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Item 7. Management’s Discussion and Analysis

2026-07-20 compared with 2025-07-21 · 228 added, 280 removed, 380 unchanged (57% of the section changed)

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the issues discussed in Management's Discussion and Analysis in conjunction with the Company's Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

This Management's Discussion and Analysis should be read in conjunction with the Company's Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Refer also to the information provided under the heading "Forward-Looking Statements" in this Annual Report on Form 10-K.

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Combined, the Company represents over 100 years of design research and exploration in service of humanity.

Within the industries in which the Company operates, Herman Miller and Knoll, along with Colebrook Bosson Saunders, DatesWeiser, Design Within Reach, Edelman, Geiger, HAY, Holly Hunt, Maharam, Muuto, NaughtOne, and Spinneybeck|FilzFelt are acknowledged as leading brands that inspire architects and designers to create their best design solutions.

Within the industries in which the Company operates, Herman Miller and Knoll, along with Colebrook Bosson Saunders, Design Within Reach, Edelman, FilzFelt, Geiger, HAY, Holly Hunt, Maharam, Muuto, NaughtOne and Spinneybeck are acknowledged as leading brands that inspire architects and designers to create their best design solutions.

This portfolio has enabled MillerKnoll to connect with new audiences, channels, geographies, and product categories.

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Through contract furniture dealers, direct customer sales, retail stores and studios, eCommerce, wholesalers, and independent retailers, the Company serves contract and residential customers across a range of channels and geographies.

As it pertains to its operations, the Company was among the first in the industry to embrace the concepts of lean manufacturing.

As it pertains to its operations, the Company was among the first in the industry to embrace the concept of lean manufacturing.

MKPS provides the foundation for all the Company's manufacturing operations.

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• Wholesale - Through the Company's Global Retail segment, certain products are sold on a wholesale basis to independent retailers located in various markets around the world.

• Retail Locations - As of May 31, 2025, the Company operated 75 retail studios (including 38 operating under the DWR brand, 1 under the HAY brand, 30 Herman Miller stores, 3 Muuto stores, 2 Knoll stores and a multi-brand Chicago store).

The business also operated 3 outlet studios.

Challenges Ahead

Like all businesses, the Company is faced with a host of challenges and risks.

The Company believes its core strengths and values, which provide the foundation for its strategic direction, have prepared the Company to respond to the inevitable challenges it will face in the future.

While the Company is confident in its direction, it acknowledges the risks specific to our business and industry.

Refer to Item 1A for discussion of certain of these risk factors and Item 7A for disclosures of market risk.

• Retail Locations - As of May 30, 2026, the Company operated 93 retail stores, including 45 DWR stores, 39 Herman Miller stores, 4 Knoll stores, 1 Muuto store, 1 HAY store, and 3 outlet stores.

Areas of Strategic Focus

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In addition, we will continue to leverage the wide reach of our dealers’ showrooms around the globe.

In retail, we are working to evolve and enhance the Design Within Reach experience.

We are expanding the retail f ootprint of both our DWR studios and Herman Miller stores into new geographic markets, with a primary focus on growth within the United States.

In retail, we are working to evolve and enhance the DWR experience.

We are expanding the retail footprint of both our DWR and Herman Miller stores into new geographic markets, with a primary focus on growth within the United States.

We are testing new store formats, expanding our product assortment and offering design services both in store and online to enhance the customer experience, attract new customers and grow existing customers.

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We empower our associates to be agile and hold our teams accountable for living our actions and delivering high performance.

The Company believes that engagement and education are critical to enabling Associates to deliver extraordinary performance.

The Company conducts annual engagement surveys across its global associate population to gather feedback on its human capital practices and measure employee engagement.

The results help identify areas for improvement and guide action plans that support continued associate engagement and development.

Our priorities include offering a seamless MillerKnoll employee experience via a global Human Resources technology platform;

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MillerKnoll is uniquely positioned to capitalize on these opportunities given the breadth of our Contract and Global Retail businesses and product portfolios, global reach, and omni-channel distribution and fulfillment capabilities.

