Q1 2025 La-Z-Boy Inc Earnings Call

August 21, 2024

Operator: Good day and welcome to the La-Z-Boy Fiscal 2025 First Quarter Conference.

Good day, and welcome to the La-Z-Boy Fiscal 2025 First Quarter Conference Hall.

Operator: Good day, and welcome to the Lazy Boy Fiscal 2025 first quarter conference hall. At this time, all participants are in the listen-only mode.

Good day and welcome to the Lazy Boy fiscal 'twenty 25 first quarter conference call.

Operator: At this time, all participants are on a listen-only mode.

Operator: You may disconnect your phone lines at this time and have a wonderful day.

Operator: At this time, all participants are on a listen-only...

Operator: You may disconnect your phone lines at this time and have a wonderful day.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After management's prepared remarks, there will be a question and answer session.

Operator: After management's prepared remarks, there will be a question-and-answer session.

Mark backs: After managements prepared remarks, there will be a question and answer session I would now like to turn the call over to the director of Investor Relations and corporate development Mark backs the floor is yours.

Mark Becks: I would now like to turn the call over to the Director of Investor Relations and Corporate Development, Mark Becks. The floor is yours.

Operator: After management's prepared remarks, there will be a question and answer session.

Operator: Thank you for your participation.

Operator: I would now like to turn the call over to the Director of Investor Relations and Corporate Development, Mark Becks.

Thank you for your participation.

Operator: The floor is yours.

Mark Becks: Thank you, Kelly.

Mark: Thank you Kelly.

Mark Becks: Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 first quarter. With us today are Melinda Whittington, La-Z-Boy Inc. President and Chief Executive Officer, and Bob Lucian, La-Z-Boy's SVP and CFO. Melinda will open and close the call, and Bob will speak to segment performance in the financials midway through.

Mark Becks: I would now like to turn the call over to the Director of Investor Relations and Corporate Development, Mark Becks.

Mark Becks: Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 first quarter.

Speaker Change: Good morning, everyone and thanks for joining us to discuss our fiscal 2025 first quarter.

Mark Becks: With us today are Melinda Whittington, La-Z-Boy Incorporated's President and Chief Executive Officer and Bob Lucian, La-Z-Boy's SVP and CFO.

Speaker Change: With us today are Melinda Whittington, Lazy Boy incorporated President and Chief Executive Officer, and Bob pollution, Lazy Boys SVP and CFO.

Mark Becks: Melinda will open and close the call, and Bob will speak to segment performance and the financials midway through.

Speaker Change: Linda will open and close the call and Bob will speak to segment performance and the financials Midway through we will then open the call to questions.

Mark Becks: We will then open the call to questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year. And a telephone review play of the call will be available for one week, beginning this afternoon.

Mark Becks: We will then open the call to questions. Slides will accompany this presentation and you may view them through our webcast link which will be available for one year.

Speaker Change: Kids will accompany this presentation and you may view them through our webcast link which will be available for one year.

Mark Becks: And a telephone replay of the call will be available for one week beginning this afternoon.

Speaker Change: A telephone replay of the call will be available for one week beginning this afternoon.

Mark Becks: Before we begin the presentation, I would like to remind you that some statements made in today's call include four looking statements about Lazy Boy's future performance and other matters. Although we believe these statements will be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review these results on Form 10-K as well as other key information detail in our FCC filings. Also, our earnings release is available under the News Events tab on the Investor Relations page of our website.

Mark Becks: Before we begin the presentation, I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially.

Speaker Change: Before we begin the presentation I would like to remind you that some statements made in today's call include forward looking statements about lazy boys future performance and other matters.

Speaker Change: Although we believe these statements to be reasonable our actual results could differ materially the most significant risk factors that could affect our future results are described in our annual report on Form 10-K, we encourage you to review these risk factors as well as other key information detailed in our SEC filings.

Mark Becks: The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review these risk factors, as well as other key information detailed in our SEC filings.

Mark Becks: Also, our earnings release is available under the News Events tab on the Investor Relations page of our website, and it includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck.

Speaker Change: Also our earnings release is available under the news events tab on the Investor Relations page of our website and it includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck.

Mark Becks: And it includes reconciliation of certain non-get measures, which are also included as an appendix at the end of our conference call slide deck.

Melinda Whittington: With that, I will now turn the call over to Melinda Whittington, La-Z-Boy's Inc. President and Chief Executive Officer.

Mark Becks: With that, I will now turn the call over to Melinda Whittington, La-Z-Boy's Incorporated President and Chief Executive Officer.

Mark Becks: The floor is yours.

Speaker Change: With that I will now turn the call over to Melinda Whittington Lazy Boys, Incorporated's, President and Chief Executive Officer Melinda. Thanks.

Mark Becks: Melinda?

Melinda Whittington: Melinda? Thanks, Mark, and good morning, everyone. Yesterday, following the closing market, we reported results for our July-ended first quarter. We posted a solid quarter, despite continued furniture and home furnishings industry headwinds and a general malaise in broader consumer discretionary purchases. We were pleased with our total delivered sales results in the quarter, which increased on a year-over-year basis, despite continued industry challenges. Highlights for the quarter included consolidated delivered sales of $496 million, up 3% versus the prior year. Whole sale, segment sales, increasing 5% on growth to external customers, non-GAAP operating margins of 6.6%, non-GAAP EPS of 62 cents, strong operating cash flow of $52 million for the quarter, twice as high as the prior year.

Melinda Whittington: Thanks, Mark, and good morning, everyone.

Melinda Whittington: Thank you, Kelly.

Melinda Whittington: Thanks, Mark and good morning, everyone, yes.

Melinda Whittington: Yesterday, following the close of market, we reported results for our July-ended first quarter. We posted a solid quarter, despite continued furniture and home furnishings industry headwinds and a general malaise in broader consumer discretionary purchases. We were pleased with our total delivered sales results in the quarter, which increased on a year-over-year basis despite continued industry challenges. Highlights for the quarter included consolidated delivered sales of $496 million, up 3% versus the prior year. Wholesale segment sales increasing 5% on growth to external customers, non-GAAP operating margin of 6.6%, non-GAAP EPS of $0.62.

Melinda Whittington: Good morning, everyone, and thanks for joining us to discuss our Fiscal 2025 First Quarter.

Speaker Change: Yesterday following the close of market, we reported results for July and in first quarter, we posted a solid quarter. Despite continued furniture and home furnishings industry headwinds and a general malaise in broader consumer discretionary purchases.

Melinda Whittington: With us today are Melinda Whittington, La-Z-Boy Incorporated's President and Chief Executive Officer,

Melinda Whittington: and Bob Lucian, La-Z-Boy's SVP and CFO.

Melinda Whittington: Melinda will open and close the call, and Bob will speak to segment performance and the financials midway through.

Speaker Change: We were pleased with our total delivered sales results in the quarter, which increased on a year over year basis. Despite continued industry challenges.

Speaker Change: Highlights for the quarter included consolidated delivered sales of $496 million up 3% versus the prior year.

Speaker Change: Wholesale segment sales, increasing 5% on growth to external customers.

Speaker Change: non-GAAP operating margin of six 6%.

Speaker Change: non-GAAP EPS of <unk> 62.

Melinda Whittington: Strong operating cash flow of $52 million for the quarter, twice as high as the prior year. $42 million returned to shareholders through share repurchases and dividends.

Strong operating cash flow of $52 million for the quarter twice as high as the prior year.

Melinda Whittington: $42 million returned to shareholders through share purchases and dividends, a strong balance sheet with $342 million in cash and no external debt, and continued progress against our century vision growth strategy, including completing the acquisition of one independent, La-Z-Boy furniture gallery store in the Midwest, and signing an agreement to acquire another two-store independent dealer in Florida in our second quarter. Our results for the first quarter were in line with our guidance. We were pleased as this came against a consumer backdrop that has become increasingly challenging. We are more focused than ever on adapting and improving our business, and I couldn't be more proud of our resilient sales teams and our increasingly agile supply chain demonstrating our ability to deliver truly enriching experience for consumers in transforming their homes.

Speaker Change: $42 million returned to shareholders through share repurchases and dividends.

Melinda Whittington: A strong balance sheet with $342 million in cash and no external debt, and continued progress against our Century Vision growth strategy, including completing the acquisition of one independent La-Z-Boy furniture gallery store in the Midwest and signing an agreement to acquire another two-store independent dealer in Florida in our second quarter.

Speaker Change: A strong balance sheet with $342 million in cash and no external debt.

Speaker Change: And continued progress against our century vision growth strategy.

Speaker Change: <unk> completed the acquisition of one independent La Z boy furniture galleries store in the Midwest and signing an agreement to acquire another two store independent dealer in Florida, and our second quarter.

Melinda Whittington: We will then open the call to questions.

Melinda Whittington: Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year.

Melinda Whittington: Our results for the first quarter were in line with our guidance. We were pleased as this came against a consumer backdrop that has become increasingly challenging.

Speaker Change: Our results for the first quarter were in line with our guidance. We were pleased as this came against a consumer backdrop that has become increasingly challenging we are more focused than ever on adapting and improving our business and I couldnt be more proud of our resilient sales teams and our increasingly agile.

Melinda Whittington: And a telephone replay of the call will be available for one week, beginning this afternoon.

Melinda Whittington: Before we begin the presentation, I would like to remind you that some statements made in today's call include

Melinda Whittington: We are more focused than ever on adapting and improving our business, and I couldn't be more proud of our resilient sales teams and our increasingly agile supply chain demonstrating our ability to deliver a truly enriching experience for consumers in transforming their homes.

Speaker Change: Supply chain, demonstrating our ability to deliver a truly enriching experience for consumers and transforming their homes.

Melinda Whittington: The furniture industry remains challenged. Structural headwinds of elevated mortgage rates and high housing costs, and global geopolitical and economic uncertainty continue to dampen big-ticket purchases. Nevertheless, our recent quarter again illustrates that an iconic brand amplified by strong execution and operational agility can still drive business growth, even with this backdrop. Further, we are optimistic that expected Fed rate cuts later this calendar year will begin to spur an acceleration in housing turnover and subsequently in furniture demand. Meanwhile, we're not waiting for the macro environment to turn around. We continue to play offense with our Central Vision strategy, offering tangible solutions to drive disproportionate growth over the long term and to consistently gain share in the fragmented furniture and home furnishings market.

Melinda Whittington: The furniture industry remains challenged, structural headwinds of elevated mortgage rates and high housing costs, and global, geopolitical, and economic uncertainty continue to dampen big-ticket purchases.

Speaker Change: The furniture industry remains challenged structural headwinds of elevated mortgage rates and high housing costs and global geopolitical and economic uncertainty continued to dampen big ticket purchases.

Melinda Whittington: forward-looking statements about La-Z-Boy's future performance and other matters.

Melinda Whittington: Nevertheless, our recent quarter again illustrates that an iconic brand, amplified by strong execution and operational agility, can still drive business growth even with this backdrop.

Speaker Change: Nevertheless, our recent quarter again illustrates that our iconic brand amplified by strong execution and operational agility can still drive business growth even with this backdrop.

Melinda Whittington: Further, we are optimistic that expected fed rate cuts later this calendar year will begin to spur an acceleration in housing turnover and subsequently in furniture demand.

Speaker Change: Further we are optimistic that expected fed rate cuts later this calendar year, we'll begin to spur an acceleration and housing turnover and subsequently in furniture demand.

Melinda Whittington: Meanwhile, we're not waiting for the macro environment to turn around.

Speaker Change: Meanwhile, we're not waiting for the macro environment turnaround, we continue to play offense with our central vision strategy.

Melinda Whittington: Although we believe these statements to be reasonable, our actual results could differ materially.

Melinda Whittington: We continue to play offense with our Century Vision strategy, offering tangible solutions to drive disproportionate growth over the long term, and to consistently gain share in the fragmented furniture and home furnishings market.

Melinda Whittington: The most significant risk factors that could affect our future results are described in our annual report on Form 10-K.

Speaker Change: Offering tangible solutions to drive disproportionate growth over the long term and to consistently gain share in the fragmented furniture and home furnishings market.

Melinda Whittington: We encourage you to review these risk factors, as well as other key information detailed in our SEC filings.

Melinda Whittington: Also, our earnings release is available under the News Events tab on the Investor Relations page of our website,

Melinda Whittington: and it includes reconciliations of certain non-GAAP measures,

Melinda Whittington: Recapping our first quarter written sales trends, total written sales for our company-owned retail segment increased 4% versus last year's first quarter. Written, same store sales for our company on retail segment in the first quarter declined 3% versus the prior year. Same store sales were strongest early in the quarter around key Memorial Day events and softened towards the end of the quarter as consumers continued the pattern of pulling back spending outside of key holidays. Our stores continue to execute very well, with conversion rates and design average ticket both improving year over year. However, this has only been able to offset a portion of the continuing double-digit year-over-year traffic declines experienced across our industry.

Melinda Whittington: Recapping our first quarter written sales trend. Total written sales for our company-owned retail segment increased 4% versus last year's first quarter, written same-store sales for our company-owned retail segment in the first quarter declined 3% versus the prior year. Same-store sales were strongest early in the quarter around key Memorial Day events and softened towards the end of the quarter as consumers continued the pattern of pulling back spending outside of key holidays.

Speaker Change: Recapping, our first quarter written sales trends total written sales for our company owned retail segment.

Speaker Change: Increased 4% versus last year's first quarter.

Speaker Change: Written same store sales for our company owned retail segment in the first quarter declined 3% versus the prior year same.

Speaker Change: Same store sales were strongest early in the quarter around key memorial day events and softened towards the end of the quarter as consumers continued the pattern of pulling back spending outside of key holidays.

Melinda Whittington: Our stores continue to execute very well, with conversion rates and design average ticket both improving year over year.

Speaker Change: Our stores continue to execute very well with conversion rates and design average ticket both improving year over year.

Melinda Whittington: However, this has only been able to offset a portion of the continuing double-digit year-over-year traffic declines experienced across our industry.

Speaker Change: However, this is only been able to offset a portion of the continuing double digit year over year traffic declines experienced across our industry.

Melinda Whittington: Written, same store sales for the entire La-Z-Boy Furniture Galleries network of 356 stores also declined 3% versus the prior year. According to the US Census Bureau data, the furniture and home furnishings industry also declined 3% for our fiscal first quarter. With our company-owned Lazy Boy furniture galleries, same store sales outperforming the industry in the first two months of our quarter. Turning to Joybird, written sales increased 9% versus a year ago, driven by execution across the 12-store network compared to 10 stores for most of the prior year quarter. Joybird's operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Melinda Whittington: Written same-store sales for the entire La-Z-Boy Furniture Gallery's network of 356 stores also declined 3% versus the prior year. According to the U.S. Census Bureau data, the furniture and home furnishings industry also declined 3% for our fiscal first quarter, with our company-owned La-Z-Boy Furniture Gallery's same-store sales outperforming the industry in the first two months of our quarter.

Speaker Change: Written same store sales for the entire lazy boy furniture galleries network of 356 stores also declined 3% versus the prior year.

Speaker Change: According to the U S census Bureau data the furniture and home furnishings industry also declined 3% for our fiscal first quarter.

Speaker Change: With our company owned Lazy boy furniture galleries same store sales outperforming the industry in the first two months of our quarter.

Melinda Whittington: Turning to Joybird, written sales increased 9% versus a year ago, driven by execution across the 12-store network compared to 10 stores for most of the prior year quarter.

Speaker Change: Turning to Joy bird written sales increased 9% versus a year ago, driven by execution across the 12 store network compared to 10 stores for most of the prior year quarter.

Melinda Whittington: Joybird Operating Performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Speaker Change: Joy Britt operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Melinda Whittington: which are also included as an appendix at the end of our conference call slide deck.

Melinda Whittington: Looking to the longer term, I want to spend a few minutes on our progress during the quarter to strengthen our enterprise. Recall, Century Vision is our strategic framework, setting up Lazy Boy Incorporated for our next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace double the market and deliver consistent double-digit operating margins over the long term. The furniture and home furnishing category is highly fragmented. As one of the largest brands in the United States but was only roughly a 5% market share, we are well positioned to continue to strategically grow our business.

Melinda Whittington: Looking to the longer term, I want to spend a few minutes on our progress during the quarter to strengthen our enterprise.

Speaker Change: Looking to the longer term I want to spend a few minutes on our progress during the quarter to strengthen our enterprise.

Melinda Whittington: With that, I will now turn the call over to Melinda Whittington,

Melinda Whittington: La-Z-Boy's Incorporated's President and Chief Executive Officer.

Melinda Whittington: Recall Century Vision is our strategic framework setting up La-Z-Boy Inc. for our next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace double the market and deliver consistent double-digit operating margins over the long term. The Furniture and Home Furnishings category is highly fragmented.

Speaker Change: Recall central vision is our strategic framework setting up lazy boy incorporated for our next 100 years as we celebrate our first century in 2027.

Melinda Whittington: Melinda?

Melinda Whittington: Thanks, Mark, and good morning, everyone.

Speaker Change: This is measured by our intention to grow top line at a pace double the market and deliver consistent double digit operating margins over the long term.

Speaker Change: The furniture and home furnishings category is highly fragmented.

Melinda Whittington: As one of the largest brands in the United States, but with only roughly a 5% market share, we are well positioned to continue to strategically grow our business. We have consistently expanded La-Z-Boy's brand reach over the last several quarters.

Melinda Whittington: Yesterday, following the close of market, we reported results for our July-ended first quarter.

Speaker Change: As one of the largest brands in the United States, but with only roughly a 5% market share we are well positioned to continue to strategically grow our business. We have consistently expanded lazy boys brand reach over the last several quarters. Our total furniture galleries network ended the quarter with 305.

Melinda Whittington: We posted a solid quarter, despite continued furniture and home furnishings industry headwinds,

Melinda Whittington: and a general malaise in broader consumer discretionary purchases.

Melinda Whittington: We have consistently expanded La-Z-Boy's brand reach over the last several quarters. Our total furniture galleries network ended the quarter with 356 stores, and our retail segment, comprised of the company-owned portion of those stores, increased to 188 stores, up 13 from the prior year. Company-owned stores now represent 53% of all La-Z-Boy furniture galleries. Growing our company-owned stores is important as it gives us the greatest opportunity to delight the consumer by controlling the end-to-end experience, which features comfortable and customized upholstery with quick delivery. Our North American manufacturing footprint enables us to deliver custom furniture in less than eight weeks to the consumer and benefits us financially with the strength of our vertically integrated model.

Melinda Whittington: We were pleased with our total delivered sales results in the quarter,

Melinda Whittington: Our total furniture galleries network ended the quarter with 356 stores, and our retail segment, comprised of the company-owned portion of those stores, increased to 188 stores, up 13 from the prior year. Company owned stores now represent 53% of all La-Z-Boy furniture galleries. Growing our company-owned stores is important, as it gives us the greatest opportunity to delight the consumer by controlling the end-to-end experience, which features comfortable and customized upholstery with quick delivery.

Melinda Whittington: which increased on a year-over-year basis, despite continued industry challenges.

Speaker Change: Six stores and our retail segment comprised of the company owned portion of those stores increased to 188 stores up 13 from the prior year company owned stores now represent 53% of all lazy boy furniture galleries.

Speaker Change: Growing our company owned stores is important as it gives us the greatest opportunity to delight the consumer by controlling the end to end experience, which features comfortable and customized upholstery with quick delivery.

Melinda Whittington: Our North American manufacturing footprint enables us to deliver custom furniture in less than eight weeks to the consumer and benefits us financially with the strength of our vertically integrated model.

Speaker Change: Our north American manufacturing footprint enables us to deliver custom furniture in less than eight weeks to the consumer and benefits us financially with the strength of our vertically integrated model.

Melinda Whittington: We see opportunity to grow the total La-Z-Boy furniture galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisitions. To this point, we acquired one store during the first quarter, and we recently signed an agreement to acquire an additional two-store network from an independent dealer in Florida, scheduled to close in the second quarter. These store acquisitions are immediately accreted to our profitability, allowing the company to benefit from the integrated wholesale and retail margins.

Melinda Whittington: We see opportunity to grow the total La-Z-Boy Furniture Galleries network to approximately 400 stores over the next several years, and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisition, to this point. We acquired one store during the first quarter, and we recently signed an agreement to acquire an additional two-store network from an independent dealer in Florida scheduled to close in the second quarter. These store acquisitions are immediately accretive to our profitability, allowing the company to benefit from the integrated wholesale and retail margin.

Speaker Change: We see opportunity to grow the total lazy boy furniture galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company owned portion of the network through new store growth and acquisitions.

Speaker Change: To this point.

Speaker Change: We acquired one store during the first quarter and we recently signed an agreement to acquire an additional two store network from an independent dealer in Florida scheduled to close in the second quarter.

Speaker Change: These store acquisitions are immediately accretive to our profitability, allowing the company to benefit from the integrated wholesale and retail margins.

Melinda Whittington: We are also growing the business through our refined channel strategy. This donate has enabled us to grow share of voice of a Lazy Boy brand with general dealers and provide a broader range of consumers access to the Lazy Boy brand. We have had strong results with strategic partners like Rooms to Go, which have allowed us to gain mind share in an under-penetrated market. We continue to look for new and creative ways to reach a broader audience and bring products like the iconic Lazy Boy recliner into more households. Another core pillar of our CentriVision strategy to expand Lazy Boy brand reach is our Long Live the Lazy Brand campaign, which is celebrating its one-year anniversary after debuting last August on National Easy Day.

Melinda Whittington: We are also growing the business through our refined channel strategy.

