What changed in this filing

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Item 1A. Risk Factors

2026-08-19 compared with 2025-08-22 · 43 added, 29 removed, 108 unchanged (40% of the section changed)

4 unchanged sentences

Risks related to our industry:

Changes in global trade policy and the impact on tariffs may have a material adverse effect on our business and results of operations.

We source certain finished products from external suppliers in foreign countries, primarily Vietnam, and have significant manufacturing operations in Mexico.

On April 2, 2025, the President of the United States issued an executive order to regulate imports by imposing reciprocal country specific tariffs on multiple nations around the world, including Vietnam.

A further executive order issued April 9, 2025, paused the implementation of the country specific tariffs on Vietnam and many other countries for 90 days, maintaining a 10% global baseline tariff, while the United States works with its trade partners to negotiate new trade agreements.

On July 31, 2025, a further executive order was issued clarifying certain matters related to tariffs, including a country specific tariff of 20% on goods from Vietnam.

Although the country specific tariffs and the global 10% baseline tariffs do not apply to our products imported from Mexico, that status could change at any time.

The current situation is dynamic, and it is unknown if the United States and its trade partners will reach an agreement to further pause or adjust the current tariffs.

Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S.

economic conditions and commodity markets, declining consumer confidence, significant inflation or diminished expectations for the economy, and ultimately reduced demand for our products.

In addition, tariffs on our imported goods could have a material adverse impact on our future net sales, cost of goods sold, profit and cash flow.

The ultimate effect will be dependent on the magnitude and duration of the tariffs and the countries implicated as well as our ability to offset or recoup the increased costs.

Changes in U.S.

trade policy, including the imposition of tariffs and other trade restrictions, could materially adversely affect our business, financial condition and results of operations.

We source certain finished products from foreign suppliers, primarily in Vietnam, and have significant manufacturing operations in Mexico.

As a result, tariffs and other trade restrictions imposed by the United States can materially increase the cost of products we import into the United States.

trade policy has changed significantly in recent years and remains subject to ongoing legal, political, and regulatory developments.

Existing tariffs may be increased, extended, modified or replaced, scheduled tariff increases may take effect, and additional tariffs or trade restrictions may be imposed on products or countries that affect our business.

Increases in tariffs or other trade restrictions could increase our cost of goods sold, require price increases, disrupt our sourcing and manufacturing strategies, reduce our competitiveness, and adversely affect our relationships with suppliers and retail partners.

Although we may seek to mitigate these impacts through pricing actions, supplier negotiations, sourcing adjustments or other measures, such efforts may not fully offset increased costs.

Tariffs and trade restrictions may also contribute to inflation, economic uncertainty, commodity price volatility and reduced consumer confidence.

Because furniture purchases are generally discretionary such conditions may reduce consumer demand for our products.

Accordingly, changes in tariffs or other trade policies could materially adversely affect our net sales, profitability, cash flows and results of operations.

Claims relating to tariff refunds we have received could adversely affect our financial results.

Following the invalidation of certain tariffs previously imposed under the International Emergency Economic Powers Act, we became entitled to refunds of tariffs previously paid on certain imported products.

As of June 30, 2026, we had received substantially all of our eligible refund claims.

Retail partners, suppliers, distributors or other parties may assert claims seeking reimbursement, credits or other payments relating to some or all of these tariff refunds.

Any amounts we are required to pay, credit or otherwise settle in connection with such claims could reduce the benefit of the refunds received and adversely affect our financial condition, results of operations and cash flows.

Inflation and changes in foreign currency may impact our profitability.

Cost inflation including significant increases in ocean container rates, tariffs, raw materials prices, labor rates, and domestic transportation costs have and could continue to impact profitability.

Cost inflation, including significant increases in ocean container rates, tariffs, raw materials prices, labor rates, and domestic transportation costs, has and could continue to impact profitability.

Imbalances between supply and demand for these resources may continue to exert upward pressure on costs.