Our collective of dynamic brands are united in their commitment to our purpose, design for the good of humankind, and they offer a complementary set of design solutions.

Our collective of dynamic brands is united in its commitment to our purpose - design for the good of humankind - and offers a complementary set of design solutions.

By leveraging our global operations footprint, we are able to fuel our brands and build solutions in market closer to our customers, and we are creating centers of excellence in our operations facilities to support all brands in each region.

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Business Overview

The following is a summary of the significant events and items impacting the Company's operations for the year ended May 31, 2025:

The following summary provides an overview of the Company’s operating performance and segment results for the year ended May 30, 2026:

Consolidated Results

• Net sales were $3,841.7 million, representing an increase of 4.7% when compared to the prior year.

Growth was primarily driven by increased sales volumes in the North America Contract and International Contract segments, along with the positive impact of pricing actions.

These drivers more than offset sales declines due to unfavorable foreign currency translation, the strategic closure of the HAY eCommerce channel in North America and sales volume declines in the Global Retail segment.

Growth was primarily driven by increased sales volumes across all segments, along with the positive impact of pricing actions and favorable foreign currency translation.

On an organic basis, net sales were $3,800.4 million(*), representing an increase of 3.6% when compared to the prior year.

• Gross margin was 38.8% as compared to 39.1% in the prior year.

The decline in gross margin was driven by increases in material costs, some of which are related to increases in tariffs during the year, as well as from unfavorable channel and product mix.

These pressures were offset in part by gross margin benefit from favorable net pricing.

• Operating expenses increased by $119.8 million or 9.6% as compared to the prior year.

The increase was primarily related to an increase in non-cash intangible impairment charges of $113.2 million.

• The effective tax rate was negative 53.1% for fiscal 2025 compared to 14.8% for the prior year.

• Diluted loss per share for the full year totaled $0.54 compared to earnings per share of $1.11 in the prior year.

On an adjusted basis(*), diluted earnings per share totaled $1.95 in fiscal 2025 compared to $2.08 in fiscal 2024.

• Gross margin was 38.8% in both fiscal 2026 and fiscal 2025.

• Operating expenses decreased by $81.6 million or 5.9% as compared to the prior year.

The decrease was driven primarily from the impact of non-cash intangible impairment charges in the prior year, partially offset by an increase in fixed and variable compensation costs and incremental costs related to the expanded retail store footprint.

◦ Operating earnings were $198.3 million in fiscal 2026 compared to $50.5 million in fiscal 2025.

◦ Adjusted operating income was $238.4 million in fiscal 2026 compared to $248.7 million in fiscal 2025.

• The effective tax rate was 25.3% compared to negative 53.1% for the prior year.

The fiscal 2025 tax rate was impacted by non-deductible goodwill impairment charges that did not occur in fiscal 2026.

• Diluted earnings per share for the full year totaled $1.32 compared to loss per share of $0.54 in the prior year.

Adjusted diluted earnings per share (*) totaled $1.86 in fiscal 2026 compared to $1.95 in fiscal 2025.

• The Company declared cash dividends of $0.75 per share in both fiscal 2026 and fiscal 2025.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

The following summary includes the Company's view on the economic environment in which it operates:

• The current global macroeconomic environment — which reflects higher interest rates, tepid housing-related demand trends, relatively low CEO and consumer confidence levels, as well as geopolitical and global trade uncertainty — continues to pose challenges for the industry.

While these factors are expected to continue in the near term, we are focused on prudent cost management and investment in targeted growth opportunities.

These opportunities include growth within the Global Retail segment through expansion of our North American store footprint and product assortment.

Within our North America Contract and International Contract segments, our strategy is focused on targeting economically resilient customer sectors, continued investment in product design and innovation leadership and expansion into geographies with opportunity to grow our market share.

• The Company's financial performance is sensitive to changes in material costs including changes related to tariffs or commodity cost changes.

During fiscal year 2025 there were changes in trade policies that have resulted and are expected to continue to result in added cost pressures.

The Company has implemented pricing actions together with other mitigation strategies that, over time, are expected to offset the net impact of tariff costs on the financial results.