We are also growing the business through our refined channel strategy. This has enabled us to grow share of voice of a lazy boy brand with general dealers and provide a broader range of consumers access to the lazy boy brand.

Melinda Whittington: This has enabled us to grow, share a voice of the La-Z-Boy brand with general dealers, and provide a broader range of consumers access to the La-Z-Boy brand, we have had strong results with strategic partners like Rooms2Go, which have allowed us to gain mindshare in an underpenetrated market.

Speaker Change: We have had strong results with strategic partners like rooms to go which have allowed us to gain mind share and an underpenetrated market.

Melinda Whittington: We continue to look for new and creative ways to reach a broader audience and bring products like the iconic La-Z-Boy recliner into more households.

Speaker Change: We continue to look for new and creative ways to reach a broader audience and bring products like the iconic lazy boy recliner into more households.

Melinda Whittington: Another core pillar of our Century Vision strategy to expand La-Z-Boy brand reach is our Long Live the La-Z-Brand campaign, which is celebrating its one-year anniversary after debuting last August on National AZ Day.

Speaker Change: Another core pillar of our central vision strategy to expand lazy boy brand reach is our long lived the lazy brand campaign, which is celebrating its one year anniversary after the viewing last August on National ACD.

Melinda Whittington: One of our initial goals was to enhance unated brand awareness and keep the brand top of mind. A year into the campaign, we have been successful in increasing unated awareness, consideration, and purchase attempt among those who have seen the Long Live the Lazy campaign and connect it to Lazy Boy. Since its introduction, Long Live the Lazy has won numerous awards, including the Drum Awards from Marketing America's, and the best short form video at the L.A. at the Think L.A. Ideal Awards. We've also activated the brand in new ways, including a new Heights podcast sponsorship with Jason and Travis Kelsey, and branded media integrations across Amazon, New York Times, and ESPN.com.

Melinda Whittington: One of our initial goals was to enhance unaided brand awareness and keep the brand top of mind. A year into the campaign, we have been successful in increasing unaided awareness, consideration, and purchase intent among those who have seen the Long Live the Lazy campaign and connected to La-Z-Boy.

Speaker Change: One of our initial goals was to enhance unaided brand awareness and keep the brand top of mind a.

Speaker Change: A year into the campaign, we have been successful in increasing unaided awareness consideration and purchase intent among those who have seen the long lived the lazy campaign and connected to lazy way.

Melinda Whittington: Since its introduction, Long Live the Lazy has won numerous awards, including the Drum Awards for Marketing Americas and the Best Short Form Video at the Think L.A.

Speaker Change: Since its introduction long live the lazy has won numerous awards, including the drum awards from marketing Americas and the best short form video at the early at the Thank Ali idea awards.

Melinda Whittington: Idea Awards.

Melinda Whittington: We've also activated the brand in new ways, including a new Heights podcast sponsorship with Jason and Travis Kelsey, and branded media integrations across Amazon, New York Times, and ESPN.com.

Speaker Change: We have also activated the brand in new ways, including our new Heights podcast sponsorship with Jason and Travis Kelsey and branded media integrations across Amazon, New York Times, and ESPN Dot com.

Melinda Whittington: Speaking to how Lazy Boy is beloved in consumers' minds, the brand was even recently mentioned in a hit song by Lou Combe. As we move the campaign into its second year, we are focused on broadening the campaign impact to achieve our goal of connecting with an even brighter audience. Another focus area for expanding La-Z-Boy brand reach is within product development. Our development process is becoming even more consumer-centric, leveraging a data-driven approach. The insights we are gaining are enabling us to develop more consumer-relevant, on-trend products in our core-oppostured furniture category, particularly in motion and reclining, where we are a market leader.

Melinda Whittington: Speaking of how La-Z-Boy is beloved in consumers' minds, the brand was even recently mentioned in a hit song by Luke Combs.

Speaker Change: Speaking to how lazy boy is beloved in consumers' minds. The brand was even recently mentioned and a hit song by Luke Combs.

Melinda Whittington: As we move the campaign into its second year, we are focused on broadening the campaign impact to achieve our goal of connecting with an even broader audience.

Speaker Change: As we move the campaign into its second year, we are focused on broadening the campaign impact to achieve our goal of connecting with an even broader audience.

Operator: Good day, and welcome to the Lazy Boy Fiscal 2025 First Quarter Conference Hall.

Operator: Good day, and welcome to the Lazy Boy Fiscal 2025 First Quarter Conference Hall. At this time, all participants are on the listen only mode. After management's prepared remarks, there will be a question and answer session.

Melinda Whittington: Another focus area for expanding La-Z-Boy brand reach is within product development. Our development process is becoming even more consumer-centric, leveraging a data-driven approach.

Speaker Change: Another focus area for expanding lazy boy brand reach as within product development.

Operator: At this time, all participants are on the listen only mode.

Speaker Change: Our development process is becoming even more consumer centric leveraging a data driven approach.

Operator: After management's prepared remarks, there will be a question and answer session.

Mark Becks: I would now like to turn the call over to the Director of Investor Relations and Corporate Development, Mark Becks, the floor is yours.

Mark Becks: I would now like to turn the call over to the Director of Investor Relations and Corporate Development, Mark Becks, the floor is yours. Thank you, Kelly. Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 First Quarter.

Melinda Whittington: The insights we are gaining are enabling us to develop more consumer-relevant, on-trend products in our core upholstered furniture category, particularly in motion and reclining where we are a market leader.

Speaker Change: The insights we are gaining are enabling us to develop more consumer relevant on trend products and our core upholstered furniture category, particularly in motion and reclining, where we're a market leader.

Mark Becks: Thank you, Kelly.

Melinda Whittington: Joy Bird is another core pillar of our century vision, and we are optimizing the brand to deliver a balance of sales growth and profitability. We were pleased that written sales trends were positive in the quarter, and operating performance improved from prior year. With 12 stores currently open in major metro markets, the digitally native e-commerce brand is benefiting from the halo effect of stores in key markets. We have identified the potential to grow to 25 locations over the intermediate term, with our expansion pace depending on opportunities in real estate and overall market conditions. We continue to believe in the long-term growth prospects of the brand, as Joybird has a considerable opportunity to expand market share, and we will continue to make prudent investments to position it for long-term success.

Melinda Whittington: Joybird is another core pillar of our Century Vision, and we are optimizing the brand to deliver a balance of sales growth and profitability.

Mark Becks: Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 First Quarter.

Mark Becks: With us today are Melinda Whittington, Lazy Boy Inc. President and Chief Executive Officer, and Bob Lucian, Lazy Boy's SVP and CFO. Melinda will open and close the call, and Bob will speak to segment performance in the financials midway through.

Speaker Change: Julian Bird is another core pillar of our century vision and we are optimizing the brand to deliver a balance of sales growth and profitability.

Melinda Whittington: We were pleased that written sales trends were positive in the quarter and operating performance improved from prior year.

Speaker Change: We were pleased that written sales trends were positive in the quarter and operating performance improved from prior year with 12 stores currently open in major Metro markets. The digitally native E. Commerce brand is benefiting from the Halo effect of stores in key markets.

Melinda Whittington: With 12 stores currently open in major metro markets, the digitally native e-commerce brand is benefiting from the halo effect of stores in key markets. We have identified the potential to grow to 25 locations over the intermediate term, with our expansion pace depending on opportunities in real estate and overall market conditions.

Speaker Change: We have identified the potential to grow to 25 locations over the intermediate term with our expansion pace, depending on opportunities in real estate and overall market conditions. We continue to believe in the long term growth prospects of the brand as Joy Britt has a considerable opportunity to expand market share and we will continue to make prudent investments.

Mark Becks: Before we begin the presentation, I would like to remind you that some statements made in today's call include four looking statements about Lazy Boy's future performance and other matters. Although we believe these statements will be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on form 10K. We encourage you to review these results on form 10K as well as other key information detail in our FCC filings.

Melinda Whittington: We continue to believe in the long-term growth prospects of the brand as Joybird has a considerable opportunity to expand market share, and we will continue to make prudent investments to position it for long-term success.

Speaker Change: <unk> to position it for long term success.

Melinda Whittington: Strengthening our foundational capabilities, including building a more dynamic supply chain, is our final pillar of Century Vision. We are making steady progress improving the agility of our business model by better optimizing our global supply chain operations. As we mentioned in last quarter's call, we are prudently managing the consolidation of our cut and sew operations in Mexico to optimize costs while ensuring no service disruptions. In this challenging global landscape, we view our North American manufacturing footprint as a key differentiator in our ability to manufacture high quality, comfortable, custom furniture with quick speed to market. As we enter our second quarter, we expect a continued challenging macro environment for the remainder of the fiscal year.

Speaker Change: Strengthening our foundational capabilities, including building a more dynamic supply chain as our final pillar of Central vision, we are making steady progress improving the agility of our business model by better optimizing our global supply chain operations as we mentioned in last quarters call. We are prudently manage.

Mark Becks: Also, our earnings release is available under the news events tab on the investor relations page of our website. And it includes reconciliation of certain non-get measures, which are also included as an appendix at the end of our conference call slide deck.

Melinda Whittington: As we mentioned in last quarter's call, we are prudently managing the consolidation of our cut and sew operations in Mexico to optimize costs while ensuring no service disruption.

Speaker Change: <unk> the consolidation of our cut and sew operations in Mexico to optimize costs, while ensuring no service disruptions.

Mark Becks: With us today are Melinda Whittington, Lazy Boy Inc.

Melinda Whittington: With that, I will now turn the call over to Melinda Whittington, Lazy Boy's Inc. President and Chief Executive Officer. Melinda? Thanks, Mark, and good morning, everyone. Yesterday, following the closing market, we reported results for our July-ended first quarter. We posted a solid quarter, despite continued furniture and home furnishings industry headwinds, and a general malaise in broader consumer discretionary purchases. We were pleased with our total delivered sales results in the quarter, which increased on a year-over-year basis, despite continued industry challenges.

Melinda Whittington: In this challenging global landscape, we view our North American manufacturing footprint as a key differentiator in our ability to manufacture high-quality, comfortable, custom furniture with quick speed to market.

Speaker Change: In this challenging global landscape, we view, our north American manufacturing footprint as a key differentiator in our ability to manufacture high quality comfortable custom furniture with quick speed to market.

Mark Becks: President and Chief Executive Officer, and Bob Lucian, Lazy Boy's SVP and CFO.

Mark Becks: Melinda will open and close the call, and Bob will speak to segment performance in the financials midway through.

Mark Becks: We will then open the call to questions.

Mark Becks: Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year.

Melinda Whittington: As we enter our second quarter, we expect a continued challenging macro environment for the remainder of the fiscal year. However, we remain optimistic about our ability to continue to outperform the market while investing in our business through our Century Vision, so that when trends rebound, we can disproportionately benefit.

Speaker Change: As we enter our second quarter, we expect a continued challenging macro environment for the remainder of the fiscal year How's.

Melinda Whittington: However, we remain optimistic about our ability to continue to outperform the market while investing in our business through our century vision so that when trends rebound, we can disproportionately benefit. We once again made strong progress in the quarter, and we look forward to continuing to make Century Vision a reality.

Speaker Change: However, we remain optimistic about our ability to continue to outperform the market while investing in our business through our century vision, so that when trends rebound, we can disproportionately benefit.

Mark Becks: And a telephone review play of the call will be available for one week, beginning this afternoon.

Melinda Whittington: Highlights for the quarter included consolidated delivered sales of $496 million up 3% versus the prior year. Whole sale, segment sales, increasing 5% on growth to external customers, non-gap operating margins of 6.6%, non-gap EPS of 62 cents, strong operating cash flow of $52 million for the quarter, twice as high as the prior year. $42 million returned to shareholders through sharey purchases and dividends, a strong balance sheet with $342 million in cash and no external debt, and continued progress against our century vision growth strategy, including completing the acquisition of one independent, lazy boy furniture gallery store in the Midwest, and signing an agreement to acquire another two-store independent dealer in Florida in our second quarter.

Melinda Whittington: We once again made strong progress in the quarter, and we look forward to continuing to make Century Vision a reality.

Speaker Change: We once again made strong progress in the quarter and we look forward to continuing to make century vision a reality.

Bob Lucian: Now let me turn the call over to Bob to review the results in more detail. Bob.

Melinda Whittington: Now let me turn the call over to Bob to review the results in more detail.

Speaker Change: Now, let me turn the call over to Bob to review the results in more detail Bob.

Melinda Whittington: Bob?

Bob Lucian: Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a gap and non-GAAP basis. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business. Non-GAAP results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slide. On a consolidated basis, fiscal 2025, those quarter sales increased 3% to $496 million versus the prior year, primarily driven by higher delivered volume within our wholesale segment. Consolidated gap operating income was $32 million and non-gap operating income was $33 million, a decrease of 3% versus last year's first quarter.

Bob Lucian: Thank you, Melinda, and good morning, everyone.

Bob: Thank you Melinda and good morning, everyone.

Bob Lucian: As a reminder, we present our results on both a GAAP and non-GAAP basis. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business. Non-GAAP results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slide.

Bob: As a reminder, we present our results on both a GAAP and non-GAAP basis.

Bob: We believe the non-GAAP presentation, better reflects underlying operating trends and performance of the business.

Speaker Change: non-GAAP results exclude items, which are detailed in our press release and in the tables in the appendix section of our conference call slides.

Bob Lucian: On a consolidated basis, fiscal 2025 first quarter sales increased 3% to $496 million versus the prior year, primarily driven by higher delivered volume within our wholesale segment.

Bob Lucian: Highlights for the quarter included consolidated delivered sales of $496 million, up 3% versus the prior year.

Speaker Change: On a consolidated basis fiscal 2025 first quarter sales increased 3% to $496 million versus the prior year, primarily driven by higher delivered volume within our wholesale segment.

Bob Lucian: Wholesale segment sales increasing 5% on growth to external customers.

Bob Lucian: Consolidated GAAP operating income was $32 million, and non-GAAP operating income was $33 million, a decrease of 3% versus last year's first quarter. Consolidated GAAP operating margin was 6.5%, and non-GAAP operating margin was 6.6%, reflecting a 40 basis point decline versus last year due to reduced fixed cost leverage within our retail segment, partially offset by gross margin expansion.

Speaker Change: Consolidated GAAP operating income was $32 million and non-GAAP operating income was $33 million, a decrease of 3% versus last year's first quarter.

Bob Lucian: Non-GAAP operating margin of 6.6%.

Bob Lucian: Consolidated gap operating margin was 6.5%, and non-gap operating margin was 6.6%, reflecting a 40 basis point decline versus last year due to reduced fixed cost leverage within our retail segment, partially offset by gross margin expansion. Gap diluted EPS was 61 cents for the first quarter versus 63 cents in the prior year quarter. Non-GAAP diluted EPS was 62 cents, which was unchanged versus last year. As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting unless specifically stated otherwise. Starting with the retail segment for the quarter, delivered sales were $202 million, a 3% decrease over the prior year's first quarter, as the prior year benefited from the delivery of residual backlog related to component shortages.

Mark Becks: The most significant risk factors that could affect our future results are described in our annual report on form 10K.

Melinda Whittington: Our results for the first quarter were in line with our guidance. We were pleased as this came against a consumer backdrop that has become increasingly challenging. We are more focused than ever on adapting and improving our business, and I couldn't be more proud of our resilient sales teams and our increasingly agile supply chain demonstrating our ability to deliver truly enriching experience for consumers in transforming their homes. The furniture industry remains challenged.

Speaker Change: Consolidated GAAP operating margin was six 5% and non-GAAP operating margin was six 6%, reflecting a 40 basis point decline versus last year due to reduced fixed cost leverage within our retail segment, partially offset by gross margin expansion.

Mark Becks: We encourage you to review these results on form 10K as well as other key information detail in our FCC filings.

Mark Becks: Also, our earnings release is available under the news events tab on the investor relations page of our website.

Bob Lucian: Gap diluted EPS was $0.61 for the first quarter versus $0.63 in the prior year quarter.

Speaker Change: GAAP diluted EPS was <unk> 61 for the first quarter versus 63 from the prior year quarter.

Bob Lucian: Non-gap diluted EPS was 62 cents, which was unchanged versus last year.

Bob Lucian: Non-GAAP EPS of 62 cents.

Speaker Change: non-GAAP diluted EPS was <unk> 62, which was unchanged versus last year.

Mark Becks: And it includes reconciliation of certain non-get measures, which are also included as an appendix at the end of our conference call slide deck.

Bob Lucian: As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting unless specifically stated otherwise.

Bob Lucian: Strong operating cash flow of $52 million for the quarter, twice as high as the prior year.

Speaker Change: As I move to the segment discussion my comments from here will focus on our non-GAAP reporting unless specifically stated otherwise.

Melinda Whittington: With that, I will now turn the call over to Melinda Whittington, Lazy Boy's Inc.

Melinda Whittington: Structural headwinds of elevated mortgage rates and high housing costs and global geopolitical and economic uncertainty continue to dampen big-ticket purchases. Nevertheless, our recent quarter again illustrates that an iconic brand amplified by strong execution and operational agility can still drive business growth even with this backdrop. Further, we are optimistic that expected fed rate cuts later this calendar year will begin to spur an acceleration in housing turnover and subsequently in furniture demand. Meanwhile, we're not waiting for the macro environment to turn around.

Bob Lucian: Starting with the retail segment for the quarter, delivered sales for $202 million, a 3% decrease over the prior year's first quarter, as the prior year benefited from the delivery of residual backlog related to component shortage. Retail non-GAAP operating margin decreased to 10.3% versus 14.1% in the prior year quarter. This is driven by fixed-cost de-leverage on lower-delivered sales and fixed-cost increases supporting our long-term strategy of growing our retail business through new and acquired stores. Gross margin was roughly flat year over year.

Bob Lucian: $42 million returned to shareholders through share repurchases and dividends.

Speaker Change: Starting with the retail segment for the quarter delivered sales were $202 million, a 3% decrease over the prior year's first quarter as the prior year benefited from the delivery of residual backlog related to component shortages.

Melinda Whittington: President and Chief Executive Officer.

Bob Lucian: Retail non-GAAP operating margin decreased to 10.3% versus 14.1% in the prior year quarter. This is driven by fixed cost due leverage on lower delivered sales and fixed cost increases supporting our long-term strategy of growing our retail business through new and acquired stores. Gross margin was roughly flat year over year. For our whole sales segment, delivered sales to the quarter increased to $351 million, up 5% versus the prior year period. The increase was attributed to higher delivered volume to external customers, partially offset by lower intercompany sales to our retail segment and lower delivered volume in our case goods business.

Speaker Change: Retail non-GAAP operating margin decreased to 10, 3% versus 14, 1% in the prior year quarter.

Melinda Whittington: Melinda?

Speaker Change: This was driven by fixed cost deleverage on lower delivered sales and fixed costs increase and supporting our long term strategy of growing our retail business through new and acquired stores gross margin was roughly flat year over year.

Melinda Whittington: Thanks, Mark, and good morning, everyone.

Bob Lucian: For our wholesale segment, delivered sales for the quarter increased to $351 million, up 5% versus the prior year period. The increase was attributed to higher delivered volume to our external customers, partially offset by lower intercompany sales to our retail segment and lower delivered volume in our case goods business. Non-GAAP operating margin for the wholesale segment was 6.9% versus 6.8% in last year's first quarter, driven by gross margin expansion primarily from reduced commodity prices, improved sourcing, and favorable duty expense, partially offset by an unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin than products sold at furniture galleries.

Speaker Change: For our wholesale segment.

Speaker Change: Sales for the quarter increased to $351 million up 5% versus the prior year period.

Melinda Whittington: Yesterday, following the closing market, we reported results for our July-ended first quarter. We posted a solid quarter, despite continued furniture and home furnishings industry headwinds, and a general malaise in broader consumer discretionary purchases. We were pleased with our total delivered sales results in the quarter, which increased on a year-over-year basis, despite continued industry challenges. Highlights for the quarter included consolidated delivered sales of $496 million up 3% versus the prior year. Whole sale, segment sales, increasing 5% on growth to external customers, non-gap operating margins of 6.6%, non-gap EPS of 62 cents, strong operating cash flow of $52 million for the quarter, twice as high as the prior year.

Melinda Whittington: We continue to play offense with our Central Vision strategy, offering tangible solutions to drive disproportionate growth over the long term and to consistently gain share in the fragmented furniture and home furnishings market. Recapping our first quarter written sales trends, total written sales for our company-owned retail segment increased 4% versus last year's first quarter. Written, same store sales for our company on retail segment in the first quarter declined 3% versus the prior year.

Speaker Change: The increase was attributed to higher delivered volume to external customers.

Speaker Change: Partially offset by lower intercompany sales to our retail segment and lower delivered volume in our case goods business.

Bob Lucian: Non-GAAP operating margin for the whole sales segment was 6.9% versus 6.8% in last year's first quarter. If driven by gross margin expansion, primarily from reduced commodity prices, improved sourcing, and favorable duty expense, partially offset by an unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin and products sold to furniture galleries. Joybre delivered sales, reported in corporate and other, were $35 million, down 3% versus the prior year period. Surebid operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Speaker Change: non-GAAP operating margin for the wholesale segment was six 9% versus six 8% in last year's first quarter driven.

Speaker Change: Driven by gross margin expansion, primarily from reduced commodity prices improved sourcing and favorable duty expense.

Speaker Change: Partially offset by an unfavorable shift in channel mix towards external customers, which generally carry products with lower gross margins from product sold a furniture galleries.