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dollar against the peso could increase the cost of manufacturing.

In addition, the Company has certain asset and liabilities related to our manufacturing operations which are denominated in pesos, primarily our VAT receivable for recoverable VAT paid in Mexico.

In addition, the Company has certain assets and liabilities related to our manufacturing operations which are denominated in pesos, primarily our VAT receivable for recoverable VAT paid in Mexico.

A negative shift in the value of the peso against the U.S.

dollar could result in the value of our receivable decreasing which may impact our earnings.

Our ability to recover these cost increases through price increases may continue to lag the cost increases, resulting in downward pressure on margins.

Our ability to recover these cost increases through price increases may lag the cost increases, resulting in downward pressure on margins.

In addition, price increases to offset rising costs could negatively impact demand for our products.

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Additionally, a disruption in supply from foreign countries could adversely affect our ability to timely fill customer orders for those products and decrease our sales, earnings, and liquidity.

The main foreign countries we source from are Vietnam, China, Thailand, and Mexico.

The main foreign countries we source finished goods from are Vietnam and Mexico.

Additionally, China and Italy are key sources of raw materials and components used in the manufacturing of finished goods.

If we were unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain could adversely affect our sales, earnings, financial condition, and liquidity.

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As a result, the Company may not be able to maintain or raise the prices of its products in response to competitive pressures or increasing costs.

Also, due to the large number of competitors and their wide range of product offerings, the Company may not be able to significantly differentiate its products (through styling, finish, and other construction techniques) from those of its competitors.

Also, due to the large number of competitors and their wide range of product offerings, the Company may not be

able to significantly differentiate its products (through function, value, technology integration, styling, finish, and other construction techniques) from those of its competitors.

Additionally, most of our sales are to distribution channels that rely on physical stores to merchandise and sell our products and an involuntary shut down of those or a significant shift in consumer preference toward purchasing products online could have a materially adverse impact on our sales and operating margin.

These and other competitive pressures could cause us to lose market share, revenues, and customers, increase expenditure or reduce prices, any of which could have a material adverse effect on our results of operations or liquidity.

These and other competitive pressures could cause us to lose market share, revenues, and customers, increase expenditures or reduce prices, any of which could have a material adverse effect on our results of operations or liquidity.

Future costs of complying with various laws and regulations may adversely impact future operating results.

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The harm may be immediate without affording the Company an opportunity for redress or correction.

Public health events could have a materially adverse effect on our ability to operate, our ability to keep employees safe from the pandemic, our results of operations, and financial condition.

During the initial height of the COVID-19 pandemic, purchases of home furnishings were heavily impacted as they are largely deferable and heavily influenced by consumer sentiment.

Public health events could have a materially adverse effect on our ability to operate, our ability to keep employees safe from a pandemic, our results of operations, and financial condition.

During the initial height of the COVID-19 pandemic, purchases of home furnishings were heavily impacted as they are largely deferrable and heavily influenced by consumer sentiment.

Public health organizations recommended, and many governments implemented, measures from time-to-time to slow and limit the transmission of the virus, including certain business shutdowns and shelter-in-place and social distancing requirements.

Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential border closures, and disruptions to the businesses of our selling channel partners, and others.

Our suppliers and customers may also face these and other challenges, which have and could to lead to a future disruption in our supply chain, raw material inflation or the inability to get the raw materials necessary to produce our products, increased shipping and transportation costs, as well as decreased consumer spending and decreased demand for our products.

Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shutdown of certain locations, decreased employee availability, potential border closures, and disruptions to the businesses of our selling channel partners, and others.

Our suppliers and customers may also face these and other challenges, which have led and could lead to a future disruption in our supply chain, raw material inflation or the inability to get the raw materials necessary to produce our products, increased shipping and transportation costs, as well as decreased consumer spending and decreased demand for our products.