Segment Results

• The North America Contract segment reported a net sales increase of 4.9% and an organic sales increase of 4.8% (*) year-over-year.

Operating margin increased 280 basis points year-over year and 60 basis points on an adjusted basis (*) .

The increase was primarily driven by a reduction in restructuring charges as compared to the prior period

• The International Contract segment reported a net sales increase of 2.2% and an organic sales increase of 2.7%(*) year-over-year.

• The International Contract segment reported a net sales increase of 2.1% and an organic sales decrease of 1.2% (*) year-over-year.

Operating margin decreased 150 basis points year-over-year and decreased 250 basis points on an adjusted basis (*) .

• The Global Retail segment reported a net sales increase of 5.9% and an organic sales increase of 4.3% (*) year-over-year.

Operating margin increased 860 basis points year-over year and decreased 200 basis points on an adjusted basis (*) .

• The Global Retail segment reported a net sales decrease of 1.5% and an organic sales decrease of 0.3%(*) year-over-year.

Operating margin decreased 1,110 basis points year-over year and 110 basis points on an adjusted basis(*).

The decrease on a reported basis was primarily driven by non-cash intangible asset impairment charges recorded in the current year.

The increase on a reported basis was primarily driven by non-cash intangible asset impairment charges recorded in the prior year.

The remaining sections of Item 7 include additional analysis of the fiscal year ended May 30, 2026, including discussion of significant variances compared to the prior year period.

A detailed review of our fiscal 2024 performance compared to our fiscal 2023 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 1, 2024.

A detailed review of our fiscal 2025 performance compared to our fiscal 2024 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended May 31, 2025.

(*) Non-GAAP measurements;

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Reconciliation of Non-GAAP Financial Measures

This presentation contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies.

This report contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies.

These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement.

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Certain non-GAAP measures, including adjusted operating earnings, are used by the Company in its executive compensation program.

The non-GAAP financial measures referenced within this presentation include:

Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted Operating Margin and Organic Growth (Decline).

Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges and the related tax effect of these adjustments.

These adjustments are described further below.

Adjusted Operating Earnings (Loss) represents reported operating earnings plus integration charges, amortization of Knoll purchased intangibles, restructuring expenses, impairment charges and Knoll pension plan termination charges.

These adjustments are described further below.

The non-GAAP financial measures referenced within this report include:

Adjusted Earnings per Share - Diluted, Adjusted Operating Earnings (Loss), Adjusted Operating Margin and Organic Growth (Decline).

Adjusted Earnings per Share - Diluted represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges, debt extinguishment charges, CEO transition costs, and the related tax effect of these adjustments.

Adjusted Operating Earnings (Loss) represents reported operating earnings less integration charges, amortization of Knoll purchased intangibles, restructuring expenses, impairment charges, Knoll pension plan termination charges, and CEO transition costs.

Adjusted Operating Margin is calculated as Adjusted Operating Earnings (Loss) divided by Net Sales.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impact of the closure of the North America HAY eCommerce channel in the Global Retail segment.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects.

• Amortization of Knoll purchased intangibles:

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• Restructuring charges:

Includes costs associated with actions involving targeted workforce reductions.

• Impairment charges:

Includes non-cash, pre-tax charges for the impairment of the Knoll and Muuto trade names as well as impairment of goodwill attributed to the Global Retail and Holly Hunt reporting units.

Includes costs associated with actions involving targeted workforce reductions, facility consolidation charges, and accelerated depreciation of fixed assets.

• Knoll pension plan termination charges:

Includes expenses incurred associated with the termination of the Knoll pension plan which was completed in the second quarter of fiscal year 2025.

• Tax related items:

• Debt extinguishment charges:

Includes expenses associated with the extinguishment of debt.

We excluded these items from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

• Impairment charges:

Includes non-cash charges for the impairment of the Knoll and Muuto trade names as well as impairment of goodwill attributed to the Global Retail and Holly Hunt reporting units.

• CEO transition costs:

Includes expenses consisting primarily of severance, benefits and advisory fees.

