What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-02-18 · 90 added, 118 removed, 124 unchanged (63% of the section changed)

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La-Z-Boy Incorporated and its subsidiaries (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, and our business and industry.

Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, acquisitions, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, and our business and industry.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.

Forward-looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "plans," "projects," "likely," "non-recurring," "one-time," "outlook," "seeks," "short-term," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.

Forward-looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "likely," "non-recurring," "one-time," "outlook," "plans," "projects," "seeks," "short-term," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.

You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this report.

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In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid ® , American Drew ® , Hammary ® , and Joybird ® tradenames.

As of January 25, 2025, our supply chain operations included the following:

As of July 26, 2025, our supply chain operations included the following:

• Five major manufacturing locations and 14 distribution centers in the United States and three facilities in Mexico to support our speed-to-market and customization strategy

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• A global trading company in Hong Kong that helps us manage our Asian supply chain by establishing and maintaining relationships with our Asian suppliers, as well as identifying efficiencies and savings opportunities

During the second quarter of fiscal 2024, we announced actions intended to drive efficiencies and optimize our manufacturing capacity in our global supply chain operations.

As part of this initiative, we made the decision to shift upholstery production from our Ramos, Mexico operations to our other upholstery plants and relocate our cut and sew operations back to Ramos, Mexico, resulting in the permanent closure of our leased cut and sew facility in Parras, Mexico.

As a result of these actions, charges were recorded within the Wholesale segment in the first nine months of fiscal 2024, totaling $4.0 million in cost of sales for severance-related expenses, and $3.0 million in SG&A expense for the accelerated depreciation of fixed assets.

We also participate in two consolidated joint ventures in Thailand that support our international businesses:

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to furniture retailers or distributors in the United States, Canada, and approximately 50 other countries, including the United Kingdom, China, Australia, South Korea and New Zealand, directly to consumers through retail stores that we own and operate, and through our websites, www.la-z-boy.com and www.joybird.com.

• The centerpiece of our retail distribution strategy is our network of 362 La-Z-Boy Furniture Galleries ® stores and 537 La-Z-Boy Comfort Studio ® locations, each dedicated to marketing our La-Z-Boy branded products.

• The centerpiece of our retail distribution strategy is our network of 368 La-Z-Boy Furniture Galleries ® stores, over 500 La-Z-Boy Comfort Studio ® locations, and over 750 La-Z-Boy branded space locations, each dedicated to marketing our La-Z-Boy branded products.

We consider this dedicated space to be “proprietary.”

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We own 205 of the La-Z-Boy Furniture Galleries ® stores, while the remainder are independently owned and operated.

◦ La-Z-Boy Comfort Studio ® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products.

All 537 La-Z-Boy Comfort Studio ® locations are independently owned and operated.

◦ In total, we have approximately 7.7 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in the United States and Canada.

◦ We also have approximately 2.8 million square feet of floor space outside of the United States and Canada dedicated to selling La-Z-Boy branded products.

◦ La-Z-Boy Comfort Studio ® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products, while La-Z-Boy branded space locations display a curated selection of La-Z-Boy branded products within larger independent dealers.

All La-Z-Boy Comfort Studio ® locations and La-Z-Boy branded space locations are independently owned and operated.

◦ In total, we have approximately 7.7 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in North America within our La-Z-Boy Furniture Galleries ® stores and La-Z-Boy Comfort Studio ® locations.

◦ We also have approximately 2.6 million square feet of floor space outside of North America dedicated to selling La-Z-Boy branded products.

• Our other brands, England, American Drew, Hammary, and Kincaid enjoy distribution through many of the same outlets, with over half of Hammary’s sales originating through the La-Z-Boy Furniture Galleries ® store network.

◦ Kincaid and England have their own dedicated proprietary in-store programs with 675 outlets and approximately 2.0 million square feet of proprietary floor space.

• In total, our proprietary floor space includes approximately 12.4 million square feet worldwide.

• Joybird sells product primarily online and has 12 small-format stores in key urban markets.

• Joybird sells product online and has 13 small-format stores in key markets.

Century Vision Strategy

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We leverage our consumer insights to develop and deliver on-trend upholstered furniture, particularly in the motion and reclining categories.

We launched our new brand campaign and marketing platform in fiscal 2024, Long Live the Lazy , with compelling, consumer-inspired messaging designed to increase recognition and consideration of the brand.