Melinda Whittington: Same store sales were strongest early in the quarter around key memorial day events and soften towards the end of the quarter as consumers continued the pattern of pulling back spending outside of key holidays. Our stores continue to execute very well with conversion rates and design average ticket both improving year over year. However, this has only been able to offset a portion of the continuing double-digit year over year traffic declines experienced across our industry.

Bob Lucian: Joybird delivered sales, reported in corporate and other, were $35 million, down 3% versus the prior year period.

Speaker Change: Jewelry for delivery sales reported in corporate and other were $35 million down 3% versus the prior year period.

Bob Lucian: Derivative operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability. On a consolidated basis, non-GAAP gross margin improved once again across all reportable segments, and for the entire company increased by 40 basis points versus the prior year first quarter. Gross margin expansion was attributed to lower input costs from reduced commodity prices and improved sourcing, partially offset by a shift in consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment.

Speaker Change: Sure Good operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Bob Lucian: On a consolidated basis, non-GAAP gross margin improved once again across all reportable segments and for the entire company increased by 40 basis points versus the prior year first quarter. Gross margin expansion was attributed to lower input costs from reduced commodity prices and improved sourcing, partially offset by a shift and consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment. Non-Gap S-GNA as a percentage of sales for the quarter increased by 80 basis points compared with the same period last year, primarily due to lower leverage on delivered sales relative to fixed costs within our retail segment.

Speaker Change: On a consolidated basis non-GAAP gross margin improved once again across all reportable segments and for the entire company increased by 40 basis points versus the prior year first quarter.

Melinda Whittington: Written, same store sales for the entire lazy boy furniture galleries network of 356 stores also declined 3% versus the prior year. According to the US Census Bureau data, the furniture and home furnishings industry also declined 3% for our fiscal first quarter. With our company-owned lazy boy furniture galleries same store sales outperforming the industry in the first two months of our quarter. Turning to Joybird, Written sales increased 9% versus a year ago driven by execution across the 12 store network compared to 10 stores for most of the prior year quarter. Joybird operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Gross margin expansion was attributed to lower input costs from reduced commodity prices and improved sourcing partially offset by a shift in consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment.

Bob Lucian: Non-GAAP SG&A, as a percentage of sales for the quarter, increased by 80 basis points compared with the same period last year, primarily due to lower leverage on delivered sales relative to fixed costs within our retail segment.

Speaker Change: non-GAAP SG&A as a percentage of sales for the quarter increased by 80 basis points compared with the same period last year.

Primarily due to lower leverage on delivered sales relative to fixed cost within our retail segment.

Bob Lucian: Additionally, the company continues to invest to build a more agile business model and support future growth opportunities. This was partially offset by a shift and consolidated mix driven by a higher percentage of sales in our wholesale segment, which has a lower S-GNA expense as a percentage of sales than our retail segment. Our effective tax rate on a gap basis for the first quarter was 25 and a half percent compared to 26 and a half percent for the prior year. Our reduced effective tax rate was partially the result of tax benefits from the investing of stock-based compensation.

Bob Lucian: Additionally, the company continues to invest to build a more agile business model and support future growth and opportunity.

Speaker Change: Additionally, the company continues to invest to build a more agile business model and support future growth opportunities.

Bob Lucian: This was partially offset by a shift in consolidated mix driven by a higher percentage of sales in our wholesale segment, which has a lower SG&A expense as a percentage of sales than our retail segment.

Speaker Change: This was partially offset by a shift in consolidated mix driven by a higher percentage of sales in our wholesale segment, which has a lower SG&A expense as a percentage of sales than our retail segment.

Bob Lucian: Our effective tax rate on a gap basis for the first quarter was 25.5% compared to 26.5% for the prior year. A reduced effective tax rate was partially the result of tax benefits, from the Reinvesting of Stock-Based Compensation.

Speaker Change: Our effective tax rate on a GAAP basis for the first quarter was 25, 5% compared to 26, 5% for the prior year.

Melinda Whittington: Looking to the longer term, I want to spend a few minutes on our progress during the quarter to strengthen our enterprise. Recall, Century Vision is our strategic framework, setting up lazy boy incorporated for our next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace double the market and deliver consistent double digit operating margins over the long term. The furniture and home furnishing category is highly fragmented.

Speaker Change: A reduced effective tax rate was partially the result of tax benefits.

Speaker Change: From the vesting of stock based compensation.

Bob Lucian: A strong balance sheet with $342 million in cash and no external debt.

Bob Lucian: Turning to cash, we ended the quarter with a strong balance sheet, with $342 million in cash and no externally funded debt. We generated $52 million in cash from operating activities in the quarter versus $26 million in the prior year. The improvement was mainly due to a decrease in receivables and an increase in customer deposits resulting from higher written sales versus a year ago. We spent $16 million in capital expenditures during the quarter, primarily related to retail store openings and remodels and upgrades at manufacturing facilities in our market showrooms. We also spent $7 million on acquisitions during the quarter.

Turning to cash we ended the quarter with a strong balance sheet.

Speaker Change: With $342 million in cash and no externally funded debt.

Speaker Change: We generated $52 million in cash from operating activities in the quarter versus $26 million in the prior year.

Speaker Change: The improvement was mainly due to a decrease in receivables and an increase in customer deposits, resulting from higher written sales versus year ago.

Melinda Whittington: As one of the largest brands in the United States but was only roughly a 5% market share, we are well positioned to continue to strategically grow our business. We have consistently expanded lazy boy's brand reach over the last several quarters. Our total furniture galleries network ended the quarter with 356 stores and our retail segment comprised of the company-owned portion of those stores increased to 188 stores up 13 from the prior year.

Bob Lucian: We spent 16 million dollars in capital expenditures during the quarter, primarily related to retail store openings and remodels and upgrades at manufacturing facilities and our market showroom. We also spent $7 million on acquisitions during the quarter.

Speaker Change: We spent $16 million in capital expenditures during the quarter, primarily related to retail store openings, and remodels and upgrades at manufacturing facilities and our market share rooms.

Speaker Change: We also spent $7 million on acquisitions during the quarter.

Bob Lucian: For the quarter, we returned approximately $42 million to shareholders via dividends and share repurchases, including $8 million paid in dividends. We repurchased $933,000 shares in the market in the quarter, which leads 4.7 million shares available under our existing share repurchase authorization. We continued to view share repurchases and dividends as an attractive use of our cash and a positive return to shareholders. Our capital allocation target is to reinvest 50% of operating cash flow back into the business and return 50% approximately to shareholders and share repurchases and dividends over the long term. In fiscal 2024, our capital allocation was 52% reinvested into the business and 48% returned to shareholders.

Speaker Change: For the quarter, we returned approximately $42 million to shareholders via dividends and share repurchases, including $8 million paid in dividends.

Melinda Whittington: Company-owned stores now represent 53% of all lazy boy furniture galleries. Growing our company-owned stores is important as it gives us the greatest opportunity to delight the consumer by controlling the end-to-end experience which features comfortable and customized upholstery with quick delivery. Our North American manufacturing footprint enables us to deliver custom furniture in less than eight weeks to the consumer and benefits us financially with the strength of our vertically integrated model. We see opportunity to grow the total lazy boy furniture galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisitions.

Speaker Change: We repurchased 933000 shares in the market in the quarter.

Which leaves $4 7 million shares available under our existing share repurchase authorization.

Speaker Change: We continue to view share repurchases and our dividends as an attractive use of our cash and positive return to shareholders. Our capital allocation target is to reinvest 50% of operating cash flow back into the business and returned 50% approximately to shareholders and share repurchases and dividends over the long term.

Bob Lucian: Our capital allocation target is to reinvest 50% of operating cash flow back into the business and return 50% approximately to shareholders and share repurchases and dividends over the long term. In fiscal 2024, our capital allocation was 52% reinvested into the business and 48% returned to shareholders.

Speaker Change: In fiscal 2024, our capital allocation was 52% reinvested into the business and 48% return to shareholders.

Bob Lucian: Before we turn to call back to Melinda, let me highlight several important items for fiscal 2025 and our second quarter. Consistent with our century vision strategy, we continued to target sales growth double the industry growth rate and double-digit operating margins over the long term with the benefit of more normalized industry growth rates. Looking forward, we expect the industry to continue to be challenged. Consistent with recent comments from furniture retailers pointing to subdued demand and potential recovery coming later than expected, we now believe the industry may be down even more than the zero to negative 5% range estimate we previously anticipated for our fiscal year in total.

Bob Lucian: Now before turning the call back to Melinda, let me highlight several important items for fiscal 2025 and our second quarter. Consistent with our Century Vision strategy, we continue to target sales growth, double the industry growth rate and double digit operating margins over the long term with the benefit of more normalized industry growth rate.

Speaker Change: Now before turning the call back to Melinda, Let me highlight several important items for fiscal 2025, and our second quarter.

Bob Lucian: And continued progress against our Century Vision growth strategy,

Speaker Change: Consistent with our century vision strategy, we continue to target sales growth double the industry growth rate and double digit operating margins over the long term with the benefit of more normalized industry growth rates.

Melinda Whittington: $42 million returned to shareholders through sharey purchases and dividends, a strong balance sheet with $342 million in cash and no external debt, and continued progress against our century vision growth strategy, including completing the acquisition of one independent, lazy boy furniture gallery store in the Midwest, and signing an agreement to acquire another two-store independent dealer in Florida in our second quarter.

Melinda Whittington: To this point, we acquired one store during the first quarter and we recently signed an agreement to acquire an additional two-store network from an independent dealer in Florida scheduled to close in the second quarter. These store acquisitions are immediately accreted to our profitability allowing the company to benefit from the integrated wholesale and retail margins. We are also growing the business through our refined channel strategy. This donate has enabled us to grow share of voice of a lazy boy brand with general dealers and provide a broader range of consumers access to the lazy boy brand.

Bob Lucian: Looking forward, we expect the industry to continue to be challenged. Consistent with recent comments from furniture retailers pointing to subdued demand and a potential recovery coming later than expected, we now believe the industry may be down even more than the 0 to negative 5 percent range estimate we previously anticipated for our fiscal year in total.

Speaker Change: Looking forward, we expect the industry to continue to be challenged.

Speaker Change: Consistent with recent comments from furniture retailers, pointing to subdued demand and a potential recovery coming later than expected. We now believe the industry may be down even more than the zero to negative 5% range estimate we previously anticipated for our fiscal year in total.

Bob Lucian: Against that backdrop, we expect to continue to outperform the market throughout fiscal 2025, similar to our performance in fiscal 2024.

Bob Lucian: Against that backdrop, we expect to continue to offer the market throughout fiscal 2025, similar to our performance in fiscal 2024. For the second quarter, we expect sales to increase modestly versus the first quarter, supported by seasonality, to the range of $495 to $515 million. Further, we expect second quarter non-GAAP operating margin to be in the range of 6 to 7%. As we continue to invest in our Century Vision pillar of growing retail, we expect near-term margin compression versus the prior year, primarily driven by expected negative same-store sales trends from the continued challenging demand environment, which will more than offset the margin accretion from new stores and independent, Lazy Boy furniture galleries, acquisitions in our retail segment.

Speaker Change: Against that backdrop, we expect to continue to outperform the market throughout fiscal 2025, similar to our performance in fiscal 2024.

Melinda Whittington: We have had strong results with strategic partners like Rooms to go which have allowed us to gain mind share in an under penetrated market. We continue to look for new and creative ways to reach a broader audience and bring products like the iconic lazy boy recliner into more households.

Bob Lucian: including completing the acquisition of one independent Lazy Boy Furniture Gallery store in the Midwest,

Bob Lucian: For the second quarter, we expect sales to increase modestly versus the first quarter, supported by seasonality, to the range of $495 to $515 million. Further, we expect second quarter non-GAAP operating margin to be in the range of 6-7%.

Speaker Change: For the second quarter, we expect sales to increase modestly versus the first quarter supported by seasonality to the range of $495 million to $515 million.

Bob Lucian: and signing an agreement to acquire another two-store independent dealer in Florida in our second quarter.

Bob Lucian: Our results for the first quarter were in line with our guidance.

Speaker Change: Further we expect second quarter non-GAAP operating margin to be in the range of 6% to 7%.

Melinda Whittington: Another core pillar of our CentriVision strategy to expand lazy boy brand reach is our Long Live the Lazy Brand campaign which is celebrating its one-year anniversary after debuting last August on National Easy Day. One of our initial goals was to enhance unated brand awareness and keep the brand top of mind. A year into the campaign we have been successful in increasing unated awareness, consideration and purchase attempt among those who have seen the Long Live the Lazy campaign and connect it to lazy boy.

Bob Lucian: As we continue to invest in our Century Vision pillar of growing retail, we expect near-term margin compression versus the prior year, primarily driven by expected negative same-store sales trends from the continued challenging demand environment, which will more than offset the margin accretion from new stores and independent La-Z-Boy furniture gallery acquisitions in our retail segment.

Bob Lucian: We were pleased as this came against a consumer backdrop that has become increasingly challenging.

Speaker Change: As we continue to invest in our central vision pillar of growing retail, we expect near term margin compression versus the prior year, primarily driven by expected negative same store sales trends from a continued challenging demand environment, which will more than offset the margin accretion from new stores and independent La Z boy furniture galleries acquisitions in our retail segment.

Speaker Change: Sure.

Bob Lucian: In addition, near-term wholesale margin will be disproportionately affected by challenges in two of our smaller businesses. Case goods, our small import business, is experiencing challenges due to higher container rates, consistent with others across the import industry. Our international wholesale business, Bradley, is also being impacted by a combination of temporary customer disruption, lower consumer demand, and higher container rates. We expect to open 12 to 15 new La-Z-Boy Furniture Gallery stores skewed towards the second half of the year. We also expect our tax rate for the full year to be in the range of 25 and a half to 26 and a half percent.

Bob Lucian: In addition, near-term wholesale margin will be disproportionately affected by challenges in two of our smaller businesses. Case Goods, our small import business, is experiencing challenges due to higher container rates consistent with others across the import industry. Our international wholesale business, broadly, is also being impacted by a combination of temporary customer disruption, lower consumer demand, and higher container rates.

Keith: In addition, near term wholesale margin will be disproportionately affected by challenges in two of our smaller businesses Keith.

Keith: Case goods are small import business is experiencing challenges due to higher container rates consistent with others across the important industry.

Melinda Whittington: Since its introduction, Long Live the Lazy has won numerous awards, including the Drum Awards from Marketing America's, and the best short form video at the L.A, at the Think L.A. Ideal Awards. We've also activated the brand in new ways, including a new Heights podcast sponsorship with Jason and Travis Kelsey, and branded media integrations across Amazon, New York Times, and ESPN.com. Speaking to how Lazy Boy is beloved in consumers' minds, the brand was even recently mentioned in a hit song by Lou Combe. As we move the campaign into its second year, we are focused on broadening the campaign impact to achieve our goal of connecting with an even brighter audience.

Keith: Our international wholesale business broadly is also being impacted by a combination of temporary customer disruption lower consumer demand and higher container rates.

Bob Lucian: We expect to open 12 to 15 new La-Z-Boy furniture gallery stores skewed towards the second half of the year.

Keith: We expect to open 12 to 15, new La Z boy furniture galleries stores skewed towards the second half of the year.

Bob Lucian: We also expect our tax rate for the full year to be in the range of 25.5% to 26.5%. We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in the range of a penny to three cents per share.

Keith: We also expect our tax rate for the full year to be in the range of 25, 5% to 26, 5%.

Bob Lucian: We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in the range of a penny to $0.30 per share. We expect capital spending to be in the range of $70 to $80 million for fiscal 25 as we invest to strengthen the company for the future, consistent with our Century Vision strategy. This includes land and building investments and stores to maintain the growth rate of a retail network. And finally, presuming no significant worsening in macroeconomic trends, we expect to continue sharing purchases at dollar levels, consistent with pre-COVID levels.

Keith: We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in the range of a penny to <unk> <unk> per share.

Bob Lucian: We expect capital spending to be in the range of $70 to $80 million for Fiscal 25 as we invest to strengthen the company for the future, consistent with our Century Vision strategy. This includes land and building investments and stores to maintain the growth rate of our retail network.

Keith: We expect capital spending to be in the range of $70 million to $80 million for fiscal 'twenty five as we invest to strengthen the company for the future consistent with our century vision strategy.

Melinda Whittington: Another focus area for expanding Lazy Boy brand reach is within product development. Our development process is becoming even more consumer-centric, leveraging a data-driven approach. The insights we are gaining are enabling us to develop more consumer-relevant on-trend products in our core-oppostured furniture category, particularly in motion and reclining where we are a market leader. Joy Bird is another core pillar of our century vision, and we are optimizing the brand to deliver a balance of sales growth and profitability.

Keith: This includes land and building investments in stores to maintain the growth rate of our retail network.

Bob Lucian: And finally, presuming no significant worsening in macroeconomic trends, we expect to continue share repurchases at dollar levels consistent with pre-COVID levels.

Keith: And finally presuming no significant worsening in macroeconomic trends, we expect to continue share repurchases of $1 levels consistent with pre COVID-19 levels.

Melinda Whittington: And now I will turn the call back to Melinda.

Bob Lucian: And now I will turn the call back to Melinda.

Keith: And now I will turn the call back to Melinda.

Melinda Whittington: Thanks, Bob. In spite of the challenging industry backdrop, we continue to outperform while also making progress towards achieving our Century Vision goals. Our focus remains on the expansion of our Lazy Boy brand, driving growth of our company on retail segment through execution and new and acquired stores, improving agility across their supply chain, and driving efficiency and margin expansion throughout our business.

Melinda Whittington: Thanks, Bob.

Melinda Whittington: In spite of the challenging industry backdrop, we continue to outperform, while also making progress towards achieving our Century Vision goals.

Melinda Whittington: We are more focused than ever on adapting and improving our business, and I couldn't

Melinda Whittington: In spite of the challenging industry backdrop, we continue to outperform while also making progress towards achieving our century vision goals.

Melinda Whittington: Our focus remains on the expansion of our La-Z-Boy brand, driving growth of our company-owned retail segment through execution and new and acquired stores.

Speaker Change: Our focus remains on the expansion of our lazy Boy brand.

Melinda Whittington: Driving growth of our company owned retail segment through execution, and new and acquired stores.

Melinda Whittington: Our results for the first quarter were in line with our guidance. We were pleased as this came against a consumer backdrop that has become increasingly challenging.

Melinda Whittington: We were pleased that written sales trends were positive in the quarter, and operating performance improved from prior year. With 12 stores currently open in major metro markets, the digitally native e-commerce brand is benefiting from the halo effect of stores in key markets. We have identified the potential to grow to 25 locations over the intermediate term, with our expansion pace depending on opportunities in real estate and overall market conditions. We continue to believe in the long-term growth prospects of the brand, as Joy Bird has a considerable opportunity to expand market share, and we will continue to make prudent investments to position it for long-term success.

Melinda Whittington: be more proud of our resilient sales teams and our increasingly agile supply chain demonstrating

Melinda Whittington: our ability to deliver a truly enriching experience for consumers in transforming their homes.

Melinda Whittington: Improving Agility Across Their Supply Chain, and driving efficiency and margin expansion throughout our business, we are well positioned to disproportionately benefit when industry fundamentals improve.

Melinda Whittington: Improving agility across our supply chain.

Melinda Whittington: And driving efficiency and margin expansion throughout our business, we are well positioned to disproportionately benefit when industry fundamentals improve.

Melinda Whittington: We are well positioned to disproportionately benefit when industry fundamentals improve.

Melinda Whittington: Before I conclude, I would like to thank the entire Lazy Boy Incorporated team for their ongoing hard work and dedication. And I look forward to speaking with you all again in the fall, and I wish you a great end of summer.

Melinda Whittington: Before I conclude I would like to thank the entire lazy boy incorporated team for their ongoing hard work and dedication.

Melinda Whittington: And I look forward to speaking with you all again in the fall, and I wish you a great end of summer.

Melinda Whittington: And I look forward to speaking with you all again in the fall and I wish you a great end of summer.

Melinda Whittington: Now, let me turn the call back to Mark.

Mark Becks: Now, let me turn the call back to Mark. Thank you, Melinda.

Mark: Now, let me turn the call back to Mark Thank.

Mark Becks: Thank you, Melinda.

Mark: Thank you Melinda we will begin the question and answer period now.

Mark Becks: We will begin the question and answer period now.

Operator: Kelly, please review the instructions for getting into the queue to ask questions. Certainly, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speaker phone to provide optimum sound quality. Please hold just a few moments while we pull for questions.

Mark: Ali.

Ali: Please review the instructions for getting into the queue to ask questions.

Melinda Whittington: We are more focused than ever on adapting and improving our business, and I couldn't be more proud of our resilient sales teams and our increasingly agile supply chain demonstrating our ability to deliver truly enriching experience for consumers in transforming their homes.

Melinda Whittington: Strengthening our foundational capabilities, including building a more dynamic supply chain, is our final pillar of century vision. We are making steady progress improving the agility of our business model by better optimizing our global supply chain operations. As we mentioned in last quarter's call, we are prudently managing the consolidation of our cut and sew operations in Mexico to optimize costs while ensuring no service disruptions. In this challenging global landscape, we view our North American manufacturing footprint as a key differentiator in our ability to manufacture high quality, comfortable, custom furniture with quick speed to market.

Mark Becks: We will begin the question and answer period now.

Ali: Certainly the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question. Please pickup your handset up listing on a speaker phone to provide the optimum sound quality. Please hold just a few moments while we poll for questions.

Mark Becks: Please review the instructions for getting into the queue to ask questions.

Mark Becks: Certainly.

Alessandra Jimenez: Your first question is coming from Bobby Griffin with Raymond James. Please pose your question. Your line is... and his life.