Risks related to our operations:

8 unchanged sentences

Although we continue to implement strong physical and cyber security measures to ensure that our business operations remain functional and to ensure uninterrupted service to our customers, our systems and our operations remain vulnerable to cyber attacks and other disruptions because a material portion of our employees work remotely either full or part-time, and we cannot be certain that our mitigation efforts will be effective.

The use of AI technologies may present risks, including inaccurate or unreliable outputs, data privacy and cybersecurity concerns, and potential regulatory or legal requirements that may evolve over time

We are evaluating and may use artificial intelligence ("AI") technologies in targeted circumstances to support certain business functions, including administrative, customer service, marketing, and operational activities.

We have implemented an AI governance framework including Company policies, investment approvals, risk assessments, and Board oversight.

Although we seek to use AI responsibly and maintain appropriate oversight of any AI-enabled tools, these technologies are rapidly developing and may not always perform as intended.

Any failure to effectively manage risks associated with AI, including risks related to third-party AI service providers, could result in operational inefficiencies, increased costs, legal or regulatory exposure, or reputational harm.

In addition, if competitors adopt AI technologies more effectively than we do, they may gain operational or competitive advantages.

Any of these factors could adversely affect our business, financial condition, or results of operations.

The implementation of a new business information system could disrupt the business.

The Company continues to migrate business and financial processes from legacy ERP systems to SAP.

The Company takes great care in the planning and execution of these migrations, however, implementation issues related to the transition could arise and may result in the following:

The Company continues to modernize our ERP systems.

The Company takes great care in the planning and execution of these updates, however, implementation issues related to the transition could arise and may result in the following:

• Disruption of the Company’s domestic and international supply chain;

1 unchanged sentence

• Negative impact on financial results;

• Inability to fulfill federal, state and local tax filing requirements in a timely and accurate matter;

• Inability to fulfill federal, state and local tax filing requirements in a timely and accurate manner;

• Increased demands of management and associates to the detriment of other corporate initiatives.

18 unchanged sentences

A write-down of our assets would, in turn, reduce our earnings and net worth.

During the quarter ended March 31, 2025 the Company determined that the right of use asset related to our leased Mexicali, Mexico facility was not fully recoverable and recorded a pre-tax non-cash asset impairment charge of $14.1 million due to substantial changes in U.S.

trade policy in early 2025 that created significant uncertainty in US-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility.

During the quarter ended March 31, 2025, the Company determined that the right of use asset related to our leased Mexicali, Mexico facility was not fully recoverable and recorded a

pre-tax non-cash asset impairment charge of $14.1 million due to substantial changes in U.S.

trade policy in early 2025 that created significant uncertainty in U.S.-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility.

If capacity requirements do not necessitate the utilization of our leased Mexicali facility and we are unsuccessful at subleasing the facility in the future, the remaining carrying amount of the right of use asset associated with that lease may not be recoverable.

10 unchanged sentences

Some of our customers have experienced, and may in the future experience, cash flow and credit-related issues.

In the event of negative economic events such as economic recession or significant decline in consumer demand, supply chain disruptions, weather events or natural disasters, public

health events or other unforeseen issues with negative economic impact to our customers, which have occurred in the past, we may not be able to collect amounts owed to us.

In the event of negative economic events such as economic recession or significant decline in consumer demand, supply chain disruptions, weather events or natural disasters, public health events or other unforeseen issues with negative economic impact to our customers, which have occurred in the past, we may not be able to collect amounts owed to us.

While we perform credit evaluations of our customers, those evaluations may not prevent uncollectible trade accounts receivable.

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In addition, we have receivables for recoverable value added tax paid under such regimes in foreign jurisdictions, primarily Mexico.

The collection of these amounts are subject to approval by foreign governmental agencies who evaluate the claims.

The collection of these amounts is subject to approval by foreign governmental agencies who evaluate the claims.

Any actions taken by those agencies to delay, limit or deny the amounts submitted or retroactive changes in legislation surrounding these regimes may impact our ability to recover these amounts.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors