La-Z-Boy shares plunge 17% as uneven consumer spending dents earnings
La-Z-Boy reported a first-quarter adjusted earnings miss and slashed its second-quarter outlook, citing an uneven consumer environment, while peers like Home Depot and Target delivered stronger results.
La-Z-Boy Incorporated shares fell 17% in after-hours trading following the release of weaker-than-expected first-quarter results, underscoring the challenges facing furniture retailers in a volatile macroeconomic landscape. The company reported a GAAP loss per share of $0.06 and adjusted earnings per share of $0.43, missing the estimated $0.49. Total sales declined 3% to $475.6 million, falling short of the $501.4 million forecast, with written sales for its Joybird brand dropping 17% due to lower volumes in a particularly volatile consumer segment.
Management attributed the shortfall to an uneven consumer environment, providing a cautious outlook for the fiscal second quarter. La-Z-Boy now expects sales growth of between -1% and 2%, with a midpoint forecast of $536.7 million, below the Street’s previous expectation. The company noted that persistent macro pressures continue to impact discretionary spending, complicating efforts to stabilise revenue growth.
The earnings miss occurs against a backdrop of mixed results across the broader retail sector as the second-quarter earnings season winds down. While La-Z-Boy struggled, Home Depot beat expectations, reporting second-quarter revenue of $47.9 billion, driven by customers focusing on smaller home improvement projects. Target also delivered a quarterly earnings beat, increasing sales across all merchandise departments, particularly in beauty and food, and raised its full-year outlook.
Conversely, Lowe’s reported second-quarter revenue of $26 billion, slightly below the $26.1 billion expectation, with same-store sales growing 0.2% against a 0.7% expectation. The home improvement retailer cited pressure in do-it-yourself consumer spending, although its pro business and online transactions helped offset some of the weakness. These divergent results highlight the selective nature of current consumer spending.
The mixed performance comes as S&P 500 companies are on pace for a 50% year-over-year earnings growth rate, the highest since 2021, largely propelled by artificial intelligence investments. However, for retailers like La-Z-Boy, the focus remains on navigating an uneven consumer landscape where discretionary spending remains under pressure from inflation and geopolitical concerns.