Speaker Change: Your first question is coming from Bobby Griffin with Raymond James. Please pose your question your line is live.

Mark Becks: The floor is now open for questions.

Mark Becks: The furniture industry remains challenged.

Alessandra Jimenez: Good morning. This is Alessandra Jimenez on for Bobby Griffin. Thank you for taking our questions. First, I just wanted to ask about traffic trends that retail during the quarter of into August. Did you see any notable differences in monthly traffic trends, or is the improved demand during the holiday promotional period mainly a function of increased conversion rates?

Mark Becks: If you have any questions or comments, please press star 1 on your phone at this time.

Mark Becks: Structural headwinds of elevated mortgage

Alexandra <unk>: Good morning. This is Alexandra <unk> on for Bobby Griffin. Thank you for taking our questions first I just wanted to ask about traffic trends at retail during the quarter into August did you see any notable differences in monthly traffic trends or is the improved demand during the holiday promotional period, mainly a function of increased conversion rates.

Mark Becks: rates and high housing costs, and global geopolitical and economic uncertainty continue to dampen

Mark Becks: big ticket purchases.

Mark Becks: We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality.

Mark Becks: Nevertheless, our recent quarter again illustrates that an iconic brand

Mark Becks: amplified by strong execution and operational agility can still drive business growth even

Mark Becks: with this backdrop.

Mark Becks: Further, we are optimistic that expected Fed rate cuts later this calendar

Mark Becks: demand.

Mark Becks: year will begin to spur an acceleration in housing turnover and subsequently in furniture

Melinda Whittington: The furniture industry remains challenged. Structural headwinds of elevated mortgage rates and high housing costs and global geopolitical and economic uncertainty continue to dampen big-ticket purchases.

Melinda Whittington: As we enter our second quarter, we expect a continued challenging macro environment for the remainder of the fiscal year. However, we remain optimistic about our ability to continue to outperform the market while investing in our business through our century vision so that when trends rebound, we can disproportionately benefit. We once again made strong progress in the quarter, and we look forward to continuing to make century vision a reality.

Melinda Whittington: Nevertheless, our recent quarter again illustrates that an iconic brand amplified by strong execution and operational agility can still drive business growth even with this backdrop.

Melinda Whittington: Yeah, broadly, traffic remains challenged. And I think you hear that across all of the virtually all of the companies that have reported recently. What we definitely see is traffic strengthening around those major holidays. For us, Memorial Day is always one of our biggest holidays of the year, and we saw stronger traffic trends. And then, of course, we do a really nice job in our stores of converting once people are in the door.

Speaker Change: Yes broadly traffic remains challenged and I think I think you hear that across all of the.

Speaker Change: Virtually all of the companies that have reported recently, what we definitely see is traffic strengthening around those major holidays for.

Mark Becks: Meanwhile, we're not waiting for the macro

Mark Becks: environment to turn around.

Melinda Whittington: Further, we are optimistic that expected fed rate cuts later this calendar year will begin to spur an acceleration in housing turnover and subsequently in furniture demand.

Mark Becks: We continue to play offense with our century vision strategy,

Speaker Change: For US Memorial day is always one of our biggest holidays of the year and we saw stronger traffic trends and then of course, we do a really nice job in our stores of converting.

Mark Becks: offering tangible solutions to drive disproportionate growth over the long term and to consistently

Bob Lucian: Now let me turn the call over to Bob to review the results in more detail, Bob.

Mark Becks: gain share in the fragmented furniture and home furnishings market.

Mark Becks: Recapping our first quarter written sales trends, total written sales for our company-owned

Mark Becks: Same-store sales were strongest early in the quarter around key Memorial Day events and

Mark Becks: retail segment increased 4% versus last year's first quarter.

Mark Becks: softened towards the end of the quarter as consumers continued the pattern of pulling

Mark Becks: Written same-store sales for

Mark Becks: our company-owned retail segment in the first quarter declined 3% versus the prior year.

Melinda Whittington: Meanwhile, we're not waiting for the macro environment to turn around. We continue to play offense with our Central Vision strategy, offering tangible solutions to drive disproportionate growth over the long term and to consistently gain share in the fragmented furniture and home furnishings market. Recapping our first quarter written sales trends, total written sales for our company-owned retail segment increased 4% versus last year's first quarter.

Bob Lucian: Thank you Melinda and good morning everyone. As a reminder, we present our results on both a gap and non-gap basis. We believe the non-gap presentation better reflects underlying operating trends and performance of the business. Non-gap results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slide. On a consolidated basis, fiscal 2025, those quarter sales increased 3% to $496 million versus the prior year, primarily driven by higher delivered volume within our wholesale segment.

Speaker Change: Once people are in the door.

Mark Becks: back spending outside of key holidays.

Melinda Whittington: Fourth of July isn't just traditionally not as big of a holiday for us, but we also saw more challenge traffic trends. And I think, across most of the industry, folks experienced a more challenged July. And so it remains somewhat volatile. And we certainly see people focusing more on holidays and events and deeper traps in between.

Speaker Change: Fourth of July isn't.

Speaker Change: Traditionally as not as big of a holiday for us, but we also saw more challenged traffic trends and then I think across most of the industry folks experienced a more challenged July.

Mark Becks: Our stores continue to execute very well with

Mark Becks: conversion rates and design average ticket both improving year-over-year.

Mark Becks: However, this

Speaker Change: And so it.

Speaker Change: It remains somewhat volatile.

Speaker Change: And we certainly see people focusing more on holidays and events and deeper chops in between.

Alessandra Jimenez: Okay, that's helpful.

Speaker Change: Okay. That's helpful and then switching gears a bit specifically as it relates to margin how is the restructuring process progressing today do you still expect to achieve 50 to 60 basis points of improvement in wholesale beginning in <unk> from the restructuring and then that'll be offset by the previously mentioned pressure to case goods and international.

Mark Becks: has only been able to offset a portion of the continuing double-digit year-over-year

Bob Lucian: Consolidated gap operating income was $32 million and non-gap operating income was $33 million, a decrease of 3% versus last year's first quarter. Consolidated gap operating margin was 6.5%, and non-gap operating margin was 6.6% reflecting a 40 basis point decline versus last year due to reduced fixed cost leverage within our retail segment, partially offset by gross margin expansion. Gap diluted EPS was 61 cents for the first quarter versus 63 cents on the prior year quarter. Non-gap diluted EPS was 62 cents which was unchanged versus last year.

Mark Becks: traffic declines experienced across our industry.

Mark Becks: Written same-store sales for the entire Lazy

Mark Becks: Boy Furniture Gallery's network of 356 stores also declined 3% versus the prior year.

Mark Becks: According to the U.S. Census Bureau data, the furniture and home furnishings industry

Mark Becks: also declined 3% for our fiscal first quarter with our company-owned Lazy Boy Furniture

Mark Becks: Gallery's same-store sales outperforming the industry in the first two months of our quarter.

Mark Becks: Turning to Joybird, written sales increased 9% versus a year ago driven by execution across

Mark Becks: the 12-store network compared to 10 stores for most of the prior year quarter.

Melinda Whittington: The case goes in international wholesale or how should we think about margin? We're making progress against that 50 to 60 basis points. There's been some delay relative to the work we're doing down in Mexico and getting people's hired and up to speed from a quality perspective and a productivity perspective. I expect to get to that 50 to 60 basis points by the end of the fiscal year. It will just slowly improve from Q to Q to Q for.

Speaker Change: Wholesale or Howard how should we think about margin.

Speaker Change: We're making progress against that 50% to 60 basis points, there's been some delay relative to the work, we're doing down in Mexico, and getting folks hired and up to speed from a quality perspective, and a productivity perspective, I expect to get to that 50 to 60 basis points by the end of the fiscal year.

Speaker Change: It will slowly improve from Q2 to Q3 to Q4.

Bob Lucian: As I move to the segment discussion, my comments from here will focus on our non-gap reporting unless specifically stated otherwise. Starting with the retail segment for the quarter, delivered sales were $202 million, a 3% decrease over the prior year's first quarter, as the prior year benefited from the delivery of residual backlog related to component shortages. Retail non-gap operating margin decreased to 10.3% versus 14.1% in the prior year quarter. This is driven by fixed cost due leverage on lower delivered sales and fixed cost increases supporting our long-term strategy of growing our retail business through new and acquired stores.

Alessandra Jimenez: Okay, that's helpful.

Speaker Change: Okay. That's helpful and then lastly for me.

Melinda Whittington: And then lastly for me, have your advertising plans changed at all given the current demand backdrop from where you thought it would be starting the fiscal year? Yeah, it's, I mean, it's an ongoing balance of the equation, right? We want to make sure we're out there. We believe in our long live the lazy campaign and the strength of our brand. And so you need to be out there. But at the same time, particularly in these summer months, and look where the consumer is right now. Sometimes, you know, you can be speaking, but nobody's listening. So we're kind of continuously optimizing where we're spending and how much we're spending as we go through these challenging times.

Speaker Change: Have your advertising plans changed at all given the current demand backdrop from where you thought it would be starting the fiscal year.

Melinda Whittington: Written, same store sales for our company on retail segment in the first quarter declined 3% versus the prior year. Same store sales were strongest early in the quarter around key memorial day events and soften towards the end of the quarter as consumers continued the pattern of pulling back spending outside of key holidays.

Speaker Change: Yes, I mean, it's an ongoing balance of vehicle Asia III, we want to make sure. We're out there we believe in our long lived the lazy campaign and the strength of our brand and so you need to be out there.

Melinda Whittington: Our stores continue to execute very well with conversion rates and design average ticket both improving year over year.

Speaker Change: But at the same time, particularly in the summer months and with where the consumer is right now sometimes you can be speaking, but nobody is listening. So we're kind of continuously optimizing.

Melinda Whittington: However, this has only been able to offset a portion of the continuing double-digit year over year traffic declines experienced across our industry.

Speaker Change: We're spending and how much we're spending as we go through these these.

Bob Lucian: Gross margin was roughly flat year over year. For our whole sales segment, delivered sales to the quarter increased to $351 million up 5% versus the prior year period. The increase was attributed to higher delivered volume to external customers partially offset by lower intercompany sales to our retail segment and lower delivered volume in our case goods business. Non-gap operating margin for the whole sales segment was 6.9% versus 6.8% in last year's first quarter.

Speaker Change: Challenging challenging times.

Alessandra Jimenez: Thank you so much.

Speaker Change: Thank you so much.

Brad Thomas: Your next question is coming from Brad Thomas with Keyback. Please pose your question. Your mind is live.

Speaker Change: Your next question is coming from Brad Thomas with Keybanc. Please pose your question your line is live.

Mark Becks: Please hold just a few moments while we poll for questions.

Taylor: Hey, good morning.

Operator: Your first question is coming from Bobby Griffin with Raymond James.

Speaker Change: Hey, Good morning. This is Taylor on for Brad.

Taylor: This is Taylor on for Brad. Maybe if we could just start on the competition or the competitive landscape. What do you sing in terms of competition within the space in terms of pricing and promotions? And I guess related to that, there's been a number of bankruptcy and store closures in the space. You know, what are your some of your thoughts there as it relates to potentially getting some share? Yeah, so a couple of thoughts on that. You know, as you mentioned, super fragment and market both amongst retailers and amongst manufacturers and wholesalers in our space.

Operator: Joybird

Operator: operating performance again made meaningful progress against the prior comparable period

Taylor: Maybe if I could just start on the competition or the competitive landscape.

Operator: Please pose your question.

Operator: as the brand focuses on balancing sales growth and profitability.

Melinda Whittington: Melinda what are you seeing in terms of competition within the space in terms of.

Speaker Change: Pricing and promotions and I.

Speaker Change: I guess related to that there's been a number of bankruptcies and store closures in the space.

Bob Lucian: If driven by gross margin expansion, primarily from reduced commodity prices, improved sourcing and favorable duty expense, partially offset by an unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin and products sold to furniture galleries. Joybre delivered sales, reported in corporate and other were $35 million down 3% versus the prior year period. Surebid operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Speaker Change: What are your some of your thoughts there as it relates to potentially gaining some share.

Operator: Looking to the longer term, I want to spend a few minutes on our progress during the quarter

Operator: to strengthen our enterprise.

Operator: Your line is now open.

Speaker Change: Yeah. So.

Operator: Recall, Century Vision is our strategic framework, setting up La-Z-Boy Inc. for our next hundred

Operator: years as we celebrate our first century in 2027.

So couple of thoughts on that as you mentioned super fragmented market, both amongst retailers and amongst manufacturers and wholesalers in our space and these.

Alejandra Jimenez: Good morning.

Alejandra Jimenez: This is measured by our intention to grow top line at a pace double the market and deliver

Alejandra Jimenez: consistent double digit operating margins over the long term.

Alejandra Jimenez: This is Alejandra Jimenez on for Bobby Griffin.

Alejandra Jimenez: The furniture and home furnishings category is highly fragmented.

Melinda Whittington: And you know, these times, you know, of sort of, you know, all the disruption in the last couple of years has made that very hard for a lot of folks to navigate with all the puts and takes. And so we've seen quite a few folks exit the market in one way or another. And Bradley, I would say that is, that is a great opportunity for us. And we have seen that where it's an opportunity to take share in general in our industry. I think, you know, you see more consolidation through those type of opportunities than you do from, you know, very successful sort of big acquisitions and that type of thing.

Alejandra Jimenez: Thank you for taking our questions.

Alejandra Jimenez: First, I just wanted to ask about traffic trends at retail during the quarter and into August.

Speaker Change: These times.

Speaker Change: Sort of all the disruption in the last couple of years has made that very hard for a lot of folks to navigate.

Speaker Change: Now with all the puts and takes and so we've seen quite a few folks exit the market in one way or another and broadly I would say that is that that is a great opportunity for us and we have seen that where its an opportunity to take share in general in our industry.

Bob Lucian: On a consolidated basis, non-gap gross margin improved once again across all reportable segments and for the entire company increased by 40 basis points versus the prior year first quarter. Gross Margin Expansion was attributed to lower input costs from reduced commodity prices and improved sourcing, partially offset by a shift and consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment. Non-Gap S-GNA as a percentage of sales for the quarter, increased by 80 basis points compared with the same period last year, primarily due to lower leverage on delivered sales relative to fixed costs within our retail segment.

Alejandra Jimenez: As one of the largest brands in the United States but with only roughly a 5% market share,

Alejandra Jimenez: we are well positioned to continue to strategically grow our business.

Alejandra Jimenez: We have consistently expanded La-Z-Boy's brand reach over the last several quarters.

Alejandra Jimenez: Our total furniture galleries network ended the quarter with 356 stores and our retail

Alejandra Jimenez: segment, comprised of the company owned portion of those stores, increased to 188 stores,

Alejandra Jimenez: up 13 from the prior year.

Alejandra Jimenez: Company owned stores now represent 53% of all La-Z-Boy furniture galleries.

Alejandra Jimenez: Growing our company owned stores is important as it gives us the greatest opportunity to

Alejandra Jimenez: delight the consumer by controlling the end to end experience, which features comfortable

Alejandra Jimenez: and customized upholstery with quick delivery.

Speaker Change: You see more consolidation through those type of opportunities than you do from very successful sort of big acquisitions in that type of thing and we certainly our sales teams, particularly on our wholesale businesses are mobilized around being able to offer.

Melinda Whittington: And we certainly, our sales teams, particularly on our wholesale businesses, are mobilized around being able to offer a, you know, a strong supply base when some of those suppliers are going on a business. So that has definitely benefited our business. And part of our agility is being ready to help offer those solutions to both V2B customers and to wholesale. And then also to consumers, you know, as some retailers drop out. So definitely an opportunity there. Tough thing for the industry, of course. And again, you know, the fact that we have a very strong balance sheet and we're here to stay.

Speaker Change: A strong supply base when some of those suppliers are going out of business. So that has definitely benefited our business and part of our agility as being ready to help offer those solutions to both <unk> customers and to wholesale.

Speaker Change: And then also to consumers.

Speaker Change: Retailers drop out.

Speaker Change: So definitely an opportunity there testing for the industry of course and again. The fact that we have a very strong balance sheet and we are here to stay.

Melinda Whittington: Benefits us right in that space. Relative to pricing, you know, input costs are still up pretty significantly versus pre-pandemic. And so, you know, we have not seen a lot of sort of, you know, crazy, crazy attempts to really drop prices. We certainly continue to watch those opening price points because the consumer is challenged, and they may just simply decide not to go into that discretionary purchase. But broadly not seeing, again, there's always the, there's always the holiday events to drive to drive activity. But we're not seeing anything real dramatic there. In fact, given that quite a bit of our business is supplied by importers, you know, container rate hikes have actually caused some companies to actually raise their prices in the last quarter or so.

Speaker Change: Benefits us in that in that space.

Speaker Change: Relative to pricing.

Speaker Change: Input costs are still up pretty significantly versus pre pandemic and so we have not seen a lot of sort of <unk>.

Speaker Change: Crazy Crazy attempts to really drop prices, we certainly continue to watch those opening price points because the consumer is challenged and they may just simply decide not to go into that discretionary purchase but broadly not seeing again, there's always there's always a holiday events.

Alejandra Jimenez: Did you see any notable differences in monthly traffic trends or is the improved demand during the holiday promotional period mainly a function of increased conversion rates?

Bob Lucian: Turning to cash, we ended the quarter with a strong balance sheet with $342 million in cash and no externally funded debt. We generated $52 million in cash from operating activities in the quarter versus $26 million in the prior year. The improvement was mainly due to a decrease in receivables and an increase in customer deposits resulting from higher written sales versus year ago. We spent $16 million in capital expenditures during the quarter, primarily related to retail store openings and remiles and upgrades at manufacturing facilities in our market showrooms.

Melinda Whittington: Yeah, broadly traffic remains challenged.

Melinda Whittington: And I think I think you hear that across, you know, all of the virtually all of the companies that have reported recently, what we definitely see is traffic strengthening around those major holidays.

Speaker Change: Events to drive to drive activity, where we're not seeing anything real dramatic there in fact, given that quite a bit of our business is supplied by importers container.

Melinda Whittington: For us, Memorial Day is always one of our biggest holidays of the year. And we saw stronger traffic trends.

Bob Lucian: We also spent $7 million on acquisitions during the quarter. For the quarter, we returned approximately $42 million to shareholders via dividends and share repurchases, including $8 million paid in dividends. We repurchased $933,000 shares in the market in the quarter, which leads 4.7 million shares available under our existing share repurchase authorization. We continued to view share repurchases and dividends as an attractive use of our cash and positive return to shareholders. Our capital allocation target is to reinvest 50% of operating cash flow back into the business and return 50% approximately to shareholders and share repurchases and dividends over the long term. In fiscal 2024, our capital allocation was 52% reinvested into the business and 48% returned to shareholders.

Speaker Change: Container rate hikes have actually caused some southern company has to actually raise their prices in the last quarter or so and Thats something we haven't really had to do are needed to do given our primarily north American base footprint with the exception of in our case goods business as we alluded to.

Melinda Whittington: And that's something we haven't really had to do or needed to do, given our primarily North American-based footprint, with the exception of, you know, in our case goods business, as we alluded to.

Melinda Whittington: Our North American manufacturing footprint enables us to deliver custom furniture in

Melinda Whittington: less than eight weeks to the consumer and benefits us financially with the strength

Melinda Whittington: of our vertically integrated model.

Melinda Whittington: We see opportunity to grow the total La-Z-Boy furniture galleries network to approximately

Taylor: Great. That's that's super helpful.

Melinda Whittington: And then of course, we do a really nice job in our stores of converting once you know, once people are in the door.

Speaker Change: Great that's super helpful.

Melinda Whittington: Fourth of July traditionally is not as big of a holiday for us, but we also saw more challenged traffic trends, and I think across most of the industry, folks experienced a more challenged July.

Bob Lucian: And then maybe one for Bob, I guess in the retail margin side, you know, one Q was down about 400 basis points or so, and I understand one Q is usually the weakest quarter of the year. But how should we be thinking about the retail margins as we move throughout the year? And then, you know, maybe what your thoughts are longer term for that segment? Longer term for the segment we expect to get ourselves as the industry comes back and we get to back to what we expect to do on a regular basis, which is positive same store comes.

Speaker Change: And then maybe one for Bob I guess on the retail margin side.

Speaker Change: <unk> was down.

Speaker Change: About 400 basis points or so I understand <unk> is usually the weakest quarter of the year, but how should we be thinking about the retail margins as we move throughout the year and then.

Speaker Change: Maybe what you what your thoughts are longer term for that segment.

Speaker Change: Longer term for this segment, we expect to get ourselves.

Melinda Whittington: 400 stores over the next several years and see meaningful opportunity to expand the company

Speaker Change: As the industry comes back and we get to back to what we expect to do on a regular basis, which is positive same store comps, we expect that business to be in the mid teens. So that's it and that's our long term plan and we continue.

Bob Lucian: We expect that that business to be in the mid teens. So that's and that's our long term plan, and we that will be continue to be what we're focused against. In the short term, the margin that we saw this this typically as you mentioned, Q1 is our lowest margin period. We would expect to see that. and slowly improve and accelerate as we get into the back half of the year. We're typically Q3 and Q4. It has the highest margins for our retail segment because that's where you see the highest level of both sales and deliveries for the furniture industry.

Bob Lucian: Before we turn to call back to Melinda, let me highlight several important items for fiscal 2025 and our second quarter. Consistent with our century vision strategy, we continued to target sales growth double the industry growth rate and double digit operating margins over the long term with the benefit of more normalized industry growth rates. Looking forward, we expect the industry to continue to be challenged. Consistent with recent comments from furniture retailers pointing to subdued demand and potential recovery coming later than expected, we now believe the industry may be down even more than the zero to negative 5% range estimate we previously anticipated for our fiscal year in total.

