La-Z-Boy Incorporated (LZB) Q4 2025 Earnings Report, Transcript and Summary

Good morning, everyone. Welcome to the La-Z-Boy Fiscal 2025 Fourth Quarter Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Becks, Director of Investor Relations & Corporate Development. Mark, the floor is yours.

Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 fourth quarter. Joining me on today's call are Melinda Whittington, La-Z-Boy Incorporated's Board Chair, President and Chief Executive Officer; and Taylor Luebke, La-Z- Boy's SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Slides will accompany this presentation and you may view them through our webcast link, which will be available for 1 year. And a telephone replay of the call will be available for 1 week beginning this afternoon. I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News & Events tab on the Investor Relations page of our website. And it includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. I would also like to call your attention to 2 changes in our presentation format beginning this quarter. As company-owned stores now represent well over half of our total network, we will be focusing our discussion on company-owned retail metrics only and no longer report written same-store sales for the entire La-Z Boy Furniture Galleries network. We believe this will provide appropriate perspective on current consumer trends while eliminating potential confusion. Additionally, to be more consistent with current industry practice, we have renamed all of our non-GAAP financial measures to adjusted financial measures. For example, non-GAAP diluted EPS has been renamed to adjusted diluted EPS. Importantly, the methodology for calculating these measures remains unchanged. And therefore, any previously reported non-GAAP financial measures that are renamed to corresponding adjusted financial measures remain unchanged. With that, I will now turn the call over to Melinda.

