La-Z-Boy Incorporated (NYSE:LZB) Q4 2019 Earnings Conference Call - Final Transcript

Jun 19, 2019 • 08:30 am ET

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La-Z-Boy Incorporated (NYSE:LZB) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
Melinda Whittington

that first round. We're up to, call it, across the blended portfolio just under 5% on Chinese tariffs.

Mexico came and went in the last couple of weeks, which would have created another round of pricing. Canada has come off. So at this point, we are -- with just pricing that has come out in two weeks, three weeks ago, we are whole in what we're trying to pass through. What we don't know is how the elasticities will be impacted on that pricing, or what else will come along in the next round of tariffs which, again, we would still try to pass through.

But at some point, you're just hitting an elasticity point that could be troubling. Particularly on the back of -- recall over the last two years, the industry has seen some pretty significant upticks in raw material charges that we're starting to see become a tailwind instead of a headwind. But overall, furniture prices have certainly taken an uptick over the last two years.

Executive
Kurt L. Darrow

Yeah. And I think we saw that. The combination of all those things really hit the wall in Canada, when you add on the currency. So, I think some of the furniture coming from America and Canada is 30%, 40% more expensive now, given the currency. So, there could come a time, Brad, when the effect on volume and not running our plans at the level we want to is better than passing on more tariff. But we don't believe we've reached that point yet. But we'll keep a watchful eye on it.

Analyst
Bradley Thomas

Great. And if I could add one more on Joybird. It's really been experiencing some exciting growth. Can you help us think about how much you think Joybird could be up this coming year? Just obviously can -- I know you -- I'll tend to not hide on sales, but obviously, it could create a lot of variability given how fast it's been growing historically, for example. How much was the $22 million up year-over-year in 4Q? And again, how are you thinking about it going forward?

Executive
Kurt L. Darrow

Well, we're not going to give you exact, but I would say, honestly, we don't know because we are slightly behind in the integration plan we had. But we're very pleased that we are making their product now in Dayton, Tennessee. We are -- we have filled our regional distribution centers with their products, so they can get -- consumers can get product in a week or less. Having half the line made on the East Coast cuts down the time and the transportation costs.

But I just -- if you did run out of progression, Brad, we bought them when they were on a $50 million to $55 million pace. And now after owning them for less than nine months, we believe they're on a $70 million to $80 million pace and we would expect that to be a higher pace all next year if everything we have comes together.