Speaker Change: We continue to be what we're focused against in the short term the margin that we saw this this tip.

Melinda Whittington: And so it remains somewhat volatile, and we certainly see people focusing more on holidays and events and deeper chops in between.

Typically you guys. You mentioned Q1 is our lowest margin period.

Melinda Whittington: With our company-owned lazy boy furniture galleries same store sales outperforming the industry in the first two months of our quarter.

Speaker Change: We would expect to see that.

Melinda Whittington: Okay, that's helpful.

Speaker Change: Slowly improve and accelerate as we get into the back half of the year, where typically Q3 and Q4 has the highest margins for our retail segment, because that's where you see the highest level of.

Speaker Change: Both sales and deliveries for the furniture industry.

Bob Lucian: Great, thanks, Bob. And then, if I could sneak one more in, you know, you had a pretty good result within the wholesale segment: you know, 8% increase in the sales to external customers. Can you unpack that a little bit more for us to kind of understand that improvement? Yeah, and I think it's 5% total sales for wholesale. Yeah, but yeah, so the big thing that is driving that, of course, our wholesale business is supporting, you know, our company-owned retail, our independently owned furniture galleries, and then our general dealers, which are, you know, multi-brand customers that take, you know, that take a decent amount of our product as well to get to a broad array of consumers.

Alejandra Jimenez: And then switching gears a bit, specifically as it relates to margins, how is the restructuring process progressing today?

Speaker Change: Great. Thanks, Thanks, Bob and then if I could sneak one more in.

Alejandra Jimenez: Do you still expect to achieve 50 to 60 basic points of improvement in wholesale beginning in 2Q from the restructuring?

Speaker Change: You had pretty good results within the wholesale segment, 8% increase in sales to external customers can you unpack that a little bit more for us.

Alejandra Jimenez: And then that will be offset by the previously mentioned pressure to case goods and international wholesale?

Alejandra Jimenez: Or how should we think about margins?

Melinda Whittington: We're making progress against that 50 to 60 basis points.

Bob Lucian: Against that backdrop, we expect to continue to offer the market throughout fiscal 2025, similar to our performance in fiscal 2024. For the second quarter, we expect sales to increase modestly versus the first quarter, supported by seasonality to the range of $495 to $515 million. Further, we expect second quarter non-gap operating margin to be in the range of 6 to 7%. As we continue to invest in our Century Vision pillar of growing retail, we expect near-term margin compression versus the prior year, primarily driven by expected negative same-store sales trends from the continued challenging demand environment, which will more than offset the margin accretion from new stores and independent, lazy boy furniture galleries, acquisitions in our retail segment.

Speaker Change: Understand that that improvement.

Melinda Whittington: There's been some delay relative to the work we're doing down in Mexico and getting folks hired and up to speed from a quality perspective and a productivity perspective.

Melinda Whittington: I expect to get to that 50 to 60 basis. By the end of the fiscal year, it will slowly improve from Q2 to Q3 to Q4.

Melinda Whittington: Okay, that's helpful.

Speaker Change: Yeah.

Speaker Change: And I think it was 5% sales and total sales for wholesale yes, but yes. So the big thing that is driving that of course, our wholesale business is supporting our company owned retail are independently owned furniture galleries, and then our general dealers, which are in our multi brand customers.

Alejandra Jimenez: And then lastly for me, have your advertising plans changed at all given the current demand backdrop from where you thought it would be, you know, starting the fiscal year?

Alejandra Jimenez: Yeah, it's I mean, it's an ongoing balance of the equation, right?

Speaker Change: They take a decent amount of our product as well to get to a broad array of consumers what.

Bob Lucian: What we saw in this first quarter is those external customers really starting to come back, whereas last year that was still a much more depressed business. So we've seen, you know, sort of sequential strengthening in our retail, even through, you know, the challenging last two years. Those external customers took a little bit longer to come back, and so you're really seeing the benefit of that here in this first quarter. And then the one thing that we'd add to that is just the mental dimension, our channel strategy relative to expanding and getting our product available in more stores, including adding new customers like you, for example, what we specifically mentioned Rooms To Go, but there's been some others we've added.

Speaker Change: What we saw in this first quarter.

Speaker Change: Is those those external customers really starting to come backwards last year that was still a much more depressed business. So we've seen sort of sequential strengthening in our retail even through the challenging last two years.

Bob Lucian: In addition, near-term wholesale margin will be disproportionately affected by challenges in two of our smaller businesses. Case goods, our small import business, is experiencing challenges due to higher container rates, consistent with others across the import industry. Our international wholesale business, Bradley, is also being impacted by a combination of temporary customer disruption, lower consumer demand and higher container rates. We expect to open 12 to 15 new lazy boy furniture gallery stores skewed towards the second half of the year.

Speaker Change: Those external customers took a little bit longer to come back and say, you're really seeing the benefit of that here in this first quarter.

Speaker Change: And then the one thing I would add to that is just the mix.

Manuel: Manuel you mentioned, our channel strategy relative to expanding and getting our product available in more stores, including.

Alejandra Jimenez: owned portion of the network through new store growth and acquisitions.

Alejandra Jimenez: To this point, we acquired one store during the first quarter and we recently signed an

Alejandra Jimenez: agreement to acquire an additional two store network from an independent dealer in Florida

Manuel: Adding new customers like <unk> for example, where we specifically mentioned rooms to go with there has been some others. We've added those have also helped to increase the wholesale segment sales.

Bob Lucian: Those have also helped to increase the wholesale segment sales.

Bob Lucian: We also expect our tax rate for the full year to be in the range of 25 and a half to 26 and a half percent. We anticipate non-gap adjustments for purchase accounting charges for the year to be in the range of a penny to $0.3 per share. We expect capital spending to be in the range of $70 to $80 million for fiscal 25 as we invest to strengthen the company for the future consistent with our Century Vision strategy.

Taylor: Great. Thanks so much.

Speaker Change: Great. Thanks, so much.

Anthony Lebedinsky: Your next question is coming from Anthony Lebedinsky with Cedodian Company. Please pose your question. Your line is live.

Melinda Whittington: We want to make sure we're out there.

Speaker Change: Your next question is coming from Anthony <unk> with Sidoti <unk> Company. Please pose your question. Your line is open.

Melinda Whittington: We believe in our long live the lazy campaign and the strength of our brand.

Melinda Whittington: And so you need to be out there.

Melinda Whittington: But at the same time, particularly in these summer months, and with where the consumer is right now, sometimes, you know, you can be speaking, but nobody's listening.

Melinda Whittington: So we're, we're kind of continuously optimizing, you know, where we're spending and how much we're spending as we go through these, these, you know, challenging, challenging times.

Anthony Lebedinsky: Yes. Good morning, and thank you for taking the questions. So first I just wanted to follow up on the last one here as far as the wholesale segment. So, you know, what's driving that actually as far as what would you attribute the wholesale channel actually picking up their sales actually. I guess maybe if you could, I don't know if you could. There's only way you can quantify as far as on the same store, or I know you're adding some new customers. So maybe if you could just, you know, if there was a way you could parse out like, you know, how much of that is coming from you.

Anthony: Yes, good morning, and thank you for taking the questions. So first I just wanted to follow up on the last one here as far as the wholesale set.

Alejandra Jimenez: Thank you so much.

Anthony: Figment.

Operator: Your next question is coming from Brad Thomas with KeyBank.

Bob Lucian: This includes land and building investments and stores to maintain the growth rate of a retail network. And finally, presuming no significant worsening in macroeconomic trends, we expect to continue sharing purchases at dollar levels, consistent with pre-COVID levels.

Operator: Please post your question, your line is live.

Speaker Change: So whats driving that actually as far as what would you attribute the wholesale channel actually picking up.

Operator: Hey, good morning.

Taylor: This is Taylor on for Brad.

Their sales actually.

Taylor: Maybe if we could just start on the competition or the competitive landscape.

Speaker Change: I guess, maybe if you can.

Speaker Change: Great.

Speaker Change: So any way you can quantify as far as on a same.

Melinda Whittington: And now I will turn the call back to Melinda. Thanks, Bob.

Taylor: Melinda, what are you seeing in terms of competition within the space in terms of pricing and promotions?

Speaker Change: Store or.

Taylor: And I guess related to that, there's been a number of bankruptcies and store closures in the space.

Taylor: You know, what are some of your thoughts there as it relates to potentially gaining some share?

Speaker Change: I know, you're adding some new customers. So maybe if you could just.

Melinda Whittington: Turning to Joybird, Written sales increased 9% versus a year ago driven by execution across the 12 store network compared to 10 stores for most of the prior year quarter.

Melinda Whittington: In spite of the challenging industry backdrop, we continue to outperform while also making progress towards achieving our Century Vision goals. Our focus remains on the expansion of our lazy boy brand, driving growth of our company on retail segment through execution and new and acquired stores, improving agility across their supply chain, and driving efficiency and margin expansion throughout our business. We are well positioned to disproportionately benefit when industry fundamentals improve.

Melinda Whittington: Yeah, so a couple of thoughts on that.

Speaker Change: So it was a way you could parse out like how.

Speaker Change: How much of that is coming from from new.

Melinda Whittington: Joybird operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability.

Bob Lucian: The wholesale dealers versus organic and what are the main reasons for that? Yeah, we don't have a way to parse that out the way you're looking for, Anthony, but the two things that we just mentioned is one, the new customers that you just talked about; in fact, we're now have distribution and more customers and more stores. We're not specifically calling out how many specific stores there are because we're also, you know, the wholesale markets are very large markets. So we're losing some mom-and-pops, and we're adding customers like Rooms to Go or furniture or etc. So, but that's one component.

Melinda Whittington: You know, as you mentioned, super fragmented market, both amongst retailers and amongst manufacturers and wholesalers in our space.

Our wholesale dealers versus organic.

Melinda Whittington: And we've seen quite a few folks exit the market in one way or another.

Melinda Whittington: And broadly, I would say that is a great opportunity for us.

Speaker Change: What are the main reasons for that.

Melinda Whittington: And we have seen that where it's an opportunity to take share in general in our industry.

Melinda Whittington: I think, you know, you see more consolidation through those type of opportunities than you do from, you know, very successful sort of big acquisitions and that type of thing.

Speaker Change: We don't have a way to parse that out the way you are looking for Anthony but the two things that we just mentioned is one of the new customers that you just talked about and the fact that we're now have distribution in more customers or more stores, we're not specifically calling out how many specific stores or art because we're also very careful.

Melinda Whittington: Looking to the longer term, I want to spend a few minutes on our progress during the quarter to strengthen our enterprise.

Melinda Whittington: Recall, Century Vision is our strategic framework, setting up lazy boy incorporated for our next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace double the market and deliver consistent double digit operating margins over the long term. The furniture and home furnishing category is highly fragmented.

Melinda Whittington: Before I conclude, I would like to thank the entire lazy boy incorporated team for their ongoing hard work and dedication.

Speaker Change: Wholesale market is a very large market. So we're losing some mom and pops and we're adding customers like rooms to go refer to row et cetera. So.

Melinda Whittington: So that has definitely benefited our business.

Melinda Whittington: And I look forward to speaking with you all again in the fall, and I wish you a great end of summer.

Speaker Change: But thats one component.

Melinda Whittington: And part of our agility is being ready to help offer those solutions to both B2B customers and to wholesale, and then also to consumers, you know, as some retailers drop out.

Bob Lucian: The other component that Melinda alluded to was back a year ago; that market was still depressed. If you will, the wholesale market was depressed. The customers were still getting rid of their inventory, and they hadn't gotten back to normal order rates on a year-over-year basis. Now, this past quarter, they're back to those normal order rates versus what I would call a weaker base. So a combination of those two things is what was driving the growth over this past quarter versus year ago.

Melinda Whittington: So definitely an opportunity there, tough thing for the industry, of course.

Melinda Whittington: Relative to pricing, you know, input costs are still up pretty significantly versus pre-pandemic.

Speaker Change: The other component that Melinda alluded to was back a year ago.

Melinda Whittington: And again, you know, the fact that we have a very strong balance sheet and we're here to stay benefits us, right, in that space.

Melinda Whittington: And so, you know, we have not seen a lot of sort of, you know, crazy, crazy attempts to really drop prices.

Melinda Whittington: We certainly continue to watch those opening price points because the consumer is challenged and they may just simply decide not to go into that discretionary purchase.

Mark Becks: Now, let me turn the call back to Mark. Thank you, Melinda.

Melinda Whittington: But broadly not seeing, again, there's always the holiday events to drive activity, but we're not seeing anything real dramatic there.

Speaker Change: Market was still depressed if you will the wholesale market was depressed because our customers were still getting rid of their inventory and they haven't gotten back to normal order rates on a year over year basis now.

Operator: We will begin the question and answer period now. Kelly, please review the instructions for getting into the queue to ask questions. Certainly, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speaker phone to provide optimum sound quality. Please hold just a few moments while we pull for questions.

Speaker Change: Our past quarter, they're back to those normal order rates versus what I would call a weaker base through a combination of those two things is what was driving the growth over this past quarter versus year ago.

Melinda Whittington: I would just build two additional items on that external side of things. You know, we tend to talk about some of our newer customers. But as we really focus on strategic partners, you know, we've got some real successes with some of our long time customers like the Flumberlands of the world that are strong customers for us, and we're really working at how we strategically grow our businesses together. As well as really sharpening our execution on comfort studios, so that's our store within the store concept. And over the last year or so, even with long little lazy coming out, we are sharpening execution in those branded spaces across the existing network and expanding that network so that the brand really comes through and feels very consistent.

Speaker Change: I would just build two additional items on the external side of things we tend to talk about some of our newer customers.

Operator: Your first question is coming from Bobby Griffin with Raymond James. Please pose your question. Your line is.., and his life.

Speaker Change: But as we really focus on strategic partners.

Speaker Change: We've got some real successes with some of our long time customers like the slumber lands of the world that are strong customers for us and we're really working on how we strategically grow our businesses together as well as really sharpening our execution on comfort studios. So that's our store within a store concept and over the long.

Melinda Whittington: As one of the largest brands in the United States but was only roughly a 5% market share, we are well positioned to continue to strategically grow our business.

Speaker Change: Last the last year or so even with long lived the lazy coming out we are sharpening execution in those branded spaces across the existing network and expanding that network. So that the brand really comes through and feels very consistent.

Alessandra Jimenez: What we definitely see is traffic strengthening around those major holidays. For us, Memorial Day is always one of our biggest holidays of the year, and we saw stronger traffic trends. And then, of course, we do a really nice job in our stores of converting once people are in the door. Fourth of July isn't just traditionally as not as big of a holiday for us, but we also saw more challenge traffic trends.

Melinda Whittington: And to Anne, which is also helping that execution.

Speaker Change: And which is also helping that execution.

Anthony Lebedinsky: Thank you both for that detailed answer. And actually, as far as the comfort studio concept, I know that obviously that has grown.

Speaker Change: Thank you both for that.

Detailed answer and then actually as far as the studio concept I know that obviously that has grown.

Melinda Whittington: Is there a target in terms of how many of those you want to have at some point as part of your Century Vision strategy? I think it's less about a specific number and more about the right execution. And the reason I say that is we are constantly balancing comfort studio opportunities with furniture gallery opportunities. So we need to make sure we have a compatible distribution model that really best benefits the consumer. And so, at any given time, as we see opportunities for opening furniture galleries or cells, are independently owned and then balancing those with, you know, other partners across external customers.

Speaker Change: Is there a target in terms of how many of those who want to have at some point as part of your century vision strategy.

Speaker Change: I think it's less about a specific number and more about the right execution and the reason I say that is we are constantly balancing comfort studio.

Alessandra Jimenez: And I think, across most of the industry, folks experienced a more challenged July. And so it remains somewhat volatile. And we certainly see people focusing more on holidays and events and deeper traps in between. Okay, that's helpful.

Speaker Change: Opportunities with furniture gallery opportunities. So we need to make sure we have a compatible distribution model that really best benefits than consumer.

Speaker Change: And so at any given time as we see opportunities for opening up furniture galleries ourselves are independently owned and then balancing those with other partners across external customers and are they ready.

Alessandra Jimenez: And then such a year specifically as it relates to margins, how is the restructuring process progressing today? Do you still expect to achieve 50 to 60 basis points of improvement in wholesale beginning into Q from the restructuring? And then I'll be offset by the previously mentioned pressure. The case goes in international wholesale or how should we think about margin? We're making progress against that 50 to 60 basis points. There's been some delay relative to the work we're doing down in Mexico and getting people's hired and up to speed from a quality perspective and a productivity perspective. I expect to get to that 50 to 60 basis points by the end of the fiscal year. It will just slowly improve from Q to Q to Q for. Okay, that's helpful.

Melinda Whittington: And are they ready to be a true comfort studio execution?

Speaker Change: To be a shoe comfort studio execution, so not a specific target on this.

Melinda Whittington: So not a specific target on this. Got it. Okay.

Speaker Change: Got it okay. Thanks for that Melinda and then.

Anthony Lebedinsky: Thanks for that, Melinda. And then, as far as the lower traffic, obviously, as you said, it is an industry-wide thing here. Now your website already has a 30% off promotion for Labor Day sales. Are you seeing the benefits of that? Or you need to get close to the holiday. I mean, you're just wondering when do consumers start to do that? When are consumers actually starting to think about buying, or are they actually waiting for the actual holiday? We're in day two of that. So a little early to the comment on that one. But you know, you know, this industry well, Anthony. You know, for the key holidays of the year, sort of that, you know, 30% off is sort of the call to action that you see across the industry.

Speaker Change: As far as the lower traffic obviously as you said it is an industry wide thing here.

Speaker Change: Now your website already has a 30% off promotion for Labor day sales are you seeing.

Speaker Change: The benefits of that.

Greg: You need to get close to the holiday I mean, if you just just one Greg.

Speaker Change: Consumers start to do that.

Speaker Change: Our consumers actually starting to think about.

Speaker Change: <unk> are they actually waiting for the phone.

Speaker Change: The actual holiday we're in day two of that so a little early too.

Alessandra Jimenez: And then lastly for me, have your advertising plans changed at all given the current demand backdrop from where you thought it would be starting the fiscal year? Yeah, it's, I mean, it's an ongoing balance of the equation, right? We want to make sure we're out there. We believe in our long live the lazy campaign and the strength of our brand. And so you need to be out there. But at the same time, particularly in these summer months and look where the consumer is right now, sometimes, you know, you can be speaking, but nobody's listening. So we're kind of continuously optimizing where we're spending and how much we're spending as we go through these challenging times.

Speaker Change: Comment on that one but.

Speaker Change: You know this industry well Anthony for the key holidays of the year sort of that 30 percentage off is is sort of a call to action that you see across the industry that promotion is the.

Alessandra Jimenez: Thank you so much.

Melinda Whittington: That promotion is, you know, the depth of that promotion is not different than, you know, what we've been doing for years. Honestly, even in the middle of the pandemic, demand to drive a call to action. You know, we are experimenting with, as you've seen across many retailers, even across many categories, on how many days do you expand those promotions for to kind of drive that top of mind.

Melinda Whittington: We have consistently expanded lazy boy's brand reach over the last several quarters. Our total furniture galleries network ended the quarter with 356 stores and our retail segment comprised of the company-owned portion of those stores increased to 188 stores up 13 from the prior year. Company-owned stores now represent 53% of all lazy boy furniture galleries. Growing our company-owned stores is important as it gives us the greatest opportunity to delight the consumer by controlling the end-to-end experience which features comfortable and customized upholstery with quick delivery.

Debt to that promotion is not different.

Anthony: Then what we've been doing for years honestly, even in the middle of the pandemic demand to drive a call to action.

Anthony: We are experimenting with as you've seen across many retailers even across the many categories on how many days do you expand those promotions for to kind of drive that top of mind.

Anthony Lebedinsky: But it's too early to say anything about how Labor Day will look this year. Got it. Okay, understood. Okay.

Anthony: But too early to say anything about how labor day will look this year.

Speaker Change: Got it okay understood, Okay, and then lastly.

Bob Lucian: And then lastly, case could obviously is a small piece of your business, but it's been impacted by higher container rates. Have you put it through the ocean freight surcharges to reflect that? Are you thinking about doing that to offset the higher rates? We, we, Anthony, we have, we've already implemented surcharges on new orders. However, we operate on a life basis with case good. So that, as those costs come in, they go immediately to the bottom line. So it's going to be a temporary mismatch on the cost coming in, and it's going to take a while before those surcharges take effect, but we actually deliver product that had those surcharges now when they were ordered.

Melinda Whittington: In fact, given that quite a bit of our business is supplied by importers, you know, container rate hikes have actually caused, you know, some companies to actually raise their prices in the last quarter or so.

Brad Thomas: Your next question is coming from Brad Thomas with Keyback. Please pose your question. Your mind is live. Hey, good morning. This is Taylor on for Brad. Maybe if we could just start on the competition or the competitive landscape. What do you sing in terms of competition within the space in terms of pricing and promotions? And I guess related to that, there's been a number of bankruptcy and store closures in the space.

Because obviously as a small piece of your business, but it's been impacted by higher container rates have you.

Taylor: Great, that's super helpful.

Taylor: And then maybe one for Bob, I guess on the retail margin side, you know, 1Q was down about 400 basis points or so.

Taylor: And I understand 1Q is usually the weakest quarter of the year.

Bob Lucian: And then, you know, maybe what your thoughts are longer term for that segment?

