LA-Z-BOY INC (LZB)·Q3 2025 Earnings Summary

Executive Summary

• Q3 FY2025 delivered sales rose 4% YoY to $522M and GAAP/Non-GAAP EPS were $0.68; consolidated operating margin expanded 20 bps YoY to 6.7% GAAP/6.8% Non-GAAP, with strength at Retail and core North America Wholesale offset by international deleverage .
• Retail delivered sales grew 11% with written same‑store sales up 7% and total Retail written sales up 15%; Joybird delivered sales rose 9% to $37M and reached breakeven operating profit, while cash ended at $315M with no debt .
• Q4 outlook: sales $545–$565M and Non‑GAAP operating margin 8.5%–9.5% (a step-up vs Q3), predicated on no significant tariff changes; FY tax rate 25.5%–26.5%, capex $70–$80M, and 5–7 new stores in Q4 (raising FY openings to 14–16) .
• Stock-reaction catalysts: accelerating Retail SSS, improving core Wholesale margins, and a stronger Q4 margin guide; watch headwinds from the U.K./international transition and tariff uncertainty, which management is mitigating with supply-chain agility and potential pricing actions .

What Went Well and What Went Wrong

• What Went Well

  • Retail momentum: “written sales for the Retail segment increased 15%… written same‑store sales increased 7%,” with higher conversion, average ticket, and design sales .
  • Core Wholesale improving: Non‑GAAP Wholesale margin up 10 bps YoY to 6.5%, driven by lower input costs and FX; management highlighted “really good margin expansion now three consecutive quarters” in core NA Wholesale .
  • Joybird stabilization: delivered sales +9% to $37M and breakeven operating profit; CEO cited a first‑of‑its‑kind Pantone 2025 collaboration and improving execution as a base for growth .

• What Went Wrong

  • International deleverage: significant customer transition (U.K.) drove Wholesale deleverage; impact expected to ease gradually as DFS rolls out .
  • Retail margin dilution: Retail Non‑GAAP operating margin 10.7% (down 20 bps YoY) as new stores and higher selling expenses weighed in the near term despite sales growth .
  • Macro/traffic: housing affordability and choppy demand persist; traffic improved around key holidays but remains volatile outside events .

Financial Results

Consolidated results by quarter (oldest → newest)

Q3 actual vs prior periods

Segment breakdown (Q3 FY2025 vs YoY)

KPIs and cash (oldest → newest)

Estimates vs actuals for Q3 FY2025

Note: S&P Global consensus data was temporarily unavailable due to API limit; comparisons to consensus will be updated when accessible.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered sales growth across each of our segments, punctuated by strong Retail same‑store sales… our core North America La‑Z‑Boy brand continues to post sales growth and margin expansion.” — CEO Melinda Whittington .
• “Our strong written trends and sequential acceleration… we expect fiscal fourth quarter sales to be $545–$565M and Non‑GAAP operating margin to be 8.5%–9.5%.” — CFO Taylor Luebke .
• “We’re incredibly pleased at the sustainability of margin progression on our core North America La‑Z‑Boy wholesale business… really good margin expansion now three consecutive quarters.” — CFO Taylor Luebke .
• On Joybird: “This resulted in breakeven operating profit for the quarter as this business achieves foundational stability from which to grow.” — CFO Taylor Luebke .
• On macro: “The environment… continues to be volatile… however, in spite of these industry headwinds, La‑Z‑Boy Incorporated is growing.” — CEO Melinda Whittington .

Q&A Highlights

• Cadence/trends: Strength across all three months of Q3, strongest in November around holidays; early Q4 (Feb) choppy industry traffic; weather noise cited .
• Margin bridge into Q4: Positives from core NA Wholesale and Joybird breakeven; headwinds from international (U.K.) deleverage and short‑term costs of standing up new stores; target 8.5%–9.5% Q4 Non‑GAAP operating margin .
• Strategic partnerships: Expanding B2B (e.g., Rooms To Go, Furniture Row, Slumberland); refreshing 500+ Comfort Studios; pipeline for more partnerships .
• International transition: Incremental improvement expected but “slow and steady” as DFS rollout builds; rightsizing manufacturing underway .
• Tariffs: Company planning for multiple scenarios across Mexico/Canada/others with sourcing agility and potential pricing actions; prefers healthy consumer but prepared to mitigate .

Estimates Context

• S&P Global consensus for Q3 FY2025 revenue and EPS was unavailable at the time of analysis due to a temporary API limit. Management reported results at the high end of their Q3 sales and Non‑GAAP operating margin guidance ranges and guided a notable step‑up in Q4 margins to 8.5%–9.5% .
• Implication: In the absence of Street comparisons, the guidance quality and sequential acceleration in Retail/Wholesale serve as interim anchors for expectation resets; update with S&P Global consensus when accessible.

Key Takeaways for Investors

• Retail flywheel is working: written SSS inflected to +7% and total written +15%, indicating conversion/design execution and marketing efficacy; supports continued share gains despite weak industry .
• Core NA Wholesale margin expansion remains intact; expect further leverage when volumes normalize; near‑term drag isolated to U.K. transition and casegoods imports .
• Q4 set up: guidance implies sequential sales growth and a sharp margin step‑up to 8.5%–9.5%; if delivered, this would re‑accelerate annualized earnings power into year‑end .
• Balance sheet strength (no debt, $315M cash) enables continued dividends ($0.22) and repurchases at pre‑COVID levels while funding 14–16 store openings FY‑to‑date — a tangible compounding lever for Retail mix .
• Watch list: pace of DFS rollout in the U.K., casegoods/container costs, and tariff policy; management plans pricing and sourcing actions to mitigate scenarios .
• Medium‑term thesis: Century Vision targets (double industry growth, double‑digit margins) are tracking via Retail expansion, channel partnerships, and North American manufacturing differentiation; normalization in housing could unlock higher throughput/margins .

Citations

• Q3 FY2025 8‑K and exhibits:
• Q3 FY2025 press release:
• Q3 FY2025 earnings call:
• Q2 FY2025 press release/call (trend & prior guidance):
• Q1 FY2025 press release/call (trend):