La-Z-Boy Incorporated (NYSE: LZB) stock surged above 3% after the bell as the first quarter earnings came ahead of estimates. However, the top line failed to beat the consensus. The retailer’s stock has recovered 20% from late December’s 52-week low of $25 mark. However, the share price is down about 5% in the last 12 months. The company’s stock was down 4% at the close of today’s trading.
Thanks to solid Retail division sales performance, sales rose 7.5% to $413.6 million over last year. The top line growth was helped by the purchase of La-Z-Boy Furniture Galleries in Arizona and Joybird acquisition. The company anticipates Joybird to report profitability in the second half of 2019.
Adjusted earnings came in at 42 cents per share, up 3 cents from last year. For the first quarter, analysts were anticipating revenue of $415.9 million and adjusted EPS of 34 cents.
Retail segment continued its momentum from the fourth quarter with the sales jumping 19.9% from the core-base stores. Retail division same-store sales grew 3.5% aided by improved conversion, rise in average ticket size and better store level execution. La-Z-Boy Furniture Galleries’ written comp-store sales increased 4.7%.
Upholstery segment witnessed flat sales dragged by the England subsidiary and muted performance from the international businesses. Non-GAAP operating margin came in at 9.5%, an increase of 1.3% from last year. The improvement in margin was backed by improved supply chain efficiencies and lower commodity costs.
Casegoods segment sales was down 4.4% to $27.1 million and operating margin contracted to 9.6% compared to10.9% in the prior-year period, due to challenging industry trends in the non-branded furniture environment.
Muted Q4 Performance
Last quarter, sales rose 8% aided by the strong performance from the Retail segment coupled with the Furniture Galleries store acquisition in Arizona and Joybird purchase. Adjusted earnings saw an 11% decline to 64 cents per share. Earnings dwindled 96% due to the pension plan termination and accounting charges, resulting in the top and bottom line miss compared to estimates.
Looking Ahead
For the second quarter, the street is expecting sales of $453 million and adjusted earnings of 51 cents per share, an increase of 3 cents compared to prior year period. On the fiscal 2020 estimates, revenue is slated to increase 5% to $1.83 billion and non-GAAP earnings to improve 8 cents to $2.22 per share over last year.