Taylor: But how should we be thinking about the retail margins as we move throughout the year?

Bob Lucian: Longer term for this segment, we expect to get ourselves, as the industry comes back and we get back to what we expect to do on a regular basis, which is positive same-store comps, we expect that business to be in the mid-teens.

Bob Lucian: So that's our long-term plan, and that will continue to be what we're focused against.

Bob Lucian: In the short term, the margin that we saw, this typically, as you mentioned, Q1 is our lowest margin period.

Speaker Change: Put through the ocean freight surcharges to reflect that or are you thinking about doing that to offset the higher rates.

Bob Lucian: We would expect to see that. Slowly improve and then accelerate as we get into the back half of the year, where typically Q3 and Q4 has the highest margins for our retail segment, because that's where you see the highest level of both sales and deliveries for the furniture industry.

Taylor: Great, thanks, Bob.

Taylor: And then if I could sneak one more in, you know, you had a pretty good results within the wholesale segment, you know, 8% increase in the sales to external customers.

Taylor: Can you unpack that a little bit more for us to kind of understand that, that improvement?

Speaker Change: We Anthony we have we've already implemented surcharges on new orders.

Bob Lucian: Yeah, and I think it's 5% sales, total sales for wholesale.

Bob Lucian: Yeah, but yeah, so the big thing that is driving that, of course, our wholesale business is supporting, you know, our company-owned retail, our independently-owned furniture galleries, and then our general dealers, which are, you know, multi-brand customers that take, you know, that take a decent amount of our product as well to get to a broad array of consumers.

Bob Lucian: What we saw in this first quarter is those external customers really starting to come back, whereas last year that was still a much more depressed business.

Bob Lucian: So we've seen, you know, sort of sequential strengthening in our retail, even through, you know, the challenging last two years.

Bob Lucian: Those external customers took a little bit longer to come back, and so you're really seeing the benefit of that here in this first quarter.

Bob Lucian: And then the one thing we'd add to that is just, as Melinda mentioned, our channel strategy relative to expanding and getting our product available in more stores, including adding new customers.

Speaker Change: However, we operate on a LIFO basis with case goods, so as that kind of as those costs come in they go immediately to the bottom line. So it was going to be a temporary mismatch on the costs coming in and it <unk> take a while before those surcharges take effect they take effect, where we actually deliver product that had those surcharges now in their order.

Bob Lucian: Like, for example, what was specifically mentioned, Rooms to Go, but there's been some others we've added.

Bob Lucian: Those have also helped to increase the wholesale segment sales.

Operator: Please post your question in your line.

Taylor: Great, thanks so much.

Anthony Lebiedzinski: Yes, good morning and thank you for taking the questions.

Operator: Your next question is coming from Anthony Lebiedzinski with Sidoti.

Anthony Lebiedzinski: So first, just wanted to follow up on the last one here as far as the wholesale segment.

Anthony Lebiedzinski: So, you know, what's driving that actually as far as what would you attribute the wholesale channel actually picking up their sales actually?

Brad Thomas: You know, what are your some of your thoughts there as it relates to potentially getting some share? Yeah, so a couple of thoughts on that. You know, as you mentioned, super fragment and market both amongst retailers and amongst manufacturers and wholesalers in our space. And you know, these times, you know, of sort of, you know, all the disruption in the last couple of years has made that very heart for a lot of folks to navigate with all the puts and takes.

Anthony Lebiedzinski: I guess maybe if you could, I don't know if there's any way you can quantify as far as on the same.

Bob Lucian: Anthony, we have, we've already implemented surcharges on new orders, however, we operate on a LIFO basis with case goods, so as those costs come in, they go immediately to the bottom line, so there's going to be a temporary mismatch on the costs coming in, and it's going to take a while before those surcharges take effect, but we actually deliver a product that had those surcharges on when they were ordered.

Anthony Lebiedzinski: I know you're adding some new customers, so maybe if there was a way you could parse out how much of that is coming from new customers.

Bob Lucian: Wholesale dealers versus organic and what are the main reasons for that?

Bob Lucian: Yeah, we don't have a way to parse that out the way you're looking for, Anthony, but the two things that we just mentioned is, one, the new customers that you just talked about and the fact that we're now have distribution and more customers and more stores.

Bob Lucian: We're not specifically calling out how many specific stores there are because we're also, you know, the wholesale market's a very large market, so we're losing some mom and pops and we're adding customers like Rooms to Go or Furniture Row, et cetera, but that's one component.

Bob Lucian: The other component that Melinda alluded to was, back a year ago, that market was still depressed, if you will, the wholesale market was depressed because our customers were still getting rid of their inventory and they hadn't gotten back to normal order rates on a year-over-year basis.

Bob Lucian: Now, this past quarter, they're back to those normal order rates versus what I would call a weaker base, so a combination of those two things is what was driving the growth over this past quarter versus a year ago.

Bob Lucian: I would just build two additional items on that external side of things.

Melinda Whittington: We tend to talk about some of our newer customers, but as we really focus on strategic partners, we've got some real successes with some of our long-time customers, like the slumberlands of the world, that are strong customers for us and we're really working at how we strategically grow our businesses together, as well as really sharpening our execution on comfort studios.

Melinda Whittington: So that's our store-within-a-store concept. And over the last year or so, even along with the Lazy coming out, we are sharpening execution in those branded spaces across the existing network and expanding that network so that the brand really comes through and feels very consistent end-to-end, which is also helping that execution.

Melinda Whittington: Thank you both for that detailed answer.

Anthony Lebiedzinski: Actually, as far as the Comfort Studio concept, I know that obviously that has grown.

Melinda Whittington: Is there a target in terms of how many of those you want to have at some point as part of your Century Vision strategy?

Anthony Lebedinsky: All right.

Melinda Whittington: I think it's less about a specific number and more about the right execution.

Melinda Whittington: And the reason I say that is we are constantly balancing Comfort Studio opportunities with furniture gallery opportunities, so we need to make sure we have a compatible distribution model that really best benefits the end consumer.

Anthony Lebiedzinski: All right, well, thank you very much and best of luck.

Melinda Whittington: And so at any given time, as we see opportunities for opening up furniture galleries, ourselves are independently owned and then balancing those with other partners across external customers and are they ready to be a true Comfort Studio execution, so not a specific target on this.

Alright, well, thank you very much and best of luck.

Anthony Lebedinsky: Well, thank you very much, and best of luck. Thanks, Anthony.

Anthony Lebiedzinski: Got it.

Anthony Lebiedzinski: Okay.

Anthony Lebiedzinski: Thanks for that, Melinda.

Anthony Lebiedzinski: Thanks, Sam.

Sam: Thanks, Sam Thanks Anthony.

Anthony Lebiedzinski: And then, as far as the lower traffic, obviously, as you said, it is an industry-wide thing here.

Anthony Lebiedzinski: Now, your website already has a 30% off promotion for Labor Day sales.

Operator: The Q&A session has now concluded.

Anthony Lebiedzinski: scheduled to close in the second quarter.

Anthony Lebiedzinski: Are you seeing the benefits of that, or do you need to get close to the holiday?

Operator: The Q&A session has now concluded.

Mark <unk>: The Q&A session has now concluded at this time I would like to turn the floor back over to Mark <unk> for any closing remarks.

Operator: These store acquisitions are immediately accretive to our profitability, allowing the company

Anthony Lebiedzinski: I'm just wondering when do consumers start to do that?

Anthony Lebiedzinski: to benefit from the integrated wholesale and retail margins.

Melinda Whittington: When are consumers actually starting to think about buying, or are they actually waiting for the actual holiday?

Mark Becks: At this time, I would like to turn the floor back over to Mark Becks for any closing remarks.

Mark Becks: At this time, I would like to turn the floor back over to Mark Backs for any closing remarks. Thanks, Kelly. Melinda, Bob, and I will be in our offices to take any follow-up calls. Have a great day. Thank you, everyone.

Mark Becks: We are also growing the business through our refined channel strategy.

Melinda Whittington: We're in day two of that, so a little early to comment on that one.

Melinda Whittington: This has enabled us to grow share of voice of a La-Z-Boy brand with general dealers and

Melinda Whittington: But you know this industry well, Anthony.

Melinda Whittington: Now, let me turn the call over to Bob to review the results in more detail.

Melinda Whittington: provide a broader range of consumers access to the La-Z-Boy brand.

Anthony Lebiedzinski: For the key holidays of the year, sort of that 30% off is sort of the call to action that you see across the industry.

Anthony Lebiedzinski: Bob?

Anthony Lebiedzinski: We have had strong results with strategic partners like Rooms to Go, which have allowed

Melinda Whittington: The depth of that promotion is not different than what we've been doing for years, honestly, even in the middle of the pandemic demand to drive a call to action.

Melinda Whittington: us to gain mind share in an under penetrated market.

Melinda Whittington: We are experimenting with, as you've seen across many retailers, even across many categories, on how many days do you expand those promotions for to kind of drive that top of mind.

Melinda Whittington: We continue to look for new and creative ways to reach a broader audience and bring

Melinda Whittington: But too early to say anything about how Labor Day will look this year.

Mark Becks: Thanks, Kelly.

Mark: Thanks, Kelly Melinda, Bob and I will be in our offices to take any follow up calls have a great day.

Mark Becks: products like the iconic La-Z-Boy recliner into more households.

Anthony Lebiedzinski: Got it.

Mark Becks: Melinda, Bob, and I will be in our offices to take any follow-up calls.

Mark Becks: Another core pillar of our Century Vision strategy to expand La-Z-Boy brand reach is

Brad Thomas: And so we've seen quite a few folks exit the market in one way or another. And Bradley, I would say that is, that is a great opportunity for us. And we have seen that where it's an opportunity to take share in general in our industry. I think, you know, you see more consolidation through those type of opportunities than you do from, you know, very successful sort of big acquisitions and that type of thing.

Anthony Lebiedzinski: Okay, understood.

Anthony Lebiedzinski: Thank you, Melinda, and good morning, everyone.

Anthony Lebiedzinski: our Long Live the La-Z brand campaign, which is celebrating its one year anniversary after

Anthony Lebiedzinski: Okay.

Anthony Lebiedzinski: As a reminder, we present our results on both a GAAP and non-GAAP basis.

Anthony Lebiedzinski: debuting last August on National La-Z Day.

Anthony Lebiedzinski: And then lastly, case goods obviously is a small piece of your business, but it's been impacted by higher container rates.

Anthony Lebiedzinski: We believe the non-GAAP presentation better reflects underlying operating trends and performance

Anthony Lebiedzinski: One of our initial goals was to enhance unaided brand awareness and keep the brand top of

Anthony Lebiedzinski: Have you put through ocean freight surcharges to reflect that?

Anthony Lebiedzinski: of the business.

Anthony Lebiedzinski: mind.

Anthony Lebiedzinski: Or are you thinking about doing that to offset the higher rates?

Mark Becks: Have a great day.

Mark Becks: Non-GAAP results exclude items which are detailed in our press release and in the tables in

Mark Becks: A year into the campaign, we have been successful in increasing unaided awareness, consideration,

Mark Becks: the appendix section of our conference call slides.

Mark Becks: Thank you.

Mark Becks: and purchase intent among those who have seen the Long Live the La-Z campaign and connected

Melinda Whittington: We see opportunity to grow the total lazy boy furniture galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisitions. To this point, we acquired one store during the first quarter and we recently signed an agreement to acquire an additional two-store network from an independent dealer in Florida scheduled to close in the second quarter. These store acquisitions are immediately accreted to our profitability allowing the company to benefit from the integrated wholesale and retail margins.

Mark Becks: On a consolidated basis, fiscal 2025 first quarter sales increased 3% to $496 million

Operator: Thank you everyone.

Operator: is live.

Speaker Change: Thank you everyone. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Operator: to La-Z-Boy.

Operator: versus the prior year, primarily driven by higher delivered volume within our wholesale

Operator: This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Operator: This does conclude today's conference call.

Operator: Good morning.

Operator: Since its introduction, Long Live the Lazy has won numerous awards, including the Drum

Operator: segment.

Operator: This is Alessandra Jimenez on for Bobby Griffin.

Operator: Awards for Marketing Americas and the Best Short Form Video at the Think L.A.

Operator: Consolidated GAAP operating income was $32 million, and non-GAAP operating income was

Operator: Thank you for taking our questions.

Operator: Idea Awards.

Melinda Whittington: We are also growing the business through our refined channel strategy.

Operator: $33 million, a decrease of 3% versus last year's first quarter.

Operator: First, I just wanted to ask about traffic trends at retail during the quarter and into

Operator: We have also activated the brand in new ways, including a New Heights podcast sponsorship

Operator: Consolidated GAAP operating margin was 6.5%, and non-GAAP operating margin was 6.6%, reflecting

Operator: August.

Operator: Thank you everyone.

Operator: with Jason and Travis Kelsey, and branded media integrations across Amazon, New York

Operator: a 40 basis point decline versus last year due to reduced fixed cost leverage within

Operator: Did you see any notable differences in monthly traffic trends, or is the improved demand

Operator: This does conclude today's conference call.

Operator: Times, and ESPN.com.

Operator: our retail segment, partially offset by gross margin expansion.

Operator: during the holiday promotional period mainly a function of increased conversion rates?

Operator: Speaking of how La-Z-Boy is beloved in consumers' minds, the brand was even recently mentioned

Operator: GAAP diluted EPS was $0.61 for the first quarter versus $0.63 in the prior year quarter.

Operator: Broadly, traffic remains challenged, and I think you hear that across virtually all

Operator: in a hit song by Luke Combs.

Melinda Whittington: This donate has enabled us to grow share of voice of a lazy boy brand with general dealers and provide a broader range of consumers access to the lazy boy brand.

Operator: Non-GAAP diluted EPS was $0.62, which was unchanged versus last year.

Operator: of the companies that have reported recently.

Operator: As we move the campaign into its second year, we are focused on broadening the campaign

Operator: As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting

Operator: What we definitely see is traffic strengthening around those major holidays.

Operator: impact to achieve our goal of connecting with an even broader audience.

Operator: unless specifically stated otherwise.

Operator: For us, Memorial Day is always one of our biggest holidays of the year, and we saw stronger

Operator: Another focus area for expanding La-Z-Boy brand reach is within product development.

Operator: Starting with the retail segment for the quarter, delivered sales were $202 million, a 3% decrease

Operator: traffic trends.

Operator: Our development process is becoming even more consumer-centric, leveraging a data-driven

Operator: over the prior year's first quarter, as the prior year benefited from the delivery of

Operator: And then, of course, we do a really nice job in our stores of converting once people are

Operator: approach.

Operator: residual backlog related to component shortages.

Operator: in the door.

Operator: The insights we are gaining are enabling us to develop more consumer-relevant, on-trend

Operator: Retail non-GAAP operating margin decreased to 10.3% versus 14.1% in the prior year quarter.

Operator: Fourth of July just traditionally is not as big of a holiday for us, but we also saw more

Operator: products in our core upholstered furniture category, particularly in motion and reclining,

Operator: This is driven by fixed cost deleverage on lower delivered sales and fixed cost increases

Operator: challenged traffic trends, and I think across most of the industry, folks experienced a

Operator: where we are a market leader.

Operator: supporting our long-term strategy of growing our retail business through new and acquired

Operator: more challenged July.

Operator: Joybird is another core pillar of our century vision, and we are optimizing the brand to

Operator: stores.

Operator: And so it remains somewhat volatile, and we certainly see people focusing more on holidays

Operator: deliver a balance of sales growth and profitability.

Melinda Whittington: We have had strong results with strategic partners like Rooms to go which have allowed us to gain mind share in an under penetrated market.

Brad Thomas: And we certainly, our sales teams, particularly on our wholesale businesses, are mobilized around being able to offer a, you know, a strong supply base when some of those suppliers are going on a business. So that has definitely benefited our business. And part of our agility is being ready to help offer those solutions to both V2B customers and to wholesale. And then also to consumers, you know, as some retailers drop out. So definitely an opportunity there.

Operator: Gross margin was roughly flat year over year.

Operator: and events and deeper chops in between.

Operator: We were pleased that written sales trends were positive in the quarter, and operating

Operator: For our wholesale segment, delivered sales for the quarter increased to $351 million,

Operator: Okay.

Operator: performance improved from prior year.

Operator: up 5% versus the prior year period.

Operator: That's helpful.

Operator: With 12 stores currently open in major metro markets, the digitally native e-commerce brand

Operator: The increase was attributed to higher delivered volume to our external customers, partially

Operator: Okay.

Operator: is benefiting from the halo effect of stores in key markets.

Operator: offset by lower intercompany sales to our retail segment, and lower delivered volume

Operator: That's helpful.

Operator: We have identified the potential to grow to 25 locations over the intermediate term, with

Operator: in our case goods business.

Operator: And then switching gears a bit, specifically as it relates to margins, how is the restructuring

Operator: our expansion pace depending on opportunities in real estate and overall market conditions.

Operator: Non-GAAP operating margin for the wholesale segment was 6.9% versus 6.8% in last year's

Operator: process progressing today?

Operator: We continue to believe in the long-term growth prospects of the brand, as Joybird has a considerable

Operator: first quarter, driven by gross margin expansion primarily from reduced commodity prices, improved

Operator: Do you still expect to achieve 50 to 60 basis points of improvement in wholesale beginning

Operator: opportunity to expand market share, and we will continue to make prudent investments

Operator: sourcing, and favorable duty expense, partially offset by an unfavorable shift in channel

Operator: in 2Q from the restructuring, and then that will be offset by the previously mentioned

Operator: to position it for long-term success.

Operator: mix towards external customers, which generally carry products with a lower gross margin than

Operator: pressure to case goods and international wholesale?

Operator: Strengthening our foundational capabilities, including building a more dynamic supply chain,

Operator: products sold to furniture galleries.

Operator: Or how should we think about margins?

Operator: is our final pillar of century vision.

Operator: Delivered sales reported in corporate and other were $35 million, down 3% versus the

Operator: We're making progress against that 50 to 60 basis points.

Operator: We are making steady progress improving the agility of our business model by better optimizing

Operator: prior year period.

Operator: There's been some delay relative to the work we're doing down in Mexico and getting folks

Operator: our global supply chain operations.

Melinda Whittington: We continue to look for new and creative ways to reach a broader audience and bring products like the iconic lazy boy recliner into more households.

Operator: Delivered operating performance again made meaningful progress against the prior comparable

Operator: hired and up to speed from a quality perspective and a productivity perspective.

Operator: As we mentioned in last quarter's call, we are prudently managing the consolidation of

Operator: period as the brand focuses on balancing sales growth and profitability.

Operator: I expect to get to that 50 to 60 basis points by the end of the fiscal year, and it'll slowly

Operator: our cut-and-sew operations in Mexico to optimize costs while ensuring no service disruptions.

Operator: On a consolidated basis, non-GAAP gross margin improved once again across all reportable

Operator: improve from Q2 to Q3 to Q4.

Operator: In this challenging global landscape, we view our North American manufacturing footprint

Operator: segments, and for the entire company increased by 40 basis points versus the prior year first

Operator: Okay.

Operator: as a key differentiator in our ability to manufacture high-quality, comfortable custom

Operator: quarter.

Operator: That's helpful.

Operator: furniture with quick speed to market.

Operator: Gross Margin Expansion was attributed to lower input costs from reduced commodity prices and improved sourcing, partially offset by a shift in consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment.

Operator: And then lastly for me, have your advertising plans changed at all given the current demand

Operator: As we enter our second quarter, we expect a continued challenging macro environment

Operator: Non-GAAP SG&A as a percentage of sales for the quarter increased by 80 basis points compared with the same period last year, primarily due to lower leverage on delivered sales relative to fixed costs within our retail segment.

Operator: backdrop from where you thought it would be, you know, starting the fiscal year?

Operator: for the remainder of the fiscal year.

Operator: Additionally, the company continues to invest to build a more agile business model and support future growth and opportunities.

Operator: Yeah.

Operator: However, we remain optimistic about our ability to continue to outperform the market while

Operator: This was partially offset by a shift in consolidated mix driven by a higher percentage of sales in our wholesale segment, which has a lower SG&A expense as a percentage of sales than our retail segment.

Operator: I mean, it's an ongoing balance of the equation, right?

Operator: investing in our business through our century vision so that when trends rebound, we can

Operator: Our effective tax rate on a GAAP basis for the first quarter was 25.5% compared to 26.5% for the prior year.

Operator: We want to make sure we're out there.

Operator: disproportionately benefit.

Melinda Whittington: One of our initial goals was to enhance unated brand awareness and keep the brand top of mind. A year into the campaign we have been successful in increasing unated awareness, consideration and purchase attempt among those who have seen the Long Live the Lazy campaign and connect it to lazy boy.

Operator: A reduced effective tax rate was partially the result of tax benefits from the revesting of stock-based compensation.

Operator: We believe in our Long Live the Lazy campaign and the strength of our brand, and so you

Operator: We once again made strong progress in the quarter, and we look forward to continuing

Operator: Turning to cash, we ended the quarter with a strong balance sheet with $342 million in cash and no externally funded debt.

Operator: need to be out there.

Operator: to make century vision a reality.

Operator: We generated $52 million in cash from operating activities in the quarter versus $26 million in the prior year.

Operator: But at the same time, particularly in these summer months and with where the consumer

Operator: The improvement was mainly due to a decrease in receivables and an increase in customer deposits, resulting from higher written sales versus a year ago.

Operator: is right now, sometimes, you know, you can be speaking, but nobody's listening.

Operator: We spent $16 million in capital expenditures during the quarter, primarily related to retail store openings and remodels and upgrades at manufacturing facilities and our market showrooms.

