La-Z-Boy Incorporated (NYSE:LZB) Q1 2018 Earnings Conference Call - Preliminary Transcript

Aug 23, 2017 • 08:30 am ET

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La-Z-Boy Incorporated (NYSE:LZB) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Executive
Kurt Darrow

at a high level. And as we move through August, volumes have returned to our planned levels and I'm confident that as a year unfolds, the efficiencies of our supply chain will be evident in our results.

Before I talk about the three business segments for the quarter, I will take a few minutes to talk about what we are doing to expand our business in the future. The work we are doing on the e-commerce front is the most notable and the opportunities before us are exciting, particularly as we will have a dual strategy to reach two distinct groups of consumers.

Our 4-4-5 store build-out program, one of our key growth strategies over the past four years has been essential as we expand the La-Z-Boy Furniture Galleries store network across North America to fully penetrate the distribution landscape associated with our core consumer demographic.

To-date, we have made significant progress with 4-4-5. In addition to opening new stores, we have reached the second four in our moniker of $4 million in average revenue per store in the third-year of our strategy. Additionally, with many remodeled and relocation projects undertaken throughout the past four years, we have improved the overall quality of the store network with a 116 stores in the new concept design format.

Moving forward, we will continue to open stores in key locations. As we have discussed in the past, the La-Z-Boy Furniture Galleries stores showcase our full line of furniture, display full room groups complete with accessories, highlight customization opportunities with our broad array of fabrics and leathers, and provide the consumer with the access to our complimentary design services. When consumers shop in our stores, we have the opportunity to sell multiple pieces and/or a complete room group and increase the average ticket.

In turn, the consumer leaves as the more satisfied customer with a beautifully designed room. That said, with the online furniture sales growing rapidly, particularly among millennials and the Gen X crowd, over the past year La-Z-Boy has developed a multi-faceted strategy to participate in and leverage the trend to drive our growth.

In evaluating the online landscape, the demographic of the consumer who purchase most frequently online and La-Z-Boy's strengths and competitive advantages, we have created a framework to pursue three e-commerce opportunities. The first is to increase online sales of La-Z-Boy Furniture through la-z-boy.com and other digital companies. The second is to leverage the strength of our world-class global supply chain to support other e-commerce brands, and the third is to invest in new online companies.

I'll take a few moments to more fully discuss each of those strategies. First, the La-Z-Boy brand opportunity. La-Z-Boy is the most powerful brand in the industry and while research tells us that the majority of our core customers continue to shop in the stores, most are spending a lot of time online, researching products beforehand.

So we believe we need to have a best-in-class digital presence to make it easy for consumers,