We expect this new messaging will enhance the appeal of our brand with a broader consumer base.

We launched our brand campaign and marketing platform in fiscal 2024, Long Live the Lazy , with compelling, consumer inspired, messaging designed to increase recognition and consideration of the brand.

We expect that this messaging will enhance the appeal of our brand with a broader consumer base.

Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person.

We are driving change throughout our digital platforms

to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

• Growing our La-Z-Boy Furniture Galleries ® store network .

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We are not only focused on growing the number of locations, but also on upgrading existing store locations to our new concept designs.

We are prioritizing growth of our company-owned Retail business by opportunistically acquiring existing La-Z-Boy Furniture Galleries ® stores and opening new La-Z-Boy Furniture Galleries ® stores where we see opportunity for growth, or where we believe we have opportunities for further market penetration.

We are prioritizing growth of our company-owned

Retail business by opportunistically acquiring existing La-Z-Boy Furniture Galleries ® stores and opening new La-Z-Boy Furniture Galleries ® stores where we see opportunity for growth, or where we believe we have opportunities for further market penetration.

• Expanding the reach of our wholesale distribution channels.

Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy Furniture Galleries ® store network and in the La-Z-Boy Comfort Studio ® locations, our store-within-a-store format.

While consumers increasingly interact with the brand digitally, our consumers demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Furniture Galleries ® store, or La-Z-Boy Comfort Studio ® , experience and provide design services.

Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy Furniture Galleries ® store network, the La-Z-Boy Comfort Studio ® locations, our store-within-a-store format, and La-Z-Boy branded space locations.

While consumers increasingly interact with the brand digitally, our consumers also demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Furniture Galleries ® store, La-Z-Boy Comfort Studio ® , or La-Z-Boy branded space experience and provide design services.

In addition to our branded distribution channels, approximately 1,900 other dealers sell La-Z-Boy products, which include some of the best-known names in the industry, providing us the benefit of multi-channel distribution.

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• Profitably growing the Joybird brand with a digital-first consumer experience.

During fiscal 2019, we purchased Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture with a direct-to-consumer model.

We believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling profitable growth through an increase in digital marketing spend to drive awareness and customer acquisition, ongoing investments in technology, an expansion of product assortment, and providing additional small-format stores in key urban markets to enhance our consumers' omni-channel experience.

Joybird is a leading omni-channel, direct to consumer retailer and manufacturer of upholstered furniture.

We believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling profitable growth through the opening of additional small-format stores in key markets, an increase in digital marketing spend to drive awareness and customer acquisition, ongoing investments in technology, and an expansion of product assortment.

Enhancing our enterprise capabilities

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Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood) furniture such as bedroom sets, dining room sets, entertainment centers and occasional pieces.

The Wholesale segment sells directly to La-Z-Boy Furniture Galleries ® stores, operators of La-Z-Boy Comfort Studio ® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

The Wholesale segment sells directly to La-Z-Boy Furniture Galleries ® stores, operators of La-Z-Boy Comfort Studio ® and branded space locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

• Corporate and Other .

Corporate and Other includes the shared costs for corporate functions, including human resources, information technology, finance and accounting, and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy ® brand name on various products.

We consider our corporate

functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories.

Joybird sells to the end consumer primarily online through its website, www.joybird.com, and through small-format stores in key urban markets.

We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an omni-channel retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories.

Joybird sells to the end consumer online through its website, www.joybird.com, and through small-format stores in key markets.

None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

Results of Operations

Fiscal 2025 Third Quarter Compared with Fiscal 2024 Third Quarter

Fiscal 2026 First Quarter Compared with Fiscal 2025 First Quarter

La-Z-Boy Incorporated

Quarter Ended Nine Months Ended

(Unaudited, amounts in thousands, except percentages) 1/25/2025 1/27/2024 % Change 1/25/2025 1/27/2024 % Change

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/26/2025 7/27/2024 % Change

Sales $ 492,229 $ 495,532 (0.7)%

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Operating margin 4.5% 6.5%

Consolidated sales increased $21.4 million, or 4%, and $44.8 million, or 3%, in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

The increase during the third quarter of fiscal 2025 was primarily driven by delivered same-store sales growth in our Retail business, incremental sales resulting from our Retail acquisitions, and higher delivered volume in our Joybird business.

The increase during the first nine months of fiscal 2025 was primarily driven by incremental sales resulting from our Retail acquisitions, higher delivered volume in our Joybird business, and higher delivered wholesale volume in our core North America La-Z-Boy branded upholstery business, including growth from our major wholesale dealers.

