La-Z-Boy Incorporated (NYSE: LZB) stock lost over 3.7% on 24th June, 2020 (As of 5:39 pm GMT+2; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 20. The trajectory of sales and earnings growth for the last two months of the year were substantially affected due to COVID-19 and mandated retail closures across North America. Due to the pandemic the company took a decisive Action Plan in March 2020. The majority of retailers, including the company-owned La-Z-Boy Furniture Galleries stores, were closed for at least the last four weeks of the quarter, and most closures extended into the first quarter of fiscal 2021. The company had temporarily closed the majority of the manufacturing operations, and managed all other expenses, including temporarily furloughing 70% of the workforce and dramatically reducing all other cash expenditures to preserve liquidity. Currently furniture retailers and La-Z-Boy Furniture Galleries stores have reopened and the company is seeing strong early demand. The manufacturing facilities have ramped from zero production at the end of April and are moving toward 80% of prior-year production as the company head into July. The company had also made the decision to permanently close the Newton, Mississippi manufacturing facility and reduce the global workforce by approximately 10%.
La-Z-Boy has delivered strong performance for 10 months of fiscal 2020 through February. The iconic La-Z-Boy brand, excellent Retail performance, great product introductions and supply chain strength resulted in strong sales and earnings growth for those 10 months. The fourth quarter started with a 20.4% increase in written same-store sales for the entire La-Z-Boy Furniture Galleries network in February.
LZB in the fourth quarter of FY 20 has reported the adjusted earnings per share of 49 cents, beating the analysts’ estimates for the adjusted earnings per share of 31 cents, according to the Zacks Consensus Estimate. The company had reported 19.1 percent decline in the adjusted revenue to $367.28 million in the fourth quarter of FY 20, missing the analysts’ estimates for revenue by 6.16%. The company delivered Non-GAAP operating margin of 9.3% in the current-year quarter versus 8.6% in last year’s fourth quarter, due to increases in the Upholstery and Retail segments offset by a decline in the Casegoods segment.
Moreover, for the quarter, the sales in the company’s Upholstery segment fell 21.7% to $253.3 million and Non-GAAP operating margin increased to 11.8% versus 11.6%. In the Casegoods segment, sales fell 19.7% to $21.4 million and operating margin had fallen by 1.9% compared with 9.1% in the prior-year period. The sales in the Retail segment fell 8.0% to $139.7 million in the fourth quarter of fiscal 2020.