La-Z-Boy Incorporated (LZB) Q4 2026: Flat Sales, Strong Margin Improvement — Cautiously Optimistic

La-Z-Boy Incorporated reported its fourth quarter results for fiscal 2026, revealing consolidated sales of $570 million, which is flat compared to the prior year. However, the company achieved a notable improvement in operating margins, with a GAAP operating margin of 7.2%, up from 5.2% in the same quarter last year. This translates to an increase of 200 basis points year-over-year. Diluted earnings per share (EPS) also saw a significant rise, with GAAP diluted EPS at $0.81, compared to $0.36 in the prior year, marking a 125% increase.

This quarter can be viewed as a positive outcome for shareholders, primarily due to the substantial improvement in profitability metrics despite flat sales. The increase in operating margins indicates effective cost management and operational efficiency, which are crucial in a challenging retail environment.

Key Metrics:

• Consolidated Sales: $570 million (flat YoY)
• GAAP Operating Margin: 7.2% (up from 5.2% YoY)
• Adjusted Operating Margin: 9.9% (up from 9.4% YoY)
• GAAP Diluted EPS: $0.81 (up from $0.36 YoY)
• Adjusted Diluted EPS: $1.26 (up from $0.92 YoY)

Dividend and Share Buyback:

La-Z-Boy has continued its commitment to returning value to shareholders, having authorized a new share repurchase program of up to $300 million, replacing the previous program. Additionally, the company has maintained its dividend policy, marking the fifth consecutive year of a 10% increase in quarterly dividends.

Strategic Initiatives:

The company has made significant strides in its strategic initiatives, including the completion of the exit from its American Drew and Kincaid wholesale casegoods businesses and the restructuring of its U.K. supply chain. These moves are expected to streamline operations and enhance focus on its core upholstery business, which is crucial for long-term growth.

Forward Guidance:

Looking ahead, La-Z-Boy anticipates first-quarter sales in the range of $490-510 million, reflecting organic growth of up to 4% (excluding acquisitions and divestitures). The company expects adjusted operating margins to be between 4.0-5.5%. Investors should keep an eye on the company's ability to navigate the seasonal challenges of the first quarter, which is typically the lowest sales and operating margin quarter of the fiscal year.

Conclusion:

In summary, while La-Z-Boy's sales remained flat in Q4 2026, the significant improvements in operating margins and EPS are encouraging signs for shareholders. The company's strategic focus on its core business and commitment to returning capital to shareholders through dividends and share repurchases further bolster its outlook. Investors should monitor the upcoming quarter closely, particularly the execution of growth strategies and the impact of seasonal trends on sales performance.

Note: The following tables contain amounts in thousands.

	Quarter Ended		Year Ended
	4/25/2026	4/26/2025	4/25/2026	4/26/2025
Sales	$570,338	$570,871	$2,126,635	$2,109,207
Cost of sales	307,583	319,809	1,190,034	1,182,789
Gross profit	262,755	251,062	936,601	926,418
Selling, general and administrative expense	201,558	200,954	787,427	770,000
Goodwill impairment	19,967	20,581	19,967	20,581
Operating income	41,230	29,527	129,207	135,837
Interest expense	-135	-134	-524	-545
Interest income	2,525	3,258	11,880	14,877
Other income (expense net)	-520	-635	-1,758	-3,035
Income before income taxes	43,100	32,016	138,805	147,134
Income tax expense	9,276	16,666	35,894	46,182
Net income	33,824	15,350	102,911	100,952
Net (income) loss to noncontrolling interests	-551	-419	-926	-1,396
Net income to La-Z-Boy Incorporated	$33,273	$14,931	$101,985	$99,556
Basic weighted average common shares	40,589	41,208	40,982	41,601
Basic net income attributable to La-Z-Boy Incorporated per share	$0.82	$0.36	$2.49	$2.39
Diluted weighted average common shares	40,923	41,942	41,341	42,345
Diluted net income attributable to La-Z-Boy Incorporated per share	$0.81	$0.36	$2.47	$2.35

Current assets	4/25/2026	4/26/2025
Cash and equivalents	$303,213	$328,449
Receivables, net of allowance of $5,196 at 4/25/2026 and $5,042 at 4/26/2025	131,039	139,533
Inventories, net	218,445	255,285
Assets held for sale	20,209	—
Other current assets	101,008	82,421
Total current assets	773,914	805,688
Property, plant and equipment, net	356,717	339,212
Goodwill	243,300	205,590
Other intangible assets, net	77,582	51,161
Right of use lease asset	520,726	452,848
Other long-term assets, net	70,096	67,663
Total assets	$2,042,335	$1,922,162
Current liabilities
Accounts payable	$101,875	$95,984
Lease liabilities, short-term	88,762	80,592
Accrued expenses and other current liabilities	239,258	244,215
Total current liabilities	429,895	420,791
Lease liability, long-term	475,526	410,265
Other long-term liabilities	74,240	59,130
Shareholders' Equity
Preferred shares – 5,000 authorized; none issued	—	—
Common shares, $1.00 par value – 150,000 authorized; 40,349 outstanding at 4/25/2026 and 41,164 outstanding at 4/26/2025	40,349	41,164
Capital in excess of par value	400,752	385,601
Retained earnings	610,423	597,432
Accumulated other comprehensive loss	-1,527	-3,574
Total La-Z-Boy Incorporated shareholders' equity	1,049,997	1,020,623
Noncontrolling interests	12,677	11,353
Total equity	1,062,674	1,031,976
Total liabilities and equity	$2,042,335	$1,922,162

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