Consolidated sales decreased $3.3 million, or 1%, in the first quarter of fiscal 2026, compared with the same period a year ago.

Sales in the first quarter of fiscal 2026 benefited from incremental sales from our retail store acquisitions in the prior year, increased sales from our retail store expansion, and growth in our core North America La-Z-Boy branded wholesale business driven by strategic pricing and surcharge actions.

These increases were more than offset by the combination of lower delivered volume in our international wholesale business due to a significant customer transition that began in the second quarter of fiscal 2025, along with lower delivered volume in our Joybird business.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, increased 20 basis points in both the third quarter and first nine months of fiscal 2025, compared with the same periods a year ago.

• Gross margin, which is calculated as gross profit as a percentage of sales, increased 170 basis points and 90 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Changes in our consolidated mix led to a 110 basis point increase in gross margin in the third quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher gross margin than our Wholesale segment.

◦ Lower input costs, led by reduced commodity prices and improved sourcing, drove an increase in gross margin during the third quarter and first nine months of fiscal 2025, compared with the same periods a year ago.

◦ The third quarter and first nine months of fiscal 2024 experienced favorable duty expense causing a comparative decrease in gross margin in the third quarter and first nine months of fiscal 2025.

◦ Favorable fluctuations in the Mexican peso relative to the U.S.

dollar drove lower production-related costs, resulting in increased gross margin during the third quarter of fiscal 2025 compared with the same period a year ago.

◦ During the first nine months of fiscal 2024 we recognized $4.0 million of severance-related charges as part of our global supply chain optimization initiative, resulting in a comparative gross margin increase in the first nine months of fiscal 2025.

• SG&A expenses as a percentage of sales increased 150 basis points and 70 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Changes in our consolidated mix led to a 110 basis point increase in SG&A expense as a percentage of sales in the third quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

◦ SG&A expense as a percentage of sales increased in the third quarter and first nine months of fiscal 2025 compared with the same periods a year ago, due to fixed cost deleverage on lower sales in our international wholesale business due to a significant customer transition.

◦ SG&A expense as a percentage of sales in the first nine months of fiscal 2025 also increased due to higher selling expenses and fixed costs resulting from acquisitions of independently owned La-Z-Boy Furniture Galleries ® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

Operating margin, which is calculated as operating income as a percentage of sales, decreased 200 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

• Gross margin, which is calculated as gross profit as a percentage of sales, decreased 60 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ Increased supply chain costs, including higher distribution costs primarily related to our distribution and home delivery transformation, and increased overhead in our manufacturing operations, drove a decrease in gross margin in the first quarter of fiscal 2026 compared with the same period a year ago.

◦ Gross margin also declined due to increased promotional activity on casegoods products and accessories in the first quarter of fiscal 2026 compared with the same period a year ago.

◦ Partially offsetting the items above, gross margin in the first quarter of fiscal 2026 benefited from lower input costs compared with the same period a year ago, led by favorable inbound ocean freight and improved sourcing.

• SG&A expenses as a percentage of sales increased 140 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ SG&A expense as a percentage of sales increased due to fixed cost deleverage in our Retail segment from lower delivered same-store sales combined with higher selling expenses and fixed costs resulting from our retail store expansion in support of our long-term strategy of growing our Retail segment.

◦ Partially offsetting the item above, SG&A expense as a percentage of sales benefited from lower warranty expense, driven by decreased claims activity and improved warranty trends, along with reduced marketing spend relative to the prior year.

We discuss each segment’s results in the following section.

Retail Segment

Quarter Ended Nine Months Ended

(Unaudited, amounts in thousands, except percentages) 1/25/2025 1/27/2024 % Change 1/25/2025 1/27/2024 % Change

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/26/2025 7/27/2024 % Change

Sales $ 207,150 $ 202,370 2.4%

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Operating margin 6.3% 10.2%

The Retail segment’s sales increased $23.0 million, or 11%, and $24.4 million, or 4%, in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

The increase during the third quarter was primarily due to higher delivered same-store sales along with $9.2 million of incremental sales resulting from our retail store acquisitions that occurred in fiscal 2024 and fiscal 2025.

During the first nine months of fiscal 2025, our retail store acquisitions contributed $32.1 million of incremental sales but were partially offset by a decline in delivered same-store sales.