We excluded the income tax benefit/provision effect of the tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

The following table reconciles Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by Segment for the years ended as indicated below (in millions):

Three Months Ended Twelve Months Ended

May 31, 2025 June 1, 2024 May 31, 2025 June 1, 2024

The following table reconciles Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by Segment and on a consolidated basis for MillerKnoll, Inc.

for the periods ended as indicated below (in millions):

Twelve Months Ended

May 30, 2026 May 31, 2025

North America Contract

Net sales $ 2,061.2 100.0 % $ 1,965.2 100.0 %

Gross margin 179.7 36.2 % 158.2 35.9 % 702.3 35.7 % 697.8 36.3 %

Total operating expenses 141.4 28.5 % 158.0 35.8 % 581.4 29.6 % 591.1 30.7 %

Operating earnings $ 186.4 9.0 % $ 120.9 6.2 %

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Net sales $ 674.0 100.0 % $ 660.0 100.0 %

Gross margin 68.2 36.7 % 65.4 37.7 % 240.8 36.5 % 233.1 36.1 %

Total operating expenses 46.5 25.0 % 46.5 26.8 % 177.5 26.9 % 171.5 26.6 %

Operating earnings $ 54.9 8.1 % $ 63.3 9.6 %

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Net sales $ 1,106.5 100.0 % $ 1,044.7 100.0 %

Gross margin 129.0 46.1 % 128.8 47.0 % 479.5 45.9 % 488.6 46.1 %

Total operating expenses 114.2 40.8 % 112.3 41.0 % 545.5 52.2 % 437.6 41.3 %

Operating earnings (loss) $ 25.3 2.3 % $ (66.0) (6.3) %

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Adjusted operating earnings $ 32.7 3.0 % $ 51.9 5.0 %

Operating expenses $ 19.8 — % $ 11.9 — % $ 67.7 — % $ 52.1 — %

Operating (loss) $ (68.3) — % $ (67.7) — %

Integration charges — — % — — % — — % 0.1 — %

CEO transition costs $ 2.6 — % $ — — %

Adjusted operating (loss) $ (65.7) — % $ (67.7) — %

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Net sales $ 3,841.7 100.0 % $ 3,669.9 100.0 %

Gross margin 376.9 39.2 % 352.4 39.6 % 1,422.6 38.8 % 1,419.5 39.1 %

Total operating expenses 321.9 33.5 % 328.7 37.0 % 1,372.1 37.4 % 1,252.3 34.5 %

Operating earnings $ 198.3 5.2 % $ 50.5 1.4 %

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Knoll pension plan termination charges — — % 1.0 — %

CEO transition costs 2.6 0.1 % — — %

Adjusted operating earnings $ 238.4 6.2 % $ 248.7 6.8 %

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Net sales, organic $ 2,058.9 $ 651.8 $ 1,089.7 $ 3,800.4

% change from PY 2.4 % 2.7 % (0.3) % 1.6 %

Organic Growth (Decline) 4.8 % (1.2) % 4.3 % 3.6 %

Twelve Months Ended

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Net sales, as reported $ 1,965.2 $ 660.0 $ 1,044.7 $ 3,669.9

HAY eCommerce — — (11.8) (11.8)

Net sales, organic $ 1,922.3 $ 645.6 $ 1,048.7 $ 3,616.6

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

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Orders, organic $ 1,998.5 $ 628.8 $ 1,093.4 $ 3,720.7

% change from PY 6.3 % 0.6 % 2.2 % 4.1 %

Organic (Decline) Growth (1.1) % (5.6) % 3.1 % (0.7) %

Twelve Months Ended

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Orders, as reported $ 2,021.0 $ 665.9 $ 1,060.8 $ 3,747.7

HAY eCommerce — — (11.4) (11.4)

Orders, organic $ 1,903.3 $ 667.6 $ 1,038.7 $ 3,609.6

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

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Twelve Months Ended

May 31, 2025 June 1, 2024

(Loss) Earnings per Share - Diluted $ (0.54) $ 1.11

May 30, 2026 May 31, 2025

Earnings (loss) per share - diluted $ 1.32 $ (0.54)