Thank you, Mark, and good morning, everyone. Yesterday, following the close of market, we reported our April-ended fourth quarter and fiscal year. We delivered strong results despite continued economic and industry volatility, driving growth and successfully executing on our Century Vision strategy. Highlights for the quarter included consolidated delivered sales of $571 million, growing 3% versus the prior year. Retail segment sales growing 8% led by new stores and acquisitions. During the quarter, we opened our 200th company-owned La-Z-Boy Furniture Galleries store, and we now own 55% of the total network. And our Wholesale segment sales grew 2%, led by our core North American La-Z-Boy wholesale business. Highlights for the year included consolidated delivered sales of $2.1 billion, growing 3% versus the prior year. And within these total company results, our Retail segment sales grew 5% for the year led by the new stores and acquisitions as we continued progress against our Century Vision, direct-to-consumer growth strategy. During the fiscal year, we opened a total of 11 new company-owned La-Z-Boy Furniture Galleries, the most in over 2 decades, and acquired 7 independently owned stores. Our Wholesale segment sales grew 2% for the year, led by sales growth in our core North American La-Z-Boy wholesale business across all 4 quarters. We generated $187 million in operating cash flow for the year, up 18% versus prior year; and returned $113 million to shareholders through share repurchase and dividends including increasing our dividend 10% for the fourth consecutive year. And finally, we continued to maintain a strong balance sheet with $328 million in cash and no external debt. I'm extremely proud of the results delivered by this organization throughout the fiscal year with 4 consecutive quarters of sales growth, including fourth quarter delivered sales that exceeded the high end of our guidance range and adjusted operating margin at the high end of our guidance range even in the midst of significant external volatility. The success we achieved this year is a testament to strong execution across our company as we progress our Century Vision. We are controlling what we can control to drive growth and this quarter was yet another proof point. Even as we expect global economic uncertainty to continue challenging consumers in the near term, we are confident in the strength of our business model to outperform our peers and deliver strong financial performance. Our vertically integrated model and agile supply chain give us the foundation to navigate this environment. Approximately 90% of our upholstered units sold in North America are produced in the United States with our Mexican operations supporting most of the balance. And our U.S.-centric footprint has been core to our competitive advantage to delight our consumers with customized product at speed for decades. In addition, our Mexican-based cut-and-sew operations support more than 2/3 of this North American upholstered unit production, transforming raw cover sourced from multiple countries around the globe. The vast majority of the products produced and exported out of Mexico are USMCA-compliant, and therefore, not subject to tariffs under current tariff policies. Of course, we will continue to carefully monitor the evolving global trade situation and adjust accordingly, leveraging strategic inventory moves, sourcing adjustments and continued vendor diversification as well as nominal pricing actions to manage the evolving landscape as necessary. As part of our Century Vision foundational pillars, we will continue to invest in even further strengthening and increasing the agility of our supply chain. This spring, we kicked off a multiyear project to redesign our distribution network and home delivery program, further enhancing our ability to deliver high-quality, comfortable custom furniture with quick speed to market. We are leveraging our scale to drive efficiencies across the enterprise, reducing the total number of distribution facilities and reducing the total mileage products travel while at the same time supporting a growing network and driving an even better consumer experience. This initiative to transform our distribution network and home delivery program will also help deliver our broader objective of double-digit margins in our Wholesale segment over the long term. And before leaving the topic of supply chain, I'd like to highlight a recent example of agility. In May, our upholstery manufacturing facilities in Siloam Springs, Arkansas, suffered extreme damage from a major storm, which included strong winds and hail. Thankfully, all of our employees are safe and the facility was not occupied at the time of the storm. But the damage impacted the manufacturing facility and damaged the front office area to the point of requiring a complete rebuild. I am proud to say that with the help of support teams from across the company, we rebuilt infrastructure, losing just 1 week of production at the facility; shifted some work between plants; and ultimately minimized consumer and customer delays. This incredible effort and collaboration reinforces the strength of our supply chain and broader enterprise coordination and is another proof point of the resiliency of our teams and ability to navigate whatever comes our way. Now turning towards the consumer-facing aspects of our business and written sales trends. During the fourth quarter, total written sales for our company-owned Retail segment increased 3% versus last year's fourth quarter. Written same-store sales for the Retail segment, which excludes the benefit of newly opened stores and acquired stores decreased 5% versus prior year fourth quarter. Stubbornly high mortgage rates and increased volatility in the global economy negatively influenced consumer sentiment and had an adverse impact on industry traffic. Industry data for the quarter was extremely mixed with public company peers noting same-store sales of relatively flat to declines in the mid-teen range while industry data as reported by the U.S. Census Bureau indicated an increase in the mid-single digits. Our objective remains unchanged: to continuously grow and gain share in the large and fragmented furniture and home furnishings industry regardless of existing market conditions. We are leveraging the strength of our iconic brand, new and innovative marketing, strong product offerings and excellent in-store execution to delight and inspire consumers. Our retail network is growing and our ability to deliver mass personalization with speed to market differentiates La-Z-Boy. These competitive advantages are unlocking a long-term runway for growth. On our Joybird business, written sales trends decreased 21% in the quarter versus a year ago. As a digitally native brand, we believe the Joybird consumer has been more significantly impacted by rising macro uncertainty. This pressure is likely to persist in the near term amid ongoing macroeconomic volatility, and we are making appropriate adjustments to prudently navigate during this time. Notably, we are seeing relatively stronger written trends in our Joybird physical stores where we are able to more fully serve the consumer and overcome these purchase barriers. Turning to our broader strategic road map, I'd like to spend a few minutes recapping progress over the year on our Century Vision objectives. Recall, Century Vision is our strategic framework setting up La-Z-Boy Incorporated for continued growth in the future as we celebrate our centennial in 2027 and beyond, driving top line growth at a pace double the market and delivering consistent double- digit operating margins over the long term. We have successfully expanded La-Z-Boy's brand reach over the past several years and will continue to execute this strategy. Our total Furniture Galleries network ended the year with 366 stores. We remain on track to grow the total network to over 400 stores led by strong growth in company-owned stores. During the year, our company-owned Retail segment surpassed the 200-store milestone, nearly doubling our store count over the last 10 years and ending the year with 203 company-owned stores. We opened 11 new stores in the year, the most in 2 decades, and purchased 7 stores from independent owners. The company-owned store footprint now represents 55% of the total La-Z Boy's Furniture Galleries network, up from 34% a decade ago. We will continue to grow our direct-to-consumer business where we own the entire end-to-end consumer experience, can delight the consumer and are able to collect and leverage even more value-added consumer insights to strengthen the flywheel. In Wholesale, we continue to expand our brand reach with compatible strategic partners to serve more consumers. This strategic initiative is driving increased share of voice for the La-Z-Boy brand and providing a broader range of consumers access to our brand. There remains considerable opportunity in growing with existing strategic regional partners like Rooms to Go, Gardner White, Furniture Row and Slumberland, while also selectively expanding our pipeline of new strategic partners. Additionally, we will continue to invest in our Comfort Studios and branded spaces that offer a unique store-within-a-store branding at larger independent retailers. Brand building is another core pillar of our Century Vision growth strategy. Recall, when we embarked on Century Vision, we conducted extensive consumer research and we continue to do so. One of our earliest learnings was that while La-Z-Boy had the highest brand awareness in furniture, much of that was driven by distant memory. When we launched the Long Live the Lazy campaign, our intent was to go back to our roots of comfort and quality while being more relevant for today's consumers. Our next phase of this journey is launching a new brand identity this summer, continuing to make our brand more relevant while reaching a broader audience. Our refreshed brand identity will consist of a new look and feel, tone and brand voice and be more applicable to today's digital world. Today's presentation slides provide a sneak peek into the new look and feel with more to come in August around National Lazy Day. Another core pillar of our Century Vision is to optimize the Joybird brand to drive sales growth and profitability. Joybird had a solid year with sales increasing 5% and adjusted operating margin slightly positive for the year. And this past month, we opened our 13th Joybird store in Costa Mesa, California, our first new location since November '23. While the Joybird core consumer is particularly challenged in the current economic uncertainty, the brand continues to have significant opportunity to grow share and we remain committed to disciplined investments in the business to position the brand for long-term success with 3 to 4 total new stores planned for fiscal '26. The final pillar of Century Vision is strengthening our foundational capabilities and agility across our supply chain, technology and people. As I noted earlier, navigating external uncertainty and weather challenges and initiating our distribution redesign are great examples of recent progress and continued opportunity for even more progress with distribution redesign being a key enabler towards systemic strengthening of our wholesale operating margins. As we begin fiscal '26, we're optimistic about our ability to continue to outperform the market consistent with our performance in fiscal '25. While challenged in the near term, we still believe our industry will experience a meaningful period of growth longer term as addressing the structural housing shortage and eventual further interest rate cuts will enable a rebound in housing fundamentals. We continue to grow our business and strengthen our foundation to disproportionately benefit from that industry rebound when it occurs. And now let me turn the call over to Taylor to review the financial results in more detail. Taylor?

Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis formerly referred to as non-GAAP. We believe the adjusted presentation better reflects underlying operating trends and performance of the business. Adjusted results exclude items, which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2025 fourth quarter sales grew 3% to $571 million versus the prior year, primarily driven by acquisitions and new stores in the Retail segment and continued momentum in our core North America La-Z-Boy wholesale business. Consolidated GAAP operating income was $30 million. And adjusted operating income was $54 million, an increase of 3% versus last year's fourth quarter. Consolidated GAAP operating margin was 5.2%. And adjusted operating margin was 9.4%, flat versus a year ago as lower input costs, including reduced commodity prices and improved sourcing and better leverage on marketing investments were offset by the impact of the significant ongoing customer transition in our international wholesale business as well as incremental tariff expenses in the quarter. Diluted earnings per share totaled $0.36 on a GAAP basis and $0.92 on an adjusted basis, both of which include a $0.10 impact from unfavorable foreign tax discrete items. As I move to the segment discussion, my comments from here will focus on our adjusted reporting, unless specifically stated otherwise. Starting with the Retail segment. For the fourth quarter, delivered sales were $247 million, up 8% over the prior year's fourth quarter, driven primarily by new and acquired stores. Retail adjusted operating margin was 13.1% versus 14.2% and primarily due to investment in new stores as we absorbed the increased selling expenses and fixed costs supporting our long-term strategy of growing our Retail business. Expanding the La-Z-Boy Furniture Galleries network is a key element of our Century Vision growth strategy, and we made substantial progress in Q4 and the full fiscal year with 5 new stores and 2 acquisitions for the quarter, and 11 new stores and 7 acquisitions for the full year. For our Wholesale segment, delivered sales for the quarter increased 2% to $402 million, driven by growth in our core North America La-Z-Boy wholesale business through favorable shift in product and channel mix as a result of higher sales to our La-Z-Boy Furniture Galleries partially offset by the continued impact of a significant customer transition in our international wholesale business. Adjusted operating margin for the Wholesale segment was 8.5%, flat versus last year's fourth quarter as gross margin and SG&A as a percent of sales were largely unchanged. Continued margin expansion in core North America La-Z-Boy wholesale business was offset by the margin impact of a significant customer transition in the international wholesale business as well as incremental tariff expense in the quarter. To note, this significant customer transition triggered an impairment of the goodwill related to our U.K. business during the quarter. As background, we acquired the U.K. wholesale distribution business in fiscal 2017 followed by the U.K. manufacturing business in fiscal 2022. We remain committed to growth of the La-Z-Boy brand in the U.K. and our new strategic partnership announced last September with DFS, the market leader in the U.K. For Joybird, reported in Corporate & Other, delivered sales were $36 million, down 2% versus the prior year quarter as positive retail store growth was more than offset by declines in the online business. Importantly, Joybird adjusted operating margin was positive in the fourth quarter, relatively flat versus prior year fourth quarter and slightly positive for the year. Moving on to full year results for fiscal 2025. Sales grew 3% to $2.1 billion, driven by acquisitions and new stores in our La-Z-Boy retail business and growth in our core North America La-Z-Boy wholesale business. In addition Joybird grew 5% for the fiscal year. Consolidated GAAP operating income was $136 million. And adjusted operating income was $161 million, a 1% increase versus fiscal 2024. Consolidated GAAP operating margin was 6.4%. And adjusted operating margin was 7.6%, down 20 basis points versus fiscal 2024. GAAP diluted EPS was $2.35 for fiscal 2025, and adjusted diluted EPS was $2.92 for the year versus $2.98 in fiscal 2024. GAAP diluted EPS and adjusted diluted EPS for fiscal 2025 both include a $0.10 impact from unfavorable foreign tax discrete items. Moving on to our consolidated adjusted gross margin and SG&A performance for fiscal 2025 full year. Fiscal year consolidated adjusted gross margin for the entire company increased 70 basis points versus the prior year. Gross margin expansion was primarily driven by the shift in consolidated mix towards our Retail segment, which has a higher gross margin rate than our Wholesale segment as well as lower input costs led by reduced commodity prices and improved sourcing. Adjusted SG&A as a percent of sales for the fiscal year increased by 90 basis points compared with last year, primarily driven by growth in our Retail segment due to investment in acquisitions and new stores, which carries a higher fixed cost structure relative to Wholesale and fixed cost deleverage on lower sales in our international wholesale business due to a significant customer transition. Our effective tax rate on a GAAP basis for the fiscal year was 31.4% versus 24.8% in fiscal 2024. The increase in effective tax rate in fiscal 2025 compared with the prior year was primarily a result of a onetime tax effect of a nondeductible goodwill impairment charge related to the United Kingdom reporting unit, along with the impact from unfavorable foreign tax discrete items. This increase disproportionately impacted the fourth quarter where our effective tax rate on a GAAP basis was 52.1% compared to 25.5% in the prior year. Absent these discrete items and nondeductible goodwill impairment, the effective tax rate would have been 23.2% for the fourth quarter and 24.9% for the full fiscal year. We expect our effective tax rate to be in the range of 26% to 27% for fiscal 2026. Turning to liquidity. We ended the year with a robust balance sheet, $328 million in cash and no externally funded debt. We generated $187 million in cash from operating activities, an increase of 18% versus fiscal 2024 and ended the year strong with $62 million in operating cash generated in the fourth quarter, up 17% versus last year's fourth quarter. We invested $74 million in capital expenditures during the year, primarily related to La-Z-Boy Furniture Galleries new stores and remodels and manufacturing-related investments. We also spent $30 million on acquisitions of 7 independent La-Z-Boy Furniture Galleries during the year. During the fiscal year, we returned $113 million to shareholders through dividends and share repurchases, up 32% versus the prior year comparable period, including $35 million paid in dividends. In November, we increased the dividend 10% for the fourth consecutive year. Additionally, we repurchased 2 million shares in the year, which leaves 3.7 million shares available on our existing share repurchase authorization. We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. In fiscal 2025, our capital allocation was 48% reinvested into the business and 52% returned to shareholders. Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our first quarter. Consistent with our Century Vision strategy, we continue to target sales growth double the industry growth rate and double-digit operating margins over the long term with the benefit of more normalized industry conditions. In fiscal 2026, we expect consumers to be challenged by the volatile macroeconomic environment, and we are planning prudently to navigate the year ahead while still expecting to continue outperforming the industry. Assuming no significant changes in external factors, we expect fiscal first quarter sales to be in the range of $490 million to $510 million, reflecting modest growth against the challenged consumer environment. We expect adjusted operating margin to be in the range of 5.5% to 7%, including the impact of transitory pressure from our U.K. and Joybird businesses as well as investment in our distribution network and home delivery redesign project. We expect to open approximately 15 new company-owned and independent La-Z-Boy Furniture Galleries stores during the year, of which the majority are company-owned as well as 3 to 4 new Joybird stores. The global trade environment remains dynamic, and we have and will continue to execute our playbook to mitigate the impact. This includes leveraging the strength and agility of our supply chain through strategic inventory moves, sourcing adjustments, continued vendor diversification as well as potential pricing actions. We anticipate adjustments for purchase accounting charges for the year to be in the range of $0.01 to $0.02 per share. We expect capital expenditures to be in the range of $90 million to $100 million for fiscal 2026 and as we invest to strengthen the company for the future, consistent with our Century Vision strategy. This includes investments in our La-Z-Boy Furniture Galleries for new stores and remodels, our multiyear project to redesign our distribution network and home delivery program and continued manufacturing-related investments. Our capital allocation target is to reinvest 50% of operating cash back into the business and return 50% to shareholders in share repurchases and dividends over the long term. In fiscal 2025, this was tilted towards shareholders. And looking to fiscal 2026, we expect capital allocation to be more tilted to investments into the business as we execute our Century Vision strategy. And with that, I will turn the call back to Melinda.

