La-Z-Boy Returns to Sales Growth, but Slides to a Loss
La-Z-Boy swung to a GAAP net loss of $(2.3) million even as written same-store sales turned positive for the first time in a year, rising 3% in the quarter.
La-Z-Boy (LZB) reported a GAAP net loss of $(2.3) million, or $(0.06) a share, for its fiscal first quarter, reversing net income of $18.2 million, or $0.44 a share, a year earlier. The furniture maker's operating margin fell to (0.4)% from 4.5%, a 490-basis-point decline, while adjusted operating margin dropped 90 basis points to 3.9%.
The loss came alongside the first positive reading on written same-store sales in a year: orders rose 3% in the quarter, a 500-basis-point improvement from the 2% decline reported in the fourth quarter and a reversal from the 4% decline posted three quarters earlier. The gain was concentrated in La-Z-Boy's company-owned retail stores, where written sales growth accelerated to 16%, up from 11% in each of the prior two quarters and the fastest pace in the trailing four. Retail segment operating margin also improved for a second straight period, with GAAP margin ticking up to 6.4% from 6.3%.
The wholesale business moved in the opposite direction. Segment sales fell 9% to $323 million, or 5% excluding the divestiture of the American Drew and Kincaid casegoods business completed in May, reversing a 1% increase reported three quarters earlier. Wholesale operating margin compressed to 2.1% from 7.1%, reflecting fixed-cost deleverage on lower delivered volume, partly offset by tariff refunds and pricing actions. The casegoods divestiture, first flagged in November 2025, now registers as roughly a 2-percentage-point drag on consolidated sales comparability, which fell 3% to $476 million from $492 million, or 1% excluding the divested unit.
Two one-time items widened the loss beyond what the operating trends alone would suggest. La-Z-Boy concluded production at its San Luis Rio Colorado, Mexico plant, one of two closures announced previously, booking $17.6 million in pretax supply chain optimization charges, or $0.35 a share, compared with just $1.3 million in year-ago adjustments tied to a distribution transformation. The company also disclosed a $4.1 million pretax charge, or $0.08 a share, from terminating a legacy non-qualified retirement plan, a cost not present in any prior comparison quarter.
Cash generation weakened alongside the loss. Operating cash flow fell to $15.6 million from $36.3 million a year earlier, and free cash flow turned negative at $(7.6) million versus $17.8 million, a sharp reversal from the $89 million in operating cash flow posted three quarters earlier and the $204 million generated for all of fiscal 2026. La-Z-Boy nonetheless increased cash returned to shareholders 62% to $35 million, split between $25 million in buybacks and $10 million in dividends, drawing on the $300 million repurchase authorization approved in the fourth quarter. The company also kept expanding its retail footprint, adding four company-owned stores in the quarter and signing an agreement for two more, following the largest annual store expansion in its history in fiscal 2026.
Joybird, La-Z-Boy's direct-to-consumer brand, continued to weigh on results, with written sales down 17% and delivered sales down 4% to $27 million, continuing a volatile pattern.
For the second quarter, La-Z-Boy guides to sales of $500 million to $520 million, implying enterprise growth of negative 1% to positive 2% excluding the divestiture, and adjusted operating margin of 4.0% to 5.5%, well below the 9.9% adjusted margin the company posted in the fourth quarter of fiscal 2026. The guidance points to continued near-term investment and cost friction even as the retail order trend that turned positive this quarter carries into the back half of the year.