Written same-store sales increased 7% and 1% in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago, driven by strong store-level execution and improved traffic trends in the third quarter of fiscal 2025.

The Retail segment’s sales increased $4.8 million, or 2%, in the first quarter of fiscal 2026, compared with the same period a year ago primarily due to $8.4 million of incremental sales resulting from our retail store acquisitions that occurred in fiscal 2025 along with increased sales from our retail store expansion, net of closed stores.

These increases were partially offset by a decline in delivered same-store sales.

Total written sales increased 5% in the first quarter of fiscal 2026, compared with the same period a year ago.

Written same-store sales decreased 4% over the same periods, primarily due to lower consumer demand as a result of a challenging macroeconomic environment.

Same-store sales include the sales of all currently active stores that have been open and company-owned for each comparable period.

Operating Margin

The Retail segment's operating margin decreased 20 basis points and 150 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

• Gross margin decreased 10 basis points and increased 10 basis points in the third quarter and first nine months of 2025, respectively, compared with the same periods a year ago, as a result of slight shifts in our product mix.

• SG&A expenses as a percentage of sales increased 10 basis points and 160 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

The increase in the first nine months of fiscal 2025 was primarily due to increased selling expenses and fixed costs resulting from our acquisitions of independently owned La-Z-Boy Furniture Galleries ® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

The Retail segment's operating margin decreased 390 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

• Gross margin decreased 30 basis points in the first quarter of fiscal 2026, compared with the same period a year ago, primarily due to increased promotional activity on casegoods products and accessories.

• SG&A expenses as a percentage of sales increased 360 basis points in the first quarter of fiscal 2026, compared with the same period a year ago, primarily due to fixed cost deleverage from lower delivered same-store sales combined with increased selling expenses and fixed costs resulting from our retail store expansion of 11 net new stores over the last 12 months, supporting our long-term strategy of growing our Retail segment.

Wholesale Segment

Quarter Ended Nine Months Ended

(Unaudited, amounts in thousands, except percentages) 1/25/2025 1/27/2024 % Change 1/25/2025 1/27/2024 % Change

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/26/2025 7/27/2024 % Change

Sales to external customers $ 255,345 $ 256,020

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Operating margin 7.1% 6.8%

The Wholesale segment’s sales increased $6.6 million, or 2%, and $23.0 million, or 2%, in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

Over the same periods, intercompany sales from our Wholesale segment to our Retail segment increased 13% and 5%, respectively.

Sales in both the third quarter and first nine months of fiscal 2025 benefited from a favorable shift in product mix toward higher price products which was partially offset by the impact of a significant customer transition in our international wholesale business.

Additionally, sales during the first nine months of fiscal 2025 were higher due to increased sales volume in our core North America La-Z-Boy branded upholstery business, including growth from our major wholesale dealers.

The Wholesale segment’s sales increased $2.1 million, or 1%, in the first quarter of fiscal 2026, compared with the same period a year ago, primarily due to growth in our core North America La-Z-Boy branded wholesale business led by strategic pricing and surcharge actions, combined with a favorable shift in product mix towards higher priced products.

Additionally, sales increased for our casegoods business as a result of strategic pricing and promotional activity.

These increases in sales were partially offset by lower delivered volume in our international wholesale business due to a significant customer transition that began in the second quarter of fiscal 2025.

Operating Margin

The Wholesale segment's operating margin increased 10 basis points and 30 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago

• Gross margin increased 130 basis points and 40 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Lower input costs, led by reduced commodity prices and improved sourcing drove an 80 basis point and 70 basis point increase in gross margin during the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ The third quarter and first nine months of the prior year experienced favorable duty expense, causing a comparative 70 basis point and 30 basis point decrease in gross margin in the third quarter and first nine months of fiscal 2025, respectively.

◦ Favorable fluctuations in the Mexican peso relative to the U.S.

dollar drove lower production-related costs, resulting in an 80 basis point increase in gross margin during the third quarter of fiscal 2025 compared with the same period a year ago.

◦ Gross margin in the third quarter of fiscal 2025 benefited 20 basis points from a favorable shift in channel mix toward sales to our La-Z-Boy Furniture Galleries ® , which generally carry products with a higher gross margin than products sold to external customers.

A shift in channel mix towards external customers was experienced during the first nine months of fiscal 2025, resulting in a 50 basis point decrease in gross margin.