Thanks, Taylor. We delivered a strong quarter and fiscal year in a volatile environment, once again demonstrating our ability to adapt and deliver. While we expect the consumer will be challenged for the foreseeable future, we also expect to continue to outperform the industry and deliver long-term profitable growth while prudently investing in the business. Our strong brand and vertical integration that includes company-owned retail and an agile supply chain, along with our strong balance sheet, provides us the foundation for continued growth. Before I close, I'd like to note that during the fourth quarter, La-Z-Boy Incorporated was named to Newsweek's list of America's Most Loved Brands and Most Trustworthy Companies for 2025. These awards, based on independent survey data, our additional recognition of our brand relevance and the enduring strength of our iconic brand and company. I want to thank the entire La-Z-Boy Incorporated team for their hard work, skill and flexibility in navigating a very dynamic environment. We are focused on driving value for all stakeholders, and I look forward to the year ahead. Mark?

Thank you, Melinda. We will begin the question-and-answer period now. Jenny, please review the instructions for getting into the queue to ask questions.

[Operator Instructions] Your first question is coming from Bobby Griffin of Raymond James.

I guess, first, a lot of new stuff to unpack on this call, so appreciate all the details. Maybe when we start with the Wholesale segment and the potential to get back to 10%, it's about 280 basis points, I guess, of expansion. Could you maybe bucket what the size of each of the drivers between the distribution network changes? I believe there'll be some industry volume there, too, as well as recapturing the U.K. transition. Can you maybe give some flavor or some color on how big is each one of those drivers? And is there anything I might have missed, too, as the path back to 10%?

Yes. Thanks, Bobby, for the question. Yes, part of our margin algorithm over -- for Century Vision is to advance Wholesale to double- digit over the long term. Now that also requires normalized, call it, industry growth, which we're currently not in at current state. But as we've talked in the past, as we think about bridging from where we're at today to, call that, 10% over the long term, we believe about 0.5% is fully in our control. And this distribution and home delivery redesign project is going to meaningfully help accomplish part of that over a multiyear project. The other half, frankly, is a requirement of just a healthy industry, which is backed by a healthy housing market. So that's -- yes.

And then, Melinda, maybe on the redesign and distribution project, can you talk a little bit about why now? I guess, obviously, this is part of Century Vision. Is it just also part that the scale of the business has gotten bigger, you own more of the corporate-owned stores. Just curious on the timing of the decision of why now to do the distribution project.