Amortization of Knoll purchased intangibles 0.34 0.35

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Impairment charges — 1.88

Debt extinguishment charges 0.11 —

Knoll pension plan termination charges — 0.01

CEO transition costs 0.04 —

Tax impact on adjustments (0.15) (0.38)

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The following is a comparison of our annual results of operations and year-over-year percentage changes for the periods indicated:

(Dollars in millions) Fiscal 2025 Fiscal 2024 % Change

(Dollars in millions)

Fiscal 2026 Fiscal 2025 % Change

Net sales $ 3,841.7 $ 3,669.9 4.7 %

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Other expenses, net 70.1 72.4 (3.2) %

Earnings before income taxes and equity income (21.9) 99.7 (122.0) %

Earnings (loss) before income taxes and equity income 128.2 (21.9) 685.4 %

Income tax expense 32.4 11.6 179.3 %

Equity income (loss) from nonconsolidated affiliates, net of tax 0.3 (0.4) (175.0) %

Net earnings (33.2) 84.6 (139.2) %

Equity (loss) income from nonconsolidated affiliates, net of tax (0.1) 0.3 (133.3) %

Net earnings (loss) 95.7 (33.2) 388.3 %

Net earnings attributable to redeemable noncontrolling interests 4.2 3.7 13.5 %

Net earnings attributable to MillerKnoll, Inc.

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 91.5 $ (36.9) 348.0 %

Earnings (loss) per share - diluted 1.32 (0.54) 344.4 %

Orders $ 3,761.0 $ 3,747.7 0.4 %

Backlog $ 678.8 $ 761.3 (10.8) %

The following table presents, for the periods indicated, the components of the Company's Consolidated Statements of Comprehensive Income as a percentage of Net sales:

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Other expenses, net 1.8 % 2.0 %

Earnings before income taxes and equity income (0.6) % 2.7 %

Earnings (loss) before income taxes and equity income 3.3 % (0.6) %

Income tax expense 0.8 % 0.3 %

Equity income (loss) from nonconsolidated affiliates, net of tax — % — %

Net earnings (0.9) % 2.3 %

Equity (loss) income from nonconsolidated affiliates, net of tax — % — %

Net earnings (loss) 2.5 % (0.9) %

Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.1 %

Net earnings attributable to MillerKnoll, Inc.

Net earnings (loss) attributable to MillerKnoll, Inc.

2.4 % (1.0) %

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This increase was primarily driven by the following factors:

• Increased sales volume within the International Contract and North America Contract segments of approximately $28 million and $25 million, respectively.

• Net price increases, which contributed approximately $14 million to Net sales, reflecting our ability to maintain pricing discipline in a competitive environment.

Offset in part by:

• A $12 million reduction due to the strategic closure of the HAY eCommerce channel in North America that occurred in the prior year.

• Decreased sales volume within the Global Retail segment of approximately $7 million.

• Unfavorable foreign currency impact of approximately $6 million.

Gross margin for fiscal 2025 was 38.8%, compared to 39.1% in fiscal 2024.

The 30 basis point decline was primarily driven by the following factors:

• Tariff-related costs negatively impacted gross margin by 30 basis points in the year.

• Unfavorable channel and product mix negatively impacted gross margin by approximately 30 basis points.

These factors were offset in part by:

• Effective pricing strategies, net of incremental discounting, which contributed approximately 30 basis points of margin improvement.

• Price increases, net of discounting, which positively impacted Net sales by approximately $74 million.

• Favorable foreign currency translation, which increased Net sales by approximately $41 million.

• Increased sales volume in the North America Contract, Global Retail, and International Contract segments contributed approximately $25 million, $24 million and $8 million respectively.

Gross margin for fiscal 2026 and fiscal 2025 was 38.8%.

Gross margin was stable year over year, reflecting offsetting favorable and unfavorable impacts as described below.

• Favorable channel and product mix and the impact of incremental list price increases, partially offset by contract price discounting, which positively impacted margin.