◦ During the first nine months of fiscal 2024, we recognized $4.0 million in severance-related charges as part of our global supply chain optimization initiative, resulting in comparative gross margin increase of 10 basis points and 40 basis points in the third quarter and first nine months of fiscal 2025, respectively.

• SG&A expense as a percentage of sales increased 120 basis points and 10 basis points in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Marketing expense in the third quarter of fiscal 2025 increased relative to the prior year, resulting in a 50 basis point increase in SG&A expense as a percentage of sales.

For the first nine months of fiscal 2025, marketing expense decreased relative to the prior year, as during fiscal 2024 we launched our Long Live the Lazy campaign, resulting in a 30 basis point comparative decrease in SG&A expense as a percentage of sales.

◦ SG&A expense as a percentage of sales increased 50 basis points and 30 basis points in the third quarter and first nine months of fiscal 2025, respectively, from fixed cost deleverage on lower sales in our international wholesale business due to a significant customer transition.

The Wholesale segment's operating margin increased 30 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

• Gross margin decreased 60 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ Increased distribution costs, primarily due to incremental expenses related to our distribution and home delivery transformation, as well as increased fixed costs, and higher outbound freight, drove a 110 basis point decrease in gross margin in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ Higher manufacturing overhead costs led to a 40 basis point decrease in gross margin in the first quarter of fiscal 2026 compared with the same period a year ago.

◦ Partially offsetting the items above, lower input costs, led by favorable inbound ocean freight and improved sourcing, drove a 100 basis point increase in gross margin during the first quarter of fiscal 2026, compared with the same period a year ago.

• SG&A expense as a percentage of sales decreased 90 basis points in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ Lower warranty expense resulting from decreased claims activity and improved warranty trends drove a 60 basis point decrease in SG&A expense as a percentage of sales in the first quarter of fiscal 2026, compared with the same period a year ago.

◦ Marketing expense in the first quarter of fiscal 2026 decreased relative to the prior year, resulting in a 40 basis point comparative decrease in SG&A expense as a percentage of sales.

Corporate and Other

Quarter Ended Nine Months Ended

(Unaudited, amounts in thousands, except percentages) 1/25/2025 1/27/2024 % Change 1/25/2025 1/27/2024 % Change

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/26/2025 7/27/2024 % Change

Sales $ 31,235 $ 38,708 (19.3)%

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Operating loss (16,308) (12,278) (32.8)%

Corporate and Other sales increased $2.5 million and $7.0 million in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

The change in sales was primarily led by Joybird sales which

increased $3.0 million to $37.1 million and $8.4 million to $110.3 million in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago, as higher delivered volume and a favorable shift in product mix more than offset promotional activity.

Written sales for Joybird increased 10% and 7% in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

Intercompany eliminations increased in the third quarter and first nine months of fiscal 2025 compared with the same periods a year ago due to higher sales from our Wholesale segment to our Retail segment.

Corporate and Other sales decreased $7.5 million in the first quarter of fiscal 2026, compared with the same period a year ago.

The change in sales was led by Joybird sales which decreased $6.8 million to $27.7 million in the first quarter of fiscal 2026, primarily due to lower delivered volume partially offset by a favorable shift in product mix.

Written sales for Joybird decreased 14% in the first quarter of fiscal 2026, compared with the same period a year ago, primarily from lower online sales.

Intercompany eliminations increased in the first quarter of fiscal 2026 compared with the same period a year ago due to higher sales from our Wholesale segment to our Retail segment.

Operating Loss

Our Corporate and Other operating loss increased $0.4 million and decreased $7.7 million in the third quarter and first nine months of fiscal 2025, respectively, compared with the same periods a year ago.

The third quarter of fiscal 2025 benefited from improved Joybird operating margin, resulting in breakeven profit, but was more than offset by lower intercompany operating profit from our global trading company in Hong Kong.

In the first nine months of fiscal 2025, Joybird operating profit improvements along with favorable intercompany inventory profit elimination adjustments, relative to the same period a year ago, were partially offset by lower intercompany operating profit from our global trading company in Hong Kong.

Our Corporate and Other operating loss increased $4.0 million in the first quarter of fiscal 2026, compared with the same period a year ago, primarily due to Joybird's operating loss resulting from lower delivered volume, combined with lower La-Z-Boy branded royalty income.