Yes, absolutely. And you really hit it on the head. I mean, we are over recent years with a lot more acquisition that sort of built pieces that we have the opportunity for efficiency as well as just really stepping back and with the expertise we have in the business today to just make sure that we have the right network to support our business as we go forward. So this will be a several-year project. And by the time we're done, we will have overall reduced our total warehouse overhead, optimized routes and miles traveled, reduced inventory levels we need to carry and ultimately improve that delivery experience that's going into the consumer homes as well. So it certainly drives an efficiency side of things, but even more importantly, it drives an even better service level to our consumers because we'll be able to cut time out of the system and less miles on product as well.

Appreciate it. And I guess lastly for me, can you talk a little bit about what you're seeing maybe on written orders here in May or the quarter-to-date period? I think it was pretty well known President's Day was soft, but just curious if there's been any kind of change in the monthly cadence over -- maybe more of the near-term time frame.

Yes. Our Memorial Day was a solid start to the year, and we certainly saw a strong execution in store. If I go back to across Q4, February was our most challenged month, as you know. And so what we're really looking to do as we always do is drive that total written number leveraging our new stores, our acquisitions and then maximizing what we are getting out of each individual store. So I think with where the consumer is right now, we'll need to continue to be very active on that. But again, out of the fourth quarter, February was really the most challenged month. And we're pleased with where we started out on Memorial Day. So it will -- I think the consumer will need to stay actively engaged to drive through this period.

Very good. Well, good to hear the Memorial Day was better than President's Day. One day, we will be talking about a better furniture industry, hopefully.

One of these days.

And your next question is coming from Anthony Lebiedzinski of Sidoti & Company.

So certainly nice to see the sales outperformance for the quarter. And so first, let's start with that. So just relative to your guidance that you issued back in February, so even with a softer start, as you alluded to, I mean can you just give us the reasons -- the main reasons for the sales outperformance versus your outlook that you provided a few months ago?

Overall, I'd say broad base, so no one individual driver. At the time we were -- we put guidance out there in February, we had just come off President's Day, which I think across the industry was fairly challenged, just a lot of new macroeconomic news really coming out at that time. And so we mentioned that our written trends across the quarter, February was the most challenged from a year-on-year growth basis. . So we were pleased. Again, we do what we always do there, which is to work to execute and delight the consumer and work with our business partners on the B2B side as well. And so as the year went on, we mentioned that February was the toughest month. So we go back to what we do best, which is execute and make sure that we're doing right by the consumer. And we were pleased that the quarter ended up finishing up a little bit stronger than what we had initially expected even in the midst of what ended up being increased macroeconomic challenges throughout the quarter.

Understood. And then a couple of questions on tariffs. So you mentioned there was some tariff expense. I'm not sure if you quantified that, maybe I missed that. But if you could just maybe expand on that as to how much of the tariff expense are you thinking will be impacting your first quarter results. And as far as pricing, you've talked about some potential, I think, pricing actions. So is any pricing included in the first quarter outlook? Sorry for the long-winded questions.

Thanks, Anthony. Let me try to hit those one by one, maybe not in the right order that you asked them. So as we talked before and as a reminder, we've been planning against multiple different scenarios since basically last fall as we know kind of trade policy could potentially evolve. So we were well ahead of kind of different actions we would take to mitigate anything that happened. And essentially, at the start of our last quarter is when things went into place that we responded to agilely and balanced and calm. And our policy at La-Z-Boy here is we act on fact, we wait a week to ensure it sticks and then we execute our playbook to mitigate the impact to our company while also being cognizant of our consumers and customers. So over the more immediate term in quarter 4, as you can imagine, with the general flurry of activity, there is a moment in time where actions we put into place can't completely mitigate impact as we put nominal pricing actions into the market. For our core upholstery business, low single digits, as well as really great work on our supply chain on strategic inventory moves to get ahead of potential trade policy changes as well as, call it, just inventory productivity on utilizing what we had on hand. As we look forward, we, a, want to remain agile to respond to how anything could change. The plans we put into market, we believe, mitigate the exposure we have. But frankly, our biggest concern has always been what does it do to the consumer, which has been relatively challenged now for a bit. So that's one we continue to watch. But overall, really happy with the team and our agility and think we're well positioned heading into quarter 1 of this fiscal year.

Understood. Okay. And then lastly, for Joybird. So Melinda, you talked about the divergence for your written business between online versus the stores. So I know you said that you will open, I believe, 3 to 4 this year Joybird stores. But longer term, are you perhaps maybe thinking of going maybe beyond that 25-store goal that you had previously talked about? Or just how are you guys thinking about longer term for Joybird in terms of the stores?