• Favorable leverage on fixed costs due to higher sales volumes which positively impacted margin.

• These increases were offset by tariff-related costs, partially offset by pricing actions, incurred in the first half of the year which adversely impacted gross margin.

Operating Expenses

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The amounts presented in the bar graph are expressed in millions and have been rounded.

Operating expenses increased by $120 million or 9.6% compared to the prior year fiscal period.

The current period reflects the following key changes compared to the prior year:

• An increase of $113 million in non-cash intangible impairment charges;

• Selling and marketing expenses increased by $10 million, primarily due to higher selling and marketing costs within the Global Retail segment;

• Variable selling costs, which include sales-based commission and royalty expense, increased approximately $7 million;

• Increased acquisition-related integration costs as compared to the prior year, totaling approximately $4 million.

These increases were partially offset by:

• A $16 million reduction in restructuring charges as compared to the prior year.

Operating expenses decreased by $82 million or 5.9% compared to the prior year fiscal period.

The following factors contributed to the change:

• Impairment charges of $130 million related to goodwill attributed to the Global Retail and Holly Hunt reporting units, as well as related to the Knoll and Muuto indefinite-lived trade name intangible assets, that occurred in the prior year period.

• Acquisition-related integration charges which totaled approximately $28 million, that occurred in the prior year.

These decreases were offset in part by:

• Increased fixed and variable compensation costs of approximately $33 million.

• Incremental costs of $15 million associated with the impact from opening new stores.

• Variable selling costs, including sales-based commissions and royalty expenses, which rose by approximately $14 million.

• Foreign currency translation also contributed an increase in operating expenses of approximately $10 million.

• Increase of approximately $5 million in other expenses driven in part by program spend.

Other Income/Expense

Net other expenses for fiscal 2026 totaled $70 million, compared to $72 million in fiscal 2025.

The year-over-year increase of $4.9 million was primarily attributable to the following factors:

• A $2.3 million reduction in net periodic benefit income, resulting from the termination of the Knoll pension plan during the current fiscal year.

• A $3.1 million increase in foreign currency losses compared to the prior year, reflecting greater volatility in exchange rates.

The year-over-year decrease of $2 million was primarily driven by lower interest expense due to reduced debt levels and a reduction in foreign currency losses, partially offset by a loss on extinguishment of debt of approximately $8 million incurred in connection with the refinancing of term loan debt during the current year.

See Note 10 of the Consolidated Financial Statements for additional information.

Operating Segments Results

The business is comprised of various operating segments as defined by U.S.

These operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions.

Effective as of March 1, 2025, the last day of the third quarter of fiscal 2025, the Company implemented an organizational change that resulted in a change in the reportable segments.

The Company has recast historical results to reflect this change.

The business is composed of various operating segments as defined by generally accepted accounting principles in the United States.

These operating segments are determined on the basis of how the Company internally reports and how the chief operating decision maker ("CODM") evaluates financial information used to make operating decisions.

Below is a description of each reportable segment.

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North America Contract

(Dollars in millions) Fiscal 2025 Fiscal 2024 Change

(Dollars in millions)

Fiscal 2026 Fiscal 2025 Change

Net sales $ 2,061.2 $ 1,965.2 $ 96.0

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Net sales increased 4.9%, or 4.8% (*) on an organic basis, from the prior year due to:

• Price increases, net of discounting positively impacted net sales by approximately $69 million .

• Increased sales volume within the segment of approximately $25 million.

• Price increases, net of incremental discounting, of approximately $20 million.

These increases were offset in part by:

• Unfavorable foreign currency translation of approximately $2 million.

• Favorable foreign currency translation increased net sales by approximately $2 million.

Operating earnings increased $66 million, or 54.2% compared to the same period of the prior year due to:

• Increased Gross margin of $51 million, driven by the higher sales volumes discussed above and an increase in gross margin percentage of 80 basis points.

The increase in gross margin percentage was due primarily to:

◦ Price increases, net of discounting resulted in a positive impact to margin.

◦ Favorable product mix and operational efficiency which increased margin.

