La-Z-Boy Inc. (LZB) surged as much as 12% Thursday after the home furnishings-and-fixtures company boosted its dividend and beat Wall Street’s expectations for its fiscal second-quarter earnings.
The recliner company’s shares rose to as high as $32.62 before pulling back and ending the session at $29.81, up 2.2% on the day. LZB rallied after the firm reported on Wednesday after the bell that its fiscal second-quarter net income hit $20 million, or 42 cents a share. That fell from $22.9 million (47 cents a share) a year ago, but La-Z-Boy also said that adjusted earnings per share totaled 48 cents for the latest period — beating analysts’ 44-cent consensus estimates.
Revenues also rose to $439.3 million from $393.2 million a year ago, exceeding the $434 million analysts had expected. Meanwhile, same-store sales for company-owned shops increased 4%, while La-Z-Boy boosted its quarterly dividend 8% to 13 cents a share.
Among other positive developments, sales in the company’s upholstery segment increased 4% to $317.1 million, while sales in the retail segment gained 19.7% to $139.7 million, reflecting results for the core stores as well as $16.8 million of sales from acquisitions.
La-Z-Boy also finalized its planned acquisition of 10 non-company-owned La-Z-Boy Furniture Galleries stores and the Joybird.com online-furniture business during the latest period. The company announced in July that it had agreed to buy Joybird for an undisclosed sum.
Chairman and CEO Kurt Darrow said in a conference call with analysts that the Joybird deal “will allow us to pivot to the younger group they are servicing, made up of mostly Millennials and Gen-Xers through a different channel while leveraging the La-Z-Boy supply chain.”
Still, La-Z-Boy’s operating margin fell to 10.1% on a GAAP basis during the latest period, down from 11% a year ago. The company said in a statement that margins declined because “price increases taken over the last year to counter increased raw material costs were more than offset by changes in product mix and inflationary pressures in our supply chain — including procurement, manufacturing operations and logistics.”
(This article has been updated with closing stock prices.)