Non-Operating Income (Expense)

Interest Income

Interest income was $0.7 million lower and $0.4 million higher in the third quarter and first nine months of 2025, respectively, compared with the same period a year ago, primarily driven by changes in interest rates which decreased throughout the first nine months of fiscal 2025.

Other Income, (Expense), Net

Other income (expense), net was $0.1 million of income and $2.4 million of expense in the third quarter and first nine months of fiscal 2025, respectively.

The expense in the first nine months of fiscal 2025 was primarily due to exchange rate losses related to our operations in Mexico and Thailand.

Our effective tax rate was 25.1% and 25.6% for the third quarter and first nine months of fiscal 2025, respectively, compared with 20.2% and 24.5% for the third quarter and first nine months of fiscal 2024.

The increase in our effective tax rate in the third quarter of fiscal 2025 compared with the same period a year ago was primarily the result of favorable return to provision adjustments impacting the prior year and absent these discrete items, the effective tax rate would have been 25.6% for the third quarter of fiscal 2024.

Interest income was $1.3 million lower in the first quarter of fiscal 2026, compared with the same period a year ago, primarily driven by lower interest rates.

Our effective tax rate was 25.0% for the first quarter of fiscal 2026, compared with 25.5% for the first quarter of fiscal 2025.

Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

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We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures, including fiscal 2026 contractual obligations.

We had cash, cash equivalents and restricted cash of $314.6 million at January 25, 2025, compared with $341.1 million at April 27, 2024.

In addition, we had investments to enhance our returns on cash of $2.6 million at January 25, 2025, compared with $6.8 million at April 27, 2024.

We had cash and cash equivalents of $318.5 million at July 26, 2025, compared with $328.4 million at April 26, 2025.

In addition, we had investments to enhance our returns on cash of $2.7 million at July 26, 2025, compared with $2.6 million at April 26, 2025.

The following table illustrates the main components of our cash flows:

Nine Months Ended

Quarter Ended

(Unaudited, amounts in thousands) 7/26/2025 7/27/2024

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Exchange rate changes 338 362

Change in cash, cash equivalents and restricted cash $ (26,509) $ (13,499)

Change in cash and cash equivalents $ (9,905) $ 1,172

Operating Activities

During the first nine months of fiscal 2025, net cash provided by operating activities was $125.3 million, an increase of $19.9 million compared with the same period a year ago.

The year over year increase was primarily due to an increase in customer deposits and favorable net changes in working capital, including lower receivables and lower inventory, partially offset by reduced payables.

Our cash provided by operating activities in fiscal 2025 was primarily attributable to net income, adjusted for non-cash items and favorable net changes in working capital, including higher payables and lower receivables, partially offset by an increase in inventory.

During the first quarter of fiscal 2026, net cash provided by operating activities was $36.3 million, a decrease of $16.0 million compared with the same period a year ago.

The year over year decrease was primarily due to lower net income, adjusted for non-cash items, along with a smaller reduction in receivables relative to the prior year.

Our cash provided by operating activities in fiscal 2026 was primarily attributable to net income, adjusted for non-cash items, favorable changes to working capital, and higher customer deposits, partially offset by the payout of our fiscal 2025 incentive compensation award.

Investing Activities

During the first nine months of fiscal 2025, net cash used for investing activities was $71.2 million, an increase of $17.2 million compared with the same period a year ago, primarily due to an increase in capital expenditures.

Cash used for investing activities in fiscal 2025 included the following:

• Cash used for capital expenditures in the period was $51.5 million compared with $38.0 million during the first nine months of fiscal 2024, which was primarily related to La-Z-Boy Furniture Galleries ® (new stores and remodels), manufacturing-related investments, and market showroom upgrades.

We anticipate that spending on these items will continue in fiscal 2025 with full year fiscal 2025 capital expenditures expected to be in the range of $70 to $80 million.

During the first quarter of fiscal 2026, net cash used for investing activities was $18.8 million, an increase of $1.6 million compared with the same period a year ago, due to lower proceeds from the sale of investments, net of investment purchases, along with higher capital expenditures, partially offset by lower cash paid for acquisitions.

Cash used for investing activities in fiscal 2026 was mainly attributable to capital expenditures of $18.5 million, which were primarily related to La-Z-Boy Furniture Galleries ® (new stores and remodels) and manufacturing-related investments.

We anticipate that spending on these items will continue in fiscal 2026, along with spending related to our distribution and home delivery transformation, with full year fiscal 2026 capital expenditures expected to be in the range of $90 to $100 million.