◦ These increases were partially offset by tariff-related costs, net of pricing actions, incurred in the first half of the year that adversely impacted gross margin.

• Decreased operating expenses of $15 million.

The following factors contributed to the change:

◦ A decrease of approximately $16 million in restructuring charges related to reductions in the Company's workforce;

◦ A decrease of approximately $8 million in annual incentive compensation.

These decreases were offset in part by:

◦ An increase of $12 million in non-cash intangible impairment charges as compared to the prior year;

◦ Increased acquisition related integration costs of approximately $2 million.

• Gross margin increased by $4.5 million, primarily driven by the higher sales volume discussed above.

This increase was offset by a 60 basis point decline in gross margin percentage, which was mainly attributable to the following factors:

◦ Unfavorable product mix reduced margin by approximately 40 basis points;

◦ Higher tariff-related costs led to a 30 basis point decline in gross margin;

◦ Increased commodity and product distribution costs further reduced margin by 30 basis points;

◦ Higher labor costs and loss of fixed cost leverage due to reduced production volumes in the first part of the year contributed an additional 30 basis point decrease in gross margin.

These negative impacts were partially offset by:

◦ Incremental list price increases, net of contract price discounting, which improved gross margin by approximately 70 basis points.

◦ A reduction in acquisition-related integration charges, which totaled approximately $25 million.

◦ Decreased non-cash intangible impairment charges of approximately $20 million.

These decreases were partially offset by:

◦ Increased variable selling costs, including sales-based commissions and royalty expenses of approximately $16 million.

◦ Increased compensation and benefits of approximately $13 million.

◦ Increase of approximately $1 million driven primarily by restructuring charges associated with facility consolidation initiatives.

(*) Non-GAAP measurements;

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International Contract

(Dollars in millions) Fiscal 2025 Fiscal 2024 Change

(Dollars in millions)

Fiscal 2026 Fiscal 2025 Change

Net sales $ 674.0 $ 660.0 $ 14.0

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Operating earnings % 8.1 % 9.6 % (1.5) %

Net sales increased 2.2%, or 2.7% (*) on an organic basis, from the prior year due to:

• Increased sales volume within the segment of approximately $28 million;

offset in part by

• Incremental discounting, net of price increases, which negatively impacted sales by approximately $11 million;

• Unfavorable foreign currency translation of approximately $3 million.

Operating earnings increased $1.7 million, or 2.8%, compared to the prior year due to:

• Increased gross margin of $7.7 million due to the increase in sales explained above and an increase in gross margin percentage of 40 basis points.

The increase in gross margin percentage was due primarily to:

◦ Leverage on fixed costs on higher sales volumes which had a favorable impact on margin of approximately 70 basis points;

◦ Favorable product and business mix which increased margin by 60 basis points.

Offset in part by:

◦ Incremental discounting, net of price increases which had a negative impact on margin of 90 basis points.

• The increase in gross margin was partially offset by increased Operating expenses of $6 million which was largely due to increased variable selling costs in the current year.

Net sales increased 2.1%, and decreased 1.2% (*) on an organic basis, from the prior year due to:

• Favorable foreign currency translation, which increased net sales by approximately $22 million.

• Higher sales volume within the segment, contributing approximately $8 million to the increase.

• These increases were partially offset by incremental discounting attributable to regional and product sales mix, partially offset by price increases, which adversely impacted net sales by approximately $16 million.

Operating earnings decreased $8 million, or 13.3%, compared to the prior year due to:

• Increased Operating expenses of $10 million driven primarily by:

◦ Increased fixed and variable compensation costs of approximately $6 million.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $4 million compared to the prior year.

◦ Incremental charges driven by the timing of program spend, partially offset by decreased acquisition-related integration charges and impairment charges during the prior year period.

• Increased gross margin of $2 million driven by the higher sales volumes explained above, partially offset by a decline in gross margin percentage of 50 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Unfavorable foreign currency translation which negatively impacted gross margin.

◦ Regional sales mix which had an unfavorable impact to gross margin.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes and favorable material performance.