Operator: So we're kind of continuously optimizing, you know, where we're spending and how much

Operator: We also spent $7 million on acquisitions during the quarter.

Operator: we're spending as we go through these, you know, challenging times.

Operator: For the quarter, we returned approximately $42 million to shareholders via dividends and share repurchases, including $8 million paid in dividends.

Operator: Thank you so much.

Melinda Whittington: Ideal Awards.

Brad Thomas: Tough thing for the industry, of course. And again, you know, the fact that we have a very strong balance sheet and we're here to stay. Benefits us right in that space. Relative to pricing, you know, input costs are still up pretty significantly versus pre pandemic. And so, you know, we have not seen a lot of sort of, you know, crazy, crazy attempts to really drop prices. We certainly continue to watch those opening price points because the consumer is challenged and they may just simply decide not to go into that discretionary purchase.

Operator: We repurchased 933,000 shares in the market in the quarter, which leaves 4.7 million shares available under our existing share repurchase authorization.

Operator: Your next question is coming from Brad Thomas with KeyBank.

Operator: We continue to view share repurchases and our dividends as an attractive use of our cash and positive return to shareholders.

Operator: Please pose your question.

Operator: Our capital allocation target is to reinvest 50% of operating cash flow back into the business and return 50% approximately to shareholders and share repurchases and dividends over the long term.

Operator: Your line is live.

Operator: In fiscal 2024, our capital allocation was 52% reinvested into the business and 48% returned to shareholders.

Operator: Hey.

Operator: Now, before turning the call back to Melinda, let me highlight several important items for fiscal 2025 and our second quarter.

Operator: Good morning.

Operator: Consistent with our Century Vision strategy, we continue to target sales growth double the industry growth rate and double-digit operating margins over the long term with the benefit of more normalized industry growth rates.

Operator: This is Taylor on for Brad.

Melinda Whittington: Speaking to how Lazy Boy is beloved in consumers' minds, the brand was even recently mentioned in a hit song by Lou Combe.

Operator: Looking forward, we expect the industry to continue to be challenged.

Operator: Maybe if we could just start on the competition or the competitive landscape.

Operator: Consistent with recent comments from furniture retailers pointing to subdued demand and a potential recovery coming later than expected, we now believe the industry may be down even more than the 0 to negative 5% range estimate we previously anticipated for our fiscal year in total.

Operator: Melinda, what are you seeing in terms of competition within the space in terms of pricing and promotions?

Operator: Against that backdrop, we expect to continue to outperform the market throughout fiscal 2025 similar to our performance in fiscal 2024.

Operator: And I guess related to that, there's been a number of bankruptcies and store closures

Operator: For the second quarter, we expect sales to increase modestly versus the first quarter,

Operator: in the space.

Operator: supported by seasonality, to the range of $495 to $515 million.

Operator: You know, what are some of your thoughts there as it relates to potentially gaining some

Melinda Whittington: As we move the campaign into its second year, we are focused on broadening the campaign impact to achieve our goal of connecting with an even brighter audience.

Operator: Further, we expect second quarter non-gap operating margin to be in the range of 6 to

Operator: share?

Operator: 7%.

Operator: Yeah, so a couple of thoughts on that.

Operator: As we continue to invest in our Century Vision pillar of growing retail, we expect near-term

Operator: As you mentioned, super fragmented market, both amongst retailers and amongst manufacturers

Operator: margin compression versus the prior year, primarily driven by expected negative same-store

Operator: and wholesalers in our space, and these times of sort of all the disruption in the last

Operator: sales trends from the continued challenging demand environment, which will more than

Operator: couple of years has made that very hard for a lot of folks to navigate with all the puts

Operator: offset the margin accretion from new stores and independent La-Z-Boy furniture galleries

Operator: and takes.

Operator: acquisitions in our retail segment.

Operator: We've seen quite a few folks exit the market in one way or another.

Melinda Whittington: Another focus area for expanding Lazy Boy brand reach is within product development.

Operator: In addition, near-term wholesale margin will be disproportionately affected by challenges

Operator: And broadly, I would say that is a great opportunity for us, and we have seen that, where it's

Operator: in two of our smaller businesses.

Operator: an opportunity to take share in general in our industry.

Operator: Case Goods, our small import business, is experiencing challenges due to higher container

Operator: I think you see more consolidation through those type of opportunities than you do from

Operator: rates consistent with others across the import industry.

Operator: very successful sort of big acquisitions and that type of thing.

Operator: Our international wholesale business, broadly, is also being impacted by a combination of

Operator: And we certainly, our sales teams, particularly on our wholesale businesses, are mobilized

Operator: temporary customer disruption, lower consumer demand, and higher container rates.

Operator: around being able to offer a strong supply base when some of those suppliers are going

Operator: We expect to open 12 to 15 new La-Z-Boy furniture gallery stores skewed towards the second half

Operator: out of business.

Operator: of the year.

Operator: So that has definitely benefited our business, and part of our agility is being ready to

Operator: We also expect our tax rate for the full year to be in the range of 25.5% to 26.5%.

Operator: help offer those solutions to both B2B customers and to wholesale, and then also to consumers

Melinda Whittington: Our development process is becoming even more consumer-centric, leveraging a data-driven approach. The insights we are gaining are enabling us to develop more consumer-relevant on-trend products in our core-oppostured furniture category, particularly in motion and reclining where we are a market leader.

Operator: We anticipate non-gap adjustments for purchase accounting charges for the year to be in the

Operator: as some retailers drop out.

Operator: range of a penny to three cents per share.

Operator: So definitely an opportunity there, tough thing for the industry, of course.

Operator: We expect capital spending to be in the range of $70 to $80 million for fiscal 25 as we

Operator: And again, the fact that we have a very strong balance sheet and we're here to stay benefits

Operator: invest to strengthen the company for the future, consistent with our Century Vision strategy.

Operator: us in that space.

Operator: This includes land and building investments and stores to maintain the growth rate of

Operator: Relative to pricing, input costs are still up pretty significantly versus pre-pandemic,

Operator: our retail network.

Operator: and so we have not seen a lot of sort of crazy, crazy attempts to really drop prices.

Operator: And finally, presuming no significant worsening in macroeconomic trends, we expect to continue

Operator: We certainly continue to watch those opening price points because the consumer is challenged

Operator: to share repurchases at dollar levels consistent with pre-COVID levels.

Operator: and they may just simply decide not to go into that discretionary purchase, but broadly

Operator: And now I will turn the call back to Melinda.

Operator: not seeing, again, there's always the holiday events to drive activity, but we're not seeing

Operator: Thanks, Bob.

Operator: anything real dramatic there.

Melinda Whittington: Joy Bird is another core pillar of our century vision, and we are optimizing the brand to deliver a balance of sales growth and profitability.

Brad Thomas: But broadly not seeing, again, there's always the, there's always the holiday events events to drive to drive activity. But we're not seeing anything real dramatic there. In fact, given that quite a bit of our business is supplied by importers, you know, container rate hikes have actually caused some companies to actually raise their prices in the last quarter or so. And that's something we haven't really had to do or needed to do given our primarily North American based footprint with the exception of, you know, in our case goods business as we alluded to.

Operator: In spite of the challenging industry backdrop, we continue to outperform while also making

Operator: In fact, given that quite a bit of our business is supplied by importers, container rate hikes

Operator: progress towards achieving our Century Vision goals.

Operator: have actually caused some companies to actually raise their prices in the last quarter or so.

Operator: Our focus remains on the expansion of our La-Z-Boy brand, driving growth of our company-owned

Operator: And that's something we haven't really had to do or needed to do, given our primarily

Operator: retail segment through execution and new and acquired stores, improving agility across

Operator: North American-based footprint, with the exception of in our case goods business, as we alluded to.

Operator: our supply chain, and driving efficiency and margin expansion throughout our business.

Operator: Great.

Operator: We are well positioned to disproportionately benefit when industry fundamentals improve.

Operator: That's super helpful.

Operator: Before I conclude, I would like to thank the entire La-Z-Boy Incorporated team for their

Operator: And then maybe one for Bob, I guess on the retail margin side, you know, 1Q was down

Operator: ongoing hard work and dedication.

Operator: about 400 basis points or so, and I understand 1Q is usually the weakest quarter of the year,

Melinda Whittington: We were pleased that written sales trends were positive in the quarter, and operating performance improved from prior year.

Operator: And I look forward to speaking with you all again in the fall, and I wish you a great

Operator: but how should we be thinking about the retail margins as we move throughout the year?

Operator: end of summer.

Operator: And then, you know, maybe what your thoughts are longer term for that segment?

Operator: Now let me turn the call back to Mark.

Operator: Longer term for this segment, we expect to get ourselves, as the industry comes back

Operator: Thank you, Melinda.

Operator: and we get back to what we expect to do on a regular basis, which is positive same-store

Operator: We will begin the question and answer period now.

Operator: comps, we expect that business to be in the mid-teens.

Operator: Kelly, please review the instructions for getting into the queue to ask questions.

Operator: So that's our long-term plan, and that will continue to be what we're focused against.

Operator: Certainly.

Operator: In the short term, the margin that we saw, this typically, as you mentioned, Q1 is our

Operator: The floor is now open for questions.

Operator: lowest margin period.

Operator: If you have any questions or comments, please press star 1 on your phone at this time.

Operator: We would expect to see that.

Operator: We ask that while posing your question, you please pick up your handset if listening on

Operator: slowly improve and then accelerate as we get into the back half of the year, where typically Q3 and

Operator: a speakerphone to provide optimum sound quality.

Operator: Q4 has the highest margins for our retail segment because that's where you see the

Operator: Please hold just a few moments while we pull for questions.

Operator: highest level of both sales and deliveries for the furniture industry.

Operator: Your first question is coming from Bobbi Griffin with Raymond James.

Operator: Great, thanks Bob.

Operator: Please pose your question.

Operator: And

Operator: Your line is now open.

Operator: then if I could sneak one more in, you know you had a pretty good results within the wholesale

Operator: segment, you know, eight percent increase in the sales to external customers.

Operator: Can you

Melinda Whittington: We continue to believe in the long-term growth prospects of the brand, as Joy Bird has a considerable opportunity to expand market share, and we will continue to make prudent investments to position it for long-term success.

Operator: unpack that a little bit more for us to kind of understand that improvement?

Operator: Yeah, and I think

Operator: it's five percent sales, total sales for wholesale, yeah.

Operator: But yeah, so the big thing that is

Operator: driving that, of course, our wholesale business is supporting, you know, our company-owned retail,

Operator: our independently owned furniture galleries, and then our general dealers, which are, you know,

Operator: multi-brand customers that take, you know, that take a decent amount of our product as well to

Operator: get to a broad array of consumers.

Operator: What we saw in this first quarter is those external customers

Operator: really starting to come back, whereas last year that was still a much more depressed business.

Operator: So we've seen, you know, sort of sequential strengthening in our retail, even through,

Operator: you know, the challenging last two years.

Operator: Those external customers took a little bit longer to

Operator: come back, and so you're really seeing the benefit of that here in this first quarter.

Brad Thomas: Great. That's that's super helpful. And then maybe one for Bob, I guess in the retail margin side, you know, one Q was down about 400 basis points or so and I understand one Q is usually the weakest quarter of the year. But how should we be thinking about the retail margins as we move throughout the year? And then, you know, maybe what your thoughts are longer term for that segment? Longer term for the segment we expect to get ourselves as the industry comes back and we get to back to what we expect to do on a regular basis, which is positive same store comes.

Operator: And then the one thing we'd add to that is just the, as Melinda mentioned, our channel strategy

Operator: relative to expanding and getting our product available in more stores, including adding new

Melinda Whittington: In this challenging global landscape, we view our North American manufacturing footprint as a key differentiator in our ability to manufacture high quality, comfortable, custom furniture with quick speed to market.

Operator: customers, like for example, what we specifically mentioned rooms to go, but there's been some

Operator: others we've added.

Operator: Those have also helped to increase the wholesale segment sales.

Operator: Great.

Operator: Thanks so much.

Operator: Your next question is coming from Anthony Lepidinsky with Sudotian Company.

Operator: Please pose your question.

Operator: Your line is live.

Operator: Yes, good morning, and thank you for taking the questions.

Operator: So first,

Operator: just wanted to follow up on the last one here as far as the wholesale segment.

Operator: So, you know,

Operator: what's driving that actually as far as, what would you attribute the wholesale channel actually

Melinda Whittington: As we enter our second quarter, we expect a continued challenging macro environment for the remainder of the fiscal year. However, we remain optimistic about our ability to continue to outperform the market while investing in our business through our century vision so that when trends rebound, we can disproportionately benefit.

Operator: picking up their sales actually?

Operator: I guess maybe if you could, I don't know if there's any way

Operator: you can quantify as far as on the same store or, I know you're adding some new customers,

Operator: so maybe if you could just, you know, if there was a way you could

Melinda Whittington: We once again made strong progress in the quarter, and we look forward to continuing to make century vision a reality.

Operator: parse out like, you know, how much of that is coming from new

Operator: wholesale dealers versus organic and what are the main reasons for that?

Operator: Yeah, we don't have a way to parse that out the way you're looking for,

Operator: Anthony, but the two things that we just mentioned is one, the new customers that

Operator: you just talked about and the fact that we're now have distribution and more customers and more

Operator: stores, we're not specifically calling out how many specific stores there are because we're also,

Operator: you know, the wholesale market's a very large market, so we're losing some mom and pops and

Operator: we're adding customers like Rooms to Go or Furniture Row, et cetera.

Operator: So, but that's one

Operator: component.

Operator: The other component that Melinda alluded to was back a year ago, that market was still

Operator: depressed, if you will, the wholesale market was depressed because our customers were still

Operator: getting rid of their inventory and they hadn't gotten back to normal order rates

Operator: on a year-over-year basis.

Operator: Now, this past quarter, they're back to those

Operator: normal order rates versus what I would call a weaker base. So, a combination of those two things

Brad Thomas: We expect that that business to be in the mid teens. So that's and that's our long term plan and we that will be continue to be what we're focused against. In the short term, the margin that we saw this this typically as you mentioned, Q one is our lowest margin period. We would expect to see that, and slowly improve and accelerate as we get into the back half of the year. We're typically Q3 and Q4.

Operator: is what was driving the growth over this past quarter versus a year ago.

Operator: I would just build two additional items on that external side of things.

Operator: You know, we tend to

Operator: talk about some of our newer customers, but as we really focus on strategic partners,

Operator: you know, we've got some real successes with some of our long-time customers like the slumberlands

Operator: of the world that are strong customers for us and we're really working at how we strategically

Operator: grow our businesses together, as well as really sharpening our execution on comfort studios.

Operator: So,

Operator: that's our store-within-a-store concept.

Operator: And over the last year or so, even with Long Live

Operator: the Lazy coming out, we are sharpening execution in those branded spaces across the existing

Operator: network and expanding that network so that the brand really comes through and feels very consistent

Operator: end-to-end, which is also helping that execution.

Operator: Okay, thank you both for that detailed answer.

Operator: Actually, as far as the Comfort Studio concept,

Operator: I know that obviously that has grown.

Operator: Is there a target in terms of how many of those you want

Operator: to have at some point as part of your Century Vision strategy?

Operator: I think it's less about a

Operator: specific number and more about the right execution.

Operator: And the reason I say that is we

Operator: are constantly balancing Comfort Studio opportunities with furniture gallery opportunities.

Operator: So we need to make sure we have a compatible distribution model that really best benefits

Operator: the end consumer.

Operator: And so at any given time as we see opportunities for opening up furniture

Brad Thomas: It has the highest margins for our retail segment because that's where you see the highest level of both sales and deliveries for the furniture industry. Great, thanks Bob, and then if I could sneak one more in, you know, you had a pretty good result within the wholesale segment, you know, 8% increase in the sales to external customers. Can you unpack that a little bit more for us to kind of understand that improvement?

Operator: galleries, ourselves are independently owned, and then balancing those with, you know, other partners

Operator: across external customers and are they ready to be a true Comfort Studio execution.

Operator: So not a

Operator: specific target on this.

Operator: Got it.

Operator: Okay, thanks for that, Melinda.

Operator: And then as far as the lower traffic,

Operator: obviously, as you said, it is an industry-wide thing here.

Operator: Now, your website already has a 30%

Operator: off promotion for Labor Day sales.

Operator: Are you seeing the benefits of that or do you need to get close

Bob Lucian: Now let me turn the call over to Bob to review the results in more detail, Bob.

Operator: to the holiday?

Operator: I'm just wondering when do consumers start to do that?

Operator: When are consumers

Operator: actually starting to think about buying or are they actually waiting for the actual holiday?

Operator: We're in day two of that, so a little early to comment on that one.

Operator: But, you know,

Operator: this industry well, Anthony, you know, for the key holidays of the year, sort of that, you know,

Operator: 30% off is sort of the call to action that you see across the industry.

Operator: That promotion is, you know,

Operator: the depth of that promotion is not different than, you know, what we've been doing for years,

Operator: honestly, even in the middle of the pandemic demand to drive a call to action.

Bob Lucian: Thank you Melinda and good morning everyone.

Operator: You know,

Operator: we are experimenting with, as you've seen across many retailers, even across many categories on

Operator: how many days do you expand those promotions for to kind of drive that top of mind,

Operator: but too early to say anything about how Labor Day will look this year.

Operator: Got it.

Operator: Okay.

Bob Lucian: As a reminder, we present our results on both a gap and non-gap basis. We believe the non-gap presentation better reflects underlying operating trends and performance of the business. Non-gap results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slide.

Brad Thomas: Yeah, and I think it's 5% total sales for wholesale. Yeah, but yeah, so the big thing that is driving that, of course, our wholesale business is supporting, you know, our company owned retail, our independently owned furniture galleries, and then our general dealers, which are, you know, multi-brand customers that take, you know, that take a decent amount of our product as well to get to a broad array of consumers. What we saw in this first quarter is those external customers really starting to come back, whereas last year that was still a much more depressed business.

Operator: Understood.

Operator: Okay.

Operator: And then lastly,

Operator: case goods obviously is a small piece of your business, but it's been impacted by higher

Operator: container rates.

Bob Lucian: On a consolidated basis, fiscal 2025, those quarter sales increased 3% to $496 million versus the prior year, primarily driven by higher delivered volume within our wholesale segment.

Operator: Have you put through the ocean freight surcharges to reflect that,

Operator: or are you thinking about doing that to offset the higher rates?

Operator: Anthony, we have.

Operator: We've already implemented surcharges on new orders.

Operator: However, we operate

Operator: on a LIFO basis with case goods.

Operator: So, as those costs come in, they go immediately to the bottom

Operator: line.

Operator: So, there's going to be a temporary mismatch on the costs coming in, and it's going to take a

Operator: while before those surcharges take effect, but we actually deliver a product that had those

Operator: surcharges on when they were ordered.

Operator: All right.

Operator: Well, thank you very much, and best of luck.

Operator: Thanks, Anthony.

Operator: The Q&A session has now concluded.

Operator: At this time, I would like to turn the floor

Operator: back over to Mark Becks for any closing remarks.

Operator: Thanks, Kelly.

Operator: Melinda, Bob,

Operator: and I will be in our offices to take any follow-up calls.

Operator: Have a great day.

Bob Lucian: Gap diluted EPS was 61 cents for the first quarter versus 63 cents on the prior year quarter. Non-gap diluted EPS was 62 cents which was unchanged versus last year.

Brad Thomas: So we've seen, you know, sort of sequential strengthening in our retail, even through, you know, the challenging last two years. Those external customers took a little bit longer to come back, and so you're really seeing the benefit of that here in this first quarter. And then the one thing that we'd add to that is just the mental dimension, our channel strategy relative to expanding and getting our product available in more stores, including adding new customers like you, for example, what we specifically mentioned rooms to go, but there's been some others we've added. Those have also helped to increase the wholesale segment sales. Great. Thanks so much.

Bob Lucian: As I move to the segment discussion, my comments from here will focus on our non-gap reporting unless specifically stated otherwise.

Bob Lucian: Starting with the retail segment for the quarter, delivered sales were $202 million, a 3% decrease over the prior year's first quarter, as the prior year benefited from the delivery of residual backlog related to component shortages. Retail non-gap operating margin decreased to 10.3% versus 14.1% in the prior year quarter. This is driven by fixed cost due leverage on lower delivered sales and fixed cost increases supporting our long-term strategy of growing our retail business through new and acquired stores. Gross margin was roughly flat year over year.

Bob Lucian: For our whole sales segment, delivered sales to the quarter increased to $351 million up 5% versus the prior year period. The increase was attributed to higher delivered volume to external customers partially offset by lower intercompany sales to our retail segment and lower delivered volume in our case goods business.

Anthony Lebedinski: Your next question is coming from Anthony Lebedinsky with Cedodian Company. Please pose your question. Your line is live. Yes. Good morning, and thank you for taking the questions. So first I just wanted to follow up on the last one here as far as the wholesale segment. So, you know, what's driving that actually as far as what would you attribute the wholesale channel actually picking up their sales actually. I guess maybe if you could, I don't know if you could, there's only way you can quantify as far as on the same store or I know you're adding some new customers.

Bob Lucian: Non-gap operating margin for the whole sales segment was 6.9% versus 6.8% in last year's first quarter. If driven by gross margin expansion, primarily from reduced commodity prices, improved sourcing and favorable duty expense, partially offset by an unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin and products sold to furniture galleries.

