La-Z-Boy UK has reported a significant decline in revenue for the year ending April 27, 2024, with turnover dropping by 35% to £25.4 million. The drop is attributed to the impact of unwinding a backlog of orders from the post-Covid trading period, which had seen a surge in demand. However, the company pointed out that this figure is more comparable to pre-pandemic levels.
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Despite the fall in revenue, La-Z-Boy UK saw an improvement in its gross margin, which increased to 24.8% from 18.1% in 2023, thanks to a normalisation in supply chain costs. Nevertheless, this margin boost was not sufficient to offset the decline in revenue. Profits also took a hit, dropping by approximately 25%, with the company reporting £2.33 million in profit for the period.
The company explained that the decrease in revenue was primarily caused by the backlog of orders that accumulated during the 2022 fiscal year, which carried over into the following period. This backlog had contributed to a surge in sales, and its unwinding has now resulted in a normalisation of demand, leading to the revenue drop.
These figures pre-date the termination of La-Z-Boy UK's long-standing partnership with ScS and the commencement of its new supply agreement with DFS. The company stated that the financial impact of this new arrangement could not yet be accurately estimated.
La-Z-Boy UK operates as the wholesale arm of the Michigan-based manufacturer, with products sourced from both its Colne-based UK manufacturing facility and its overseas factories. The company also reported a significant decrease in its closing cash balance, which fell by £4.5 million to £2.1 million as of the April balance sheet date. This drop is believed to be related to an estimated £4 million payment made to its US parent company.
Despite the challenges, La-Z-Boy UK remains focused on its future direction and the ongoing changes in its business operations.
Source: www.thefurnishingreport.com