What Happened?
Shares of furniture company La-Z-Boy (NYSE: LZB) jumped 3.7% in the after-market session after an announcement by President Trump of a forthcoming tariff on imported furniture. The proposed policy is seen as a significant advantage for La-Z-Boy, which, unlike many of its competitors, has a large manufacturing presence in the United States. While shares of rivals like RH, Wayfair, and Williams-Sonoma, who rely heavily on imports, declined on the news, investors appear confident that La-Z-Boy will be shielded from the potential tariffs. The policy aims to support U.S. manufacturing, and according to the announcement, a tariff investigation is set to be finalized in 50 days.
After the initial pop the shares cooled down to $36.88, up 0.8% from previous close.
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What Is The Market Telling Us
La-Z-Boy’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 13% on the news that the company reported disappointing second-quarter results and issued a weak forecast for the upcoming quarter. The furniture maker's adjusted earnings per share of $0.47 missed Wall Street's expectations by nearly 11%. While its revenue of $492.2 million was in line with estimates, it remained flat compared to the same period last year, signaling stagnant sales. Adding to investor concerns, La-Z-Boy's revenue guidance for the third quarter also came in below analysts' projections. Profitability took a hit as well, with the company's operating margin declining to 4.5% from 6.5% a year ago, indicating that rising costs were squeezing profits. This combination of missed earnings, a weak outlook, and shrinking profitability prompted a significant sell-off in the stock.
La-Z-Boy is down 14.6% since the beginning of the year, and at $36.88 per share, it is trading 23.2% below its 52-week high of $48.02 from January 2025. Investors who bought $1,000 worth of La-Z-Boy’s shares 5 years ago would now be looking at an investment worth $1,140.
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