Dive Brief:
- La-Z-Boy kicked off a redesign of its distribution network and home delivery program this spring, a critical element of the company's multi-year growth strategy, President and CEO Melinda Whittington said in a June 18 earnings call.
- The furniture maker believes a leaner, more effective supply chain can help deliver consistent double-digit operating margins, Whittington said.
- "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," the CEO told investors.
Dive Insight:
The distribution system overhaul is part of La-Z-Boy's Century Vision plan it announced in 2022 to reach long-term double-digit margins and “top-line growth at a pace double the market," Whittington said. The company wants to complete the five-year plan by its centennial year in 2027.
"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," Whittington said. She did not provide specifics of what the redesign would entail.
La-Z-Boy joins other home product manufacturers and retailers leaning on their supply chains to bolster their bottom lines. In 2024, Williams-Sonoma made significant shipping changes to improve its gross margins, and Wayfair executives have targeted the company's logistics to improve its finances.
The furniture maker’s distribution and home delivery redesign will improve the company’s operations in the long term while contributing to capital expenditures during the current fiscal year, CFO Taylor Luebke said.
La-Z-Boy also expects supply chain efficiencies to help mitigate the impact that tariffs could have on consumer spending, Whittington added.
"We know that our industry has been in a bit of a malaise for a number of years," she said. "But if the consumer is overall more strapped because of the broader macroeconomic trends, they will tend to stretch out their furniture purchases."
La-Z-Boy's response will include "leveraging the strength and agility of our supply chain through strategic inventory moves, sourcing adjustments, continued vendor diversification," Luebke said.
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