La-Z-Boy (LZB), the iconic American furniture brand best known for its recliners and home seating, delivered a mixed performance to close out fiscal 2025.
While the company’s top-line results came in above expectations, softness in margins, earnings, and forward guidance reflect the continued weight of macroeconomic uncertainty and consumer caution. Shares traded largely flat following the results, as investors digested both the positives and the persistent headwinds.
Retail Resilience Offsets Macro Drag in La-Z-Boy's Fourth Quarter
La-Z-Boy’s fourth-quarter revenue climbed 3.1% year over year to $570.9 million, exceeding the high end of its prior guidance. This outperformance was driven largely by an 8% increase in delivered revenue from its Retail segment, bolstered by new store openings and acquisitions. The company reached a key milestone during the quarter, opening its 200th company-owned La-Z-Boy Furniture Galleries store. It now owns 55% of its entire retail network.
However, not all segments told the same story. Same-store sales across the retail channel declined by 5%, a reversal from positive trends earlier in the year, reflecting broader softness in industry traffic. La-Z-Boy’s digitally native brand Joybird saw a sharper drop, with written sales tumbling 21% year over year, as more price-sensitive consumers deferred discretionary purchases.
High Mortgage Rates, Tepid Housing Market Sap Furniture Demand
La-Z-Boy’s mixed results underscore the broader challenges in the home furnishing industry. High mortgage rates and an uncertain economic environment have dulled consumer sentiment, weighing on big-ticket items like furniture. The company noted that new home purchases—a traditional catalyst for furniture sales—remain sluggish, further limiting demand.
On the bottom line, adjusted earnings per share came in at $0.92, slightly below analysts’ expectations. Operating margin fell to 5.2%, down sharply from 9.1% in the same period last year, as cost pressures outpaced revenue growth. Despite this, the company’s free cash flow margin improved significantly to 18.6%, reflecting solid financial management and inventory discipline.
Looking ahead, La-Z-Boy expects revenue of around $500 million in the current quarter, which typically marks its slowest period. That forecast is roughly in line with Wall Street estimates but suggests little acceleration in demand as summer begins. Analysts expect full-year revenue to inch up just over 2%, indicating continued cautious consumer behavior.
La-Z-Boy Stays Grounded Despite Revenue Beat, Margin Pressures
Despite margin pressures and demand headwinds, La-Z-Boy’s fundamentals remain sound. The company maintains a strong balance sheet, and approximately 90% of its upholstered furniture is made in the U.S., with most of the remainder sourced from Mexico—limiting its exposure to import tariffs. This domestic production footprint provides some insulation from global trade risks, a relative advantage in a turbulent market.
Management acknowledged that the current macro landscape remains difficult but reaffirmed its long-term confidence in the brand’s value and positioning. With a fragmented industry and a loyal customer base, La-Z-Boy sees opportunity once economic conditions stabilize.
Conclusion
La-Z-Boy’s latest quarter paints a nuanced picture of a company weathering tough conditions while maintaining operational discipline. A solid revenue beat and expanding physical retail footprint are promising signs, but weaker margins, lower profits, and tepid forward guidance highlight the ongoing strain on the consumer. For now, La-Z-Boy remains a resilient player in a volatile market—but broader recovery in housing and consumer sentiment will be key to unlocking its next phase of growth.
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