We have no material contractual commitments outstanding for future capital expenditures.

• Cash used for acquisitions was $24.8 million, primarily related to the acquisition of the Davenport, Iowa, Melbourne and Cocoa, Florida, and Toledo, Ohio retail businesses.

• Proceeds from the sale of investments, net of investment purchases, were $4.9 million.

Financing Activities

On October 15, 2021, we entered into a five-year $200 million unsecured revolving credit facility (as amended, the “Credit Facility”).

On October 15, 2021, we entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, the other agents and lenders named therein and the other parties thereto (as amended prior to July 1, 2025, the “Credit Agreement”).

The Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of $200 million, which includes a $50 million letter of credit sub-limit (the “Credit Facility”).

On July 1, 2025, we entered into an amendment to the Credit Agreement (the “Credit Agreement Amendment”).

The Credit Agreement Amendment, among other things, (i) extended the maturity date of the Credit Facility from October 15, 2026 to July 1, 2030, (ii) increased the accordion basket for additional revolving commitments and/or incremental term loans from $100 million to $125 million, (iii) removed the secured overnight financing rate (“SOFR”) credit spread adjustment, and (iv) decreased the consolidated fixed charge coverage ratio required to be satisfied under the Company’s financial covenant.

Borrowings under the Credit Facility may be used by the Company for general corporate purposes.

We may increase the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of each lender to participate in such an increase, up to an additional amount of $100 million.

The Credit Facility will mature on October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions.

As of January 25, 2025, we have no borrowings outstanding under the Credit Facility.

The Credit Facility will mature on July 1, 2030, and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions.

The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of certain assets.

As of January 25, 2025, we were in compliance with our financial covenants under the Credit Facility.

As of July 26, 2025, we have no borrowings outstanding under the Credit Facility and we were in compliance with our financial covenants under the Credit Facility.

We believe our cash and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.

During the first nine months of fiscal 2025, net cash used for financing activities was $81.2 million, an increase of $16.7 million compared with the same period a year ago, primarily due to higher share repurchases, partially offset by higher proceeds from exercised stock options.

In addition, our cash used for financing activities in fiscal 2024 included holdback payments of $5.0 million for a prior period acquisition.

During the first quarter of fiscal 2026, net cash used for financing activities was $27.7 million, a decrease of $6.6 million compared with the same period a year ago, primarily due to lower share repurchases, partially offset by reduced proceeds from exercised stock options.

Cash used for financing activities in fiscal 2026 included the following:

• Our board of directors has authorized the repurchase of company stock and we spent $64.4 million in the first nine months of fiscal 2025 to repurchase 1.7 million shares.

As of January 25, 2025, 4.0 million shares remained available

for repurchase pursuant to this authorization.

With the operating cash flows we anticipate generating in fiscal 2025, we expect to continue repurchasing Company stock subject to market conditions and other factors as deemed relevant by our board of directors.

• Cash paid to repurchase 0.3 million shares of company stock was $12.5 million.

Our board of directors has authorized the repurchase of Company stock and as of July 26, 2025, 3.4 million shares remained available for repurchase pursuant to this authorization.

• Cash paid to our shareholders in quarterly dividends was $9.0 million.

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We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time at the board's discretion.

• Proceeds from exercised stock options, net of stock issued and taxes withheld as part of our employee benefit plans, were $10.9 million.

• Cash paid for tax withholding on stock issued as part of our employee benefit plans, net of proceeds from exercised stock options, was $5.2 million.

Exchange Rate Changes

Due to changes in exchange rates, our cash, cash equivalents, and restricted cash increased by $0.6 million for the nine months ended January 25, 2025.

Due to changes in exchange rates, our cash and cash equivalents increased by $0.3 million for the quarter ended July 26, 2025.

These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

During the third quarter of fiscal 2025, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

During the first quarter of fiscal 2026, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 26, 2025.

We do not expect our continuing compliance with existing federal, state and local statutes dealing with protection of the environment to have a material effect on our capital expenditures, earnings, competitive position or liquidity.

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We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April 26, 2025.

There were no material changes to our critical accounting policies or estimates during the nine months ended January 25, 2025.

There were no material changes to our critical accounting policies or estimates during the quarter ended July 26, 2025.

Recent Accounting Pronouncements

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first nine months of fiscal 2025, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

During the first quarter of fiscal 2026, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April 26, 2025.

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-Q

Item 2. Management’s Discussion and Analysis