Yes. We still feel really good about Joybird, and it is still a young business. And so -- and particularly given that it services a more urban and generally a little bit younger consumer as well, a little more challenged here in the near term. And as you pointed out, Anthony, we're really pleased with the store base that we have now. We've got one more open here just in this last month or so. And that those are really servicing our consumer well even in a more challenged time for that consumer. We've called out the 25 and we still see a path to that. We like this pace of 3 to 4 new stores. And do I think we have the potential to go beyond 25 over the long term? Yes, absolutely. But given just Joybird is still a fairly new brand and we want to make sure that we grow prudently, particularly in challenging time for our industry, so we're going to continue to optimize the brand, optimize that consumer experience and grow in a prudent way.

Our next question is coming from Brad Thomas of KeyBanc Capital Markets.

Melinda, I wanted to start off with sort of a big picture question considering the environment that we're in. I was wondering if you could just help us put into context, given tariffs coming through, how you're thinking about La-Z-Boy's relative price point and consumer offering. And so can you help us sort of put into context what you're seeing out there from a competitive standpoint in terms of promotions and pricing and what La-Z-Boy is doing relative to that?

Yes. Thanks, Brad. I think, obviously, we are positioned extremely well in this environment, as I mentioned, 90% of our products. So let me step back a little bit, about 90% of our business is in the United States even though we're still kind of single-digit share. So obviously, lots of opportunity to grow. And then within that, we service the vast majority of that with our manufacturing footprint in the United States. So broadly, it should be a real strength for La-Z-Boy to have this manufacturing footprint here in the United States. And of course, our target is to provide consumers with the personalized furniture with speed to market. So I feel really good about where we're positioned from that standpoint. At the same time, we need to navigate the challenges for the consumer. And just in general, we see pent-up demand for furniture. We know that our industry has been in a bit of a malaise for a number of years. But if the consumer is overall more strapped because of the broader macroeconomic trends, they will tend to stretch out their furniture purchases. So we are, again, working to play offense. We are positioned well in our ability to keep our pricing responsible. We're not broadly seeing really crazy competitive moves out there, to your question. And I think that's because the input costs are going up for the industry, right, even if -- particularly if you're an importer, which more than half of our competition is. At the same time, you have a strapped consumer. So to the extent that we can continue to deliver an incredible product at a competitive price, I think we're very well positioned even to navigate through a fairly challenging time.

And that's very helpful. But to be clear, Melinda, as we think about La-Z-Boy's pricing strategy going forward, are you needing to push through more price? And what does the timing look like for that over the quarters ahead?

Yes. Taylor mentioned some nominal pricing put into place in the last quarter and that has been sufficient to manage what we're going through. Obviously, we need to stay agile and we look for a variety of ways to respond to increased input costs from broader sourcing, how we manage timing of buys and so forth. But we've had a little bit of nominal pricing in. But at this stage, I don't have any big concerns about anything big coming down the pipe.

That's great to hear. And maybe a question for Taylor. Just as we think about operating margin, I know you're not going to guide the full fiscal year, you've given us the quarter ahead here. But maybe in broad strokes, can you help us think about the major puts and takes here for the fiscal year ahead?

Yes. Good question, Brad. Yes, we don't guide to the full year. But as we look out, a lot of it depends again to the health of the industry and the consumer, which right now is pretty uncertain. So what we've stated and what we believe is whatever the industry does, we'll outperform. So if the industry looking ahead for our fiscal is flat, we'll grow. And if we grow, we should expect some margin expansion. If the industry is down, then we will be less down. But our goal going into every year is to obviously expand our margins. Now we're in a very uncertain and volatile time, so it's tougher than when you've got all the industry or housing, call it, tailwinds behind you. But a lot of it depends on what the industry does. So we're being incredibly agile. We're making our own momentum and controlling what we control quarter-over-quarter and being very prudent in light of all the external factors around us.

Well, we appear to have reached the end of our question-and-answer session. I will now turn the call back over to the management team for their closing remarks.

Thanks, Jenny. Melinda, Taylor and I will be in our offices for the rest of the day to answer any follow-up questions. Thanks, and have a great day.

Thank you very much, everyone. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful rest of the day. We thank you for your participation.