A Member of Pat McKeough’s Inner Circle recently asked for his advice on a vertically integrated residential furniture company best known for its recliners and upholstered seating.
Pat likes the value proposition centered on its aggressive supply chain optimization and retail store expansion. Furthermore, the business operates with a fortified balance sheet and is positioned to expand its high-performing corporate store count while maintaining or growing its solid dividend. However, Pat notes the firm needs to address near-term challenges brought on by a stagnant housing market and muted discretionary consumer spending.
La-Z-Boy Inc. (Symbol LZB on New York; www.la-z-boy.com) is a furniture retailer and manufacturer famous for inventing the recliner. The company was founded in 1927 and is headquartered in Monroe, Michigan. LA-Z-Boy went public in November 1972 with its listing on the New York exchange.
The company’s sales are mainly in the U.S. (90%), while most of its manufacturing takes place in North America. This has helped it to navigate the current higher U.S. tariffs on imported goods. There are eight manufacturing facilities and 14 distribution centres in North America.
La-Z-Boy operates through two main segments: Wholesale and Retail.
Wholesale: The company manufactures recliners, sofas, chairs, beds, tables, wall systems, and wood furniture for retail stores. Brands include Kincaid, England Furniture, Hammary, Joybird, and American Drew. La-Z-Boy is a leading manufacturer of reclining chairs and one of the largest manufacturers and distributors of residential furniture in the U.S.
Retail: The Retail segment consists of 230 company-owned La-Z-Boy Furniture Galleries stores; the remainder of the nearly 380 La-Z-Boy stores across North American are franchise owned.
On November 18, 2025, the company announced a series of strategic initiatives to boost results:
- The completed acquisition of 15 independently owned La-Z-Boy Furniture Galleries in the Southeast U.S.; this is expected to add an estimated $80 million in annual retail sales.
- The planned exit of non-core businesses (Kincaid and American Drew case goods and Kincaid upholstery).
- The closing of the U.K. manufacturing facility.
- The realignment of executive leadership and corporate staffing to focus on core businesses.
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La-Z-Boy’s strong balance sheet is a big plus
In the three months ended April 25, 2026, La-Z-Boy’s revenue was down slightly, to $570.3 million from $570.9 million a year earlier. Revenue rose in the retail segment but was offset by lower delivered volume at Joybird. (Joybird is La-Z-Boy’s direct-to-consumer furniture brand specializing in highly customizable, mid-century modern designs.)
Excluding one-time items, earnings rose 34.5%, to $51.6 million, or $1.26 a share, from $38.4 million, or $0.92. Earnings rose due a stronger mix of higher-profit-margin retail sales
La-Z-Boy’s balance sheet is strong, with cash of $303.2 million and no long-term debt.
The stock yields 2.4%.
La-Z-Boy needs higher consumer confidence in the near term to report higher sales and profits. But longer term, improved new home sales and existing home turnover should lead to increased demand. Moreover, by 2028, the company’s overhaul of its distribution network should lead to reduced logistics costs and better inventory management. That will protect profit margins.
Recommendation in Pat’s Inner Circle: La-Z-Boy Inc. is okay to hold.
