LA-Z-BOY INC (LZB)·Q1 2026 Earnings Summary

Executive Summary

• Q1 FY2026 delivered sales were $492.2M, down 1% YoY; GAAP EPS was $0.44 and adjusted EPS $0.47, with wholesale margin expansion offset by retail margin compression from same‑store deleverage and new store investments .
• Revenue modestly beat Wall Street consensus ($492.2M vs $490.6M*) while EPS missed ($0.47 adjusted vs $0.53*); Q2 guidance calls for $510–$530M sales and 4.5–6.0% adjusted operating margin .
• Retail written sales rose 5% (same‑store −4%); wholesale delivered sales +1% with continued margin expansion; Joybird delivered sales −20% to $28M, dragging corporate results .
• Management is advancing a multi‑year distribution and home delivery transformation (expected wholesale margin uplift of 50–75 bps in years 3–4) and evaluating alternatives for non‑core businesses amid choppy demand .

What Went Well and What Went Wrong

What Went Well

• Wholesale segment adjusted operating margin expanded to 7.5% (vs 6.9% LY) on lower warranty and marketing costs and continued gross margin expansion in core North America La‑Z‑Boy wholesale .
• Retail written sales grew 5% and delivered sales increased 2% to $207.2M, supported by new and acquired stores; network footprint expansion continues (two new stores and a 15‑store Southeast acquisition announced) .
• Strong liquidity: $318.5M cash, no external debt; $36.3M operating cash flow in the quarter; $22.0M returned to shareholders (repurchases and dividends) .

Management quotes:

• “We were pleased to deliver sales and margin growth in our Wholesale segment… Retail segment grew delivered sales and written sales… acquisition of a 15‑store network in the Southeast region” .
• “This transformation will… improve margins… and further enhance the agility of our vertically integrated supply chain” .

What Went Wrong

• Consolidated adjusted operating margin fell to 4.8% (−180 bps YoY) and adjusted EPS to $0.47 (−24% YoY) on retail same‑store deleverage and investment in new stores; GAAP operating margin declined to 4.5% (−200 bps YoY) .
• Joybird headwinds: delivered sales −20% to $28M; operating loss increased on lower volume; online channel particularly weak vs stores .
• Traffic remained challenged; retail written same‑store sales −4%; promotional activity to re‑merchandise casegoods and accessories pressured gross margin near‑term .

Financial Results

Consolidated vs Prior Periods and Estimates

Estimate comparison:

Values retrieved from S&P Global.*

Segment Breakdown (Q1 FY2026)

KPIs and Liquidity (Q1 FY2026)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Investments in our Century Vision strategy to grow our Retail store footprint and expand brand reach, combined with soft industry demand, had a downward impact on our margin performance this quarter” .
• “We are actively evaluating all alternatives to address financial pressure from non‑core parts of our enterprise” .
• “We successfully completed the opening of our new Arizona distribution hub…the first of these three centralized hubs…important driver toward our broader objective of double digit margins in our wholesale segment over the long term” .
• CFO: “Adjusted operating margin [Q2] to be in the range of 4.5% to 6%…capital expenditures…$90–$100M for fiscal 2026…we expect minimal share repurchases for the balance of the year” .

Q&A Highlights

• Traffic cadence and margins: sequential traffic improvement continued into early August; margins pressured by same‑store deleverage and new store ramp (year 1 drag; neutral to accretive by year 3) .
• Promotions & inventory: transitory promotional activity in Q1 to re‑merchandise stores and clear non‑performing inventory; casegoods promotions impacted margins short‑term .
• Wholesale demand and tariffs: wholesale growth steady; North America manufacturing footprint mitigates tariff uncertainty; steady supply and pricing for strategic partners .
• Canada tariffs: 25% retaliatory tariff in Canada offset with pricing, impacting units but holding the business steady .

Estimates Context

• Q1 FY2026: Revenue beat ($492.2M vs $490.6M*), EPS miss ($0.47 vs $0.53*). Both had three estimates.*
• Q2 FY2026: Guidance midpoint ($520M) is broadly aligned with consensus revenue ($517.6M*); no EPS guidance provided.*
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Wholesale margin momentum intact despite macro headwinds; structural initiatives (distribution/home delivery transformation) should add 50–75 bps to wholesale margins in years 3–4, though FY26–FY27 face transition drag .
• Retail expansion is the core growth lever; new stores and the Southeast 15‑store acquisition support delivered sales, but near‑term retail margins will be pressured until stores mature (2–3 years to accretive) .
• Joybird remains a near‑term overhang (online softness); store openings continue but investors should model conservative Joybird recovery timelines .
• Balance sheet strength (no debt; $318.5M cash) enables offense in a choppy environment; FY26 capital allocation tilts to reinvestment (capex $90–$100M; minimal buybacks) .
• Near‑term setup: Q2 guide implies flattish revenue with modest margins; any improvement in housing/consumer traffic or reduced tariff volatility is upside lever; EPS sensitivity high to retail comp and mix .
• Estimate revisions: Expect sell‑side to lower near‑term EPS on retail deleverage and Joybird, while holding revenue forecasts near guidance range; watch for FY26 EPS adjustments to reflect lower buybacks and transformation costs.*

Additional references:

• 8‑K Q1 FY2026 press release and full financials .
• Q1 FY2026 earnings call transcript .
• Acquisition press release (15‑store Southeast) .
• Q4 FY2025 and Q3 FY2025 press releases for trend context .