Z-Boy, we are capitalizing on and investing in our brand heritage of comfort. We're honing our messaging, investing in targeted marketing, sharpening price points, and ensuring strong execution," Whittington said in a press release.
La-Z-Boy was also able to work through its backlog of orders, which helped to reduce the time customers needed to wait to receive their items. That helped the company generate total sales of $573 million, which topped Wall Street's estimates of $530 million.
Better still, higher sales drove a sharp increase in La-Z-Boy's profitability. Its adjusted operating income climbed 34% to $53 million, as its operating margin improved by 2.3 percentage points to 9.3%. La-Z-Boy's adjusted net income, in turn, leaped 37% to $39 million. And its adjusted earnings per share, which were boosted by stock buybacks, soared 40%, to $0.91.
Now what
Management expects La-Z-Boy to generate sales of $525 million to $545 million in its fiscal 2023 fourth quarter, with an adjusted operating margin of 7% to 9%.
"As we move through this uncertain economic environment, we will continue to employ agility, a consumer-first focus, and our strong financial position to make smart investments to drive capability and brand reach," Whittington said. "I am confident we will emerge stronger and capture increased market share."