Anthony Lebedinski: So maybe if you could just, you know, if there was a way you could parse out like, you know, how much of that is coming from from you. The wholesale dealers versus organic and what are the main reasons for that? Yeah, we don't have a way to parse that out the way you're looking for Anthony, but the two things that we just mentioned is one, the new customers that you just talked about in fact that we're now have distribution and more customers and more stores.

Bob Lucian: Joybre delivered sales, reported in corporate and other were $35 million down 3% versus the prior year period.

Bob Lucian: Surebid operating performance again made meaningful progress against the prior comparable period as the brand focuses on balancing sales growth and profitability. On a consolidated basis, non-gap gross margin improved once again across all reportable segments and for the entire company increased by 40 basis points versus the prior year first quarter. Gross Margin Expansion was attributed to lower input costs from reduced commodity prices and improved sourcing, partially offset by a shift and consolidated mix towards our wholesale segment, which has a lower gross margin rate than our retail segment.

Bob Lucian: Non-Gap S-GNA as a percentage of sales for the quarter, increased by 80 basis points compared with the same period last year, primarily due to lower leverage on delivered sales relative to fixed costs within our retail segment.

Bob Lucian: Additionally, the company continues to invest to build a more agile business model and support future growth opportunities.

Bob Lucian: This was partially offset by a shift and consolidated mix driven by a higher percentage of sales in our wholesale segment, which has a lower S-GNA expense as a percentage of sales than our retail segment.

Bob Lucian: Our effective tax rate on a gap basis for the first quarter was 25 and a half percent compared to 26 and a half percent for the prior year. Our reduced effective tax rate was partially the result of tax benefits from the investing of stock-based compensation.

Anthony Lebedinski: We're not specifically calling out how many specific stores there are because we're also, you know, the wholesale markets are very large markets. So we're losing some mom and pops and we're adding customers like rooms to go or furniture or etc. So, but that's one component. The other component that Melinda alluded to was back a year ago, that market was still depressed. If you will, the wholesale market was depressed. The customers were still getting rid of their inventory and they hadn't gotten back to normal order rates on a year over your basis. Now this past quarter, they're back to those normal order rates versus what I would call a weaker base.

Bob Lucian: We spent $16 million in capital expenditures during the quarter, primarily related to retail store openings and remiles and upgrades at manufacturing facilities in our market showrooms. We also spent $7 million on acquisitions during the quarter.

Bob Lucian: Looking forward, we expect the industry to continue to be challenged. Consistent with recent comments from furniture retailers pointing to subdued demand and potential recovery coming later than expected, we now believe the industry may be down even more than the zero to negative 5% range estimate we previously anticipated for our fiscal year in total.

Bob Lucian: Against that backdrop, we expect to continue to offer the market throughout fiscal 2025, similar to our performance in fiscal 2024.

Melinda Whittington: So a combination of those two things is what was driving the growth over this past quarter versus year ago. I would just build two additional items on that external side of things. You know, we tend to talk about some of our newer customers. But as we really focus on strategic partners, you know, we've got some real successes with some of our long time customers like the Flumberlands of the world that are strong customers for us and we're really working at how we strategically grow our businesses together.

Bob Lucian: For the second quarter, we expect sales to increase modestly versus the first quarter, supported by seasonality to the range of $495 to $515 million. Further, we expect second quarter non-gap operating margin to be in the range of 6 to 7%.

Bob Lucian: As we continue to invest in our Century Vision pillar of growing retail, we expect near-term margin compression versus the prior year, primarily driven by expected negative same-store sales trends from the continued challenging demand environment, which will more than offset the margin accretion from new stores and independent, lazy boy furniture galleries, acquisitions in our retail segment.

Bob Lucian: We expect to open 12 to 15 new lazy boy furniture gallery stores skewed towards the second half of the year.

Melinda Whittington: As well as really sharpening our execution on comfort studios, so that's our store within the store concept. And over the last year or so, even with long little lazy coming out, we are sharpening execution in those branded spaces across the existing network and expanding that network so that the brand really comes through and feels very consistent. And to Anne, which is also helping that execution. Thank you both for that detailed answer.

Bob Lucian: We also expect our tax rate for the full year to be in the range of 25 and a half to 26 and a half percent.

Bob Lucian: We anticipate non-gap adjustments for purchase accounting charges for the year to be in the range of a penny to $0.3 per share.

Bob Lucian: We expect capital spending to be in the range of $70 to $80 million for fiscal 25 as we invest to strengthen the company for the future consistent with our Century Vision strategy. This includes land and building investments and stores to maintain the growth rate of a retail network.

Melinda Whittington: And actually, as far as the comfort studio concept, I know that obviously that that has grown. Is there a target in terms of how many of those you want to have at some point as part of your century vision strategy? I think it's less about a specific number and more about the right execution. And the reason I say that is we are constantly balancing comfort studio opportunities with furniture gallery opportunities. So we need to make sure we have a compatible distribution model that really best benefits the consumer.

Melinda Whittington: And so at any given time as we see opportunities for opening furniture galleries or cells are independently owned and then balancing those with you know other partners across external customers. And are they ready to be a true comfort studio execution? So not a specific target on this. Got it. Okay. Thanks for that Melinda. And then as far as the lower traffic obviously as you said, it is an industry wide thing here.

Bob Lucian: And finally, presuming no significant worsening in macroeconomic trends, we expect to continue sharing purchases at dollar levels, consistent with pre-COVID levels.

Melinda Whittington: And now I will turn the call back to Melinda.

Melinda Whittington: Now your website already has a 30% off promotion for Labor Day sales. Are you seeing the benefits of that? Or you need to get close to the holiday. I mean, you're just just wondering when do consumers start to do that? When are consumers actually starting to think about buying or are they actually waiting for the actual holiday? We're in day two of that. So a little early to the comment on that one.

Melinda Whittington: Thanks, Bob.

Melinda Whittington: In spite of the challenging industry backdrop, we continue to outperform while also making progress towards achieving our Century Vision goals.

Melinda Whittington: Our focus remains on the expansion of our lazy boy brand, driving growth of our company on retail segment through execution and new and acquired stores, improving agility across their supply chain, and driving efficiency and margin expansion throughout our business.

Melinda Whittington: We are well positioned to disproportionately benefit when industry fundamentals improve.

Melinda Whittington: But you know, you know, this industry well Anthony, you know, for the key holidays of the year, sort of that, you know, 30% off is sort of the call to action that you see across the industry. That promotion is, you know, the depth of that promotion is not different than, you know, what we've been doing for years, honestly even in the middle of the pandemic demand to drive a call to action. You know, we are experimenting with as you've seen across many retailers even across many categories on how many days do you expand those promotions for to kind of drive that top of mind.

Anthony Lebedinski: But to early to say anything about how Labor Day will look this year. Got it. Okay, understood. Okay.

Anthony Lebedinski: And then lastly, case could obviously is a small piece of your business, but it's been impacted by higher container rates. Have you put it put through the ocean freight surcharges to reflect that? Are you thinking about doing that to offset the higher rates? We, we, Anthony, we have, we've already implemented surcharges on new orders. However, we operate on a life basis with, with case good. So as that, as those costs come in, they go immediately to the bottom line.

Anthony Lebedinski: So it's going to be a temporary mismatch on the cost coming in and it's going to take a while before those surcharges take effect, but we actually deliver product that had those surcharges now when they were ordered. All right.

Anthony Lebedinski: Well, thank you very much and best of luck. Thanks, Anthony.

Mark Becks: The Q&A session has now concluded. At this time, I would like to turn the floor back over to mark backs for any closing remarks. Thanks, Kelly. Melinda Bob and I will be in our offices to take any follow-up calls. Have a great day. Thank you, everyone.

Melinda Whittington: Before I conclude, I would like to thank the entire lazy boy incorporated team for their ongoing hard work and dedication.

Melinda Whittington: And I look forward to speaking with you all again in the fall, and I wish you a great end of summer.

Operator: This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Mark Becks: Now, let me turn the call back to Mark.

Mark Becks: Thank you, Melinda.

Mark Becks: We will begin the question and answer period now.

Kelly: Kelly, please review the instructions for getting into the queue to ask questions.

Kelly: Certainly, the floor is now open for questions.

Kelly: If you have any questions or comments, please press star one on your phone at this time.

Kelly: We ask that while posing your question, you please pick up your handset if listening on a speaker phone to provide optimum sound quality.

Kelly: Please hold just a few moments while we pull for questions.

Bobby Griffin: Your first question is coming from Bobby Griffin with Raymond James.

Bobby Griffin: Please pose your question.

Alessandra Jimenez: Your line is.., and his life.

Alessandra Jimenez: Good morning.

Alessandra Jimenez: This is Alessandra Jimenez on for Bobby Griffin.

Alessandra Jimenez: Thank you for taking our questions.

Alessandra Jimenez: First, I just wanted to ask about traffic trends that retail during the quarter of into August.

Alessandra Jimenez: Did you see any notable differences in monthly traffic trends, or is the improved demand during the holiday promotional period, mainly a function of increased conversion rates?

Melinda Whittington: Yeah, broadly, traffic remains challenged.

Melinda Whittington: And I think you hear that across all of the virtually all of the companies that have reported recently.

Melinda Whittington: What we definitely see is traffic strengthening around those major holidays.

Melinda Whittington: For us, Memorial Day is always one of our biggest holidays of the year, and we saw stronger traffic trends.

Melinda Whittington: And then, of course, we do a really nice job in our stores of converting once people are in the door.

Melinda Whittington: Fourth of July isn't just traditionally as not as big of a holiday for us, but we also saw more challenge traffic trends.

Melinda Whittington: And I think, across most of the industry, folks experienced a more challenged July.

Melinda Whittington: And so it remains somewhat volatile.

Melinda Whittington: And we certainly see people focusing more on holidays and events and deeper traps in between.

Alessandra Jimenez: Okay, that's helpful.

Bob Lucian: And then such a year specifically as it relates to margins, how is the restructuring process progressing today?

Bob Lucian: Do you still expect to achieve 50 to 60 basis points of improvement in wholesale beginning into Q from the restructuring?

Bob Lucian: And then I'll be offset by the previously mentioned pressure.

Bob Lucian: The case goes in international wholesale or how should we think about margin?

Bob Lucian: We're making progress against that 50 to 60 basis points. There's been some delay relative to the work we're doing down in Mexico and getting people's hired and up to speed from a quality perspective and a productivity perspective.

Bob Lucian: I expect to get to that 50 to 60 basis points by the end of the fiscal year.

Bob Lucian: It will just slowly improve from Q to Q to Q for.

Alessandra Jimenez: Okay, that's helpful.

Melinda Whittington: And then lastly for me, have your advertising plans changed at all given the current demand backdrop from where you thought it would be starting the fiscal year?

Melinda Whittington: Yeah, it's, I mean, it's an ongoing balance of the equation, right?

Melinda Whittington: We want to make sure we're out there.

Melinda Whittington: We believe in our long live the lazy campaign and the strength of our brand.

Melinda Whittington: And so you need to be out there.

Melinda Whittington: But at the same time, particularly in these summer months and look where the consumer is right now, sometimes, you know, you can be speaking, but nobody's listening.

Melinda Whittington: So we're kind of continuously optimizing where we're spending and how much we're spending as we go through these challenging times.

Alessandra Jimenez: Thank you so much.

Brad Thomas: Your next question is coming from Brad Thomas with Keyback.

Brad Thomas: Please pose your question.

Brad Thomas: Your mind is live.

Brad Thomas: Hey, good morning.

Brad Thomas: This is Taylor on for Brad.

Brad Thomas: Maybe if we could just start on the competition or the competitive landscape.

Brad Thomas: What do you sing in terms of competition within the space in terms of pricing and promotions?

Brad Thomas: And I guess related to that, there's been a number of bankruptcy and store closures in the space.

Brad Thomas: You know, what are your some of your thoughts there as it relates to potentially getting some share?

Melinda Whittington: Yeah, so a couple of thoughts on that.

Melinda Whittington: You know, as you mentioned, super fragment and market both amongst retailers and amongst manufacturers and wholesalers in our space.

Melinda Whittington: And you know, these times, you know, of sort of, you know, all the disruption in the last couple of years has made that very heart for a lot of folks to navigate with all the puts and takes.

Melinda Whittington: And so we've seen quite a few folks exit the market in one way or another.

Melinda Whittington: And Bradley, I would say that is, that is a great opportunity for us.

Melinda Whittington: And we have seen that where it's an opportunity to take share in general in our industry.

Melinda Whittington: I think, you know, you see more consolidation through those type of opportunities than you do from, you know, very successful sort of big acquisitions and that type of thing.

Melinda Whittington: So that has definitely benefited our business.

Melinda Whittington: And part of our agility is being ready to help offer those solutions to both V2B customers and to wholesale.

Melinda Whittington: And then also to consumers, you know, as some retailers drop out.

Melinda Whittington: So definitely an opportunity there.

Melinda Whittington: Tough thing for the industry, of course.

Melinda Whittington: And again, you know, the fact that we have a very strong balance sheet and we're here to stay.

Melinda Whittington: Benefits us right in that space.

Bob Lucian: Relative to pricing, you know, input costs are still up pretty significantly versus pre pandemic.

Bob Lucian: And so, you know, we have not seen a lot of sort of, you know, crazy, crazy attempts to really drop prices.

Bob Lucian: We certainly continue to watch those opening price points because the consumer is challenged and they may just simply decide not to go into that discretionary purchase.

Bob Lucian: But broadly not seeing, again, there's always the, there's always the holiday events events to drive to drive activity.

Bob Lucian: But we're not seeing anything real dramatic there.

Bob Lucian: In fact, given that quite a bit of our business is supplied by importers, you know, container rate hikes have actually caused some companies to actually raise their prices in the last quarter or so.

Bob Lucian: And that's something we haven't really had to do or needed to do given our primarily North American based footprint with the exception of, you know, in our case goods business as we alluded to.

Brad Thomas: Great.

Brad Thomas: That's that's super helpful.

Bob Lucian: And then maybe one for Bob, I guess in the retail margin side, you know, one Q was down about 400 basis points or so and I understand one Q is usually the weakest quarter of the year.

Bob Lucian: But how should we be thinking about the retail margins as we move throughout the year?

Bob Lucian: And then, you know, maybe what your thoughts are longer term for that segment?

Bob Lucian: Longer term for the segment we expect to get ourselves as the industry comes back and we get to back to what we expect to do on a regular basis, which is positive same store comes.

Bob Lucian: We expect that that business to be in the mid teens.

Bob Lucian: So that's and that's our long term plan and we that will be continue to be what we're focused against.

Bob Lucian: In the short term, the margin that we saw this this typically as you mentioned, Q one is our lowest margin period.

Bob Lucian: We would expect to see that, and slowly improve and accelerate as we get into the back half of the year.

Bob Lucian: We're typically Q3 and Q4. It has the highest margins for our retail segment because that's where you see the highest level of both sales and deliveries for the furniture industry.

Bob Lucian: Great, thanks Bob, and then if I could sneak one more in, you know, you had a pretty good result within the wholesale segment, you know, 8% increase in the sales to external customers.

Bob Lucian: Can you unpack that a little bit more for us to kind of understand that improvement?

Bob Lucian: Yeah, and I think it's 5% total sales for wholesale.

Bob Lucian: Yeah, but yeah, so the big thing that is driving that, of course, our wholesale business is supporting, you know, our company owned retail, our independently owned furniture galleries, and then our general dealers, which are, you know, multi-brand customers that take, you know, that take a decent amount of our product as well to get to a broad array of consumers.

Bob Lucian: What we saw in this first quarter is those external customers really starting to come back, whereas last year that was still a much more depressed business.

Bob Lucian: So we've seen, you know, sort of sequential strengthening in our retail, even through, you know, the challenging last two years.

Bob Lucian: Those external customers took a little bit longer to come back, and so you're really seeing the benefit of that here in this first quarter.

Bob Lucian: And then the one thing that we'd add to that is just the mental dimension, our channel strategy relative to expanding and getting our product available in more stores, including adding new customers like you, for example, what we specifically mentioned rooms to go, but there's been some others we've added.

Bob Lucian: Those have also helped to increase the wholesale segment sales.

Brad Thomas: Great.

Brad Thomas: Thanks so much.

Anthony Lebedinsky: Your next question is coming from Anthony Lebedinsky with Cedodian Company.

Anthony Lebedinsky: Please pose your question.

Anthony Lebedinsky: Your line is live.

Anthony Lebedinsky: Yes.

Anthony Lebedinsky: Good morning, and thank you for taking the questions.

Anthony Lebedinsky: So first I just wanted to follow up on the last one here as far as the wholesale segment.

Bob Lucian: So, you know, what's driving that actually as far as what would you attribute the wholesale channel actually picking up their sales actually.

Bob Lucian: I guess maybe if you could, I don't know if you could, there's only way you can quantify as far as on the same store or I know you're adding some new customers.

Bob Lucian: So maybe if you could just, you know, if there was a way you could parse out like, you know, how much of that is coming from from you.

Bob Lucian: The wholesale dealers versus organic and what are the main reasons for that?

Bob Lucian: Yeah, we don't have a way to parse that out the way you're looking for Anthony, but the two things that we just mentioned is one, the new customers that you just talked about in fact that we're now have distribution and more customers and more stores.

Bob Lucian: We're not specifically calling out how many specific stores there are because we're also, you know, the wholesale markets are very large markets.

Bob Lucian: So we're losing some mom and pops and we're adding customers like rooms to go or furniture or etc.

Bob Lucian: So, but that's one component.

Bob Lucian: The other component that Melinda alluded to was back a year ago, that market was still depressed. If you will, the wholesale market was depressed. The customers were still getting rid of their inventory and they hadn't gotten back to normal order rates on a year over your basis.

Bob Lucian: Now this past quarter, they're back to those normal order rates versus what I would call a weaker base. So a combination of those two things is what was driving the growth over this past quarter versus year ago.

Melinda Whittington: I would just build two additional items on that external side of things.

Melinda Whittington: You know, we tend to talk about some of our newer customers.

Melinda Whittington: But as we really focus on strategic partners, you know, we've got some real successes with some of our long time customers like the Flumberlands of the world that are strong customers for us and we're really working at how we strategically grow our businesses together.

Melinda Whittington: As well as really sharpening our execution on comfort studios, so that's our store within the store concept.

Melinda Whittington: And over the last year or so, even with long little lazy coming out, we are sharpening execution in those branded spaces across the existing network and expanding that network so that the brand really comes through and feels very consistent.

Melinda Whittington: And to Anne, which is also helping that execution.

Anthony Lebedinsky: Thank you both for that detailed answer.

Anthony Lebedinsky: And actually, as far as the comfort studio concept, I know that obviously that that has grown.

Melinda Whittington: Is there a target in terms of how many of those you want to have at some point as part of your century vision strategy?

Melinda Whittington: I think it's less about a specific number and more about the right execution.

Melinda Whittington: And the reason I say that is we are constantly balancing comfort studio opportunities with furniture gallery opportunities.

Melinda Whittington: So we need to make sure we have a compatible distribution model that really best benefits the consumer.

Melinda Whittington: And are they ready to be a true comfort studio execution?

Melinda Whittington: So not a specific target on this.

Anthony Lebedinsky: Got it.

Anthony Lebedinsky: Okay.

Anthony Lebedinsky: Thanks for that Melinda.

Anthony Lebedinsky: And then as far as the lower traffic obviously as you said, it is an industry wide thing here.

Anthony Lebedinsky: Now your website already has a 30% off promotion for Labor Day sales.

Anthony Lebedinsky: Are you seeing the benefits of that?

Anthony Lebedinsky: Or you need to get close to the holiday.

Anthony Lebedinsky: I mean, you're just just wondering when do consumers start to do that?

Anthony Lebedinsky: When are consumers actually starting to think about buying or are they actually waiting for the actual holiday?

Melinda Whittington: We're in day two of that.

Melinda Whittington: So a little early to the comment on that one.

Melinda Whittington: That promotion is, you know, the depth of that promotion is not different than, you know, what we've been doing for years, honestly even in the middle of the pandemic demand to drive a call to action.

Melinda Whittington: You know, we are experimenting with as you've seen across many retailers even across many categories on how many days do you expand those promotions for to kind of drive that top of mind.

Melinda Whittington: But to early to say anything about how Labor Day will look this year.

Anthony Lebedinsky: Got it.

Anthony Lebedinsky: Okay, understood.

Anthony Lebedinsky: Okay.

Anthony Lebedinsky: And then lastly, case could obviously is a small piece of your business, but it's been impacted by higher container rates.

Bob Lucian: Have you put it put through the ocean freight surcharges to reflect that?

Bob Lucian: Are you thinking about doing that to offset the higher rates?

Bob Lucian: We, we, Anthony, we have, we've already implemented surcharges on new orders.

Bob Lucian: However, we operate on a life basis with, with case good.

Bob Lucian: So as that, as those costs come in, they go immediately to the bottom line. So it's going to be a temporary mismatch on the cost coming in and it's going to take a while before those surcharges take effect, but we actually deliver product that had those surcharges now when they were ordered.

Anthony Lebedinsky: All right.

Anthony Lebedinsky: Well, thank you very much and best of luck.

Anthony Lebedinsky: Thanks, Anthony.

Kelly: The Q&A session has now concluded.

Mark Becks: At this time, I would like to turn the floor back over to mark backs for any closing remarks.

Mark Becks: Thanks, Kelly.

Mark Becks: Melinda Bob and I will be in our offices to take any follow-up calls.

Mark Becks: Have a great day.

Mark Becks: Thank you, everyone.

Operator: This does conclude today's conference call.

Operator: You may disconnect your phone lines at this time and have a wonderful day.

Operator: Thank you for your participation.

Q1 2025 La-Z-Boy Inc Earnings Call

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