(*) Non-GAAP measurements;

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Global Retail

(Dollars in millions) Fiscal 2025 Fiscal 2024 Change

(Dollars in millions)

Fiscal 2026 Fiscal 2025 Change

Net sales $ 1,106.5 $ 1,044.7 $ 61.8

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Gross margin % 44.5 % 45.9 % (1.4) %

Operating (loss) earnings (66.0) 51.0 (117.0)

Operating (loss) earnings % (6.3) % 4.8 % (11.1) %

Net sales decreased 1.5% as reported and 0.3% (*) on an organic basis, from the prior year due to:

• Decrease of approximately $12 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year;

• A decrease in sales volumes of approximately $7 million;

• Unfavorable foreign currency translation of approximately $1 million.

These decreases were offset in part by:

• Price increases, net of incre mental discounting, of approximately $4 million.

Operating earnings decreased $117.0 million, or 229.4% over the prior year due to:

• Decreased gross margin of $9.1 million due to the decrease in sales explained above and a decrease in gross margin percentage of 20 basis points.

Operating earnings (loss) 25.3 (66.0) 91.3

Operating earnings (loss) % 2.3 % (6.3) % 8.6 %

Net sales increased 5.9% as reported and 4.3% (*) on an organic basis, from the prior year due to:

• Higher sales volumes within the segment, contributing approximately $24 million to the increase.

• Price increases, net of discounting positively impacted net sales by approximately $21 million.

• Favorable foreign currency translation, which increased net sales by approximately $17 million.

Operating earnings increased $91 million, or 138.3% over the prior year due to:

• Increased gross margin of $13 million driven by the higher sales volumes explained above, partially offset by a decline in gross margin percentage of 140 basis points.

The decrease in gross margin percentage was due primarily to:

◦ The impact of increased inventory costs as compared to the prior year which negatively impacted margin by approximately 110 basis points.

◦ Loss of leverage on fixed costs attributable to lower sales volumes as compared to the prior year which had an unfavorable impact on gross margin percentage of approximately 30 basis points.

These decreases were offset in part by:

◦ Reduced freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year and favorable product mix which had a favorable impact on gross margin percentage of approximately 100 basis points;

◦ The impact of incremental price increases, net of promotional discounting, that increased gross margin percentage by approximately 20 basis points.

These increases were offset in part by:

• Increased Operating expenses of $108 million primarily driven by an increase of $105 million in non-cash intangible impairment charges as compared to the prior year as well as increased selling and marketing costs in the current year.

◦ Tariff-related costs, net of pricing actions, that adversely impacted gross margin.

◦ Unfavorable foreign currency translation negatively impacted gross margin.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes.

• Decreased Operating expenses of $78 million driven primarily by decreased non-cash intangible impairment charges of $109 million compared to the prior year.

This decrease was offset in part by:

◦ Incremental costs of $15 million associated with the impact from opening new stores.

◦ Increased fixed and variable compensation costs of approximately $14 million.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year.

(*) Non-GAAP measurements;

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The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture, distribute, and market our products.

Net cash provided by operating activities for the twelve months ended May 31, 2025, totaled $209.3 million compared to $352.3 million in the twelve months ended June 1, 2024.

The decrease in cash inflow is due primarily to a net increase in working capital.

Net cash provided by operating activities for the twelve months ended May 30, 2026, totaled $199.9 million compared to $209.3 million in the twelve months ended May 31, 2025.

Working capital remained a use of cash in the current year and increased compared to the prior year.

Our working capital consists primarily of rec eivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses.

The following all affect these account balances:

• The timing of collection of our receivables;

• Fluctuations in inventory levels;

• The timing of collection of our receivables;

• Fluctuations in customer deposits;

• Changes in accruals related to variable compensation.

Cash Flow — Investing Activities

Cash used in investing activities for the twelve months ended May 31, 2025, was $100.9 million, as compared to $86.3 million in the twelve months ended June 1, 2024.

The increase in cash outflow in the current year was primarily due to:

• Increased capital expenditures in the current year;

Offset in part by:

• Cash proceeds of $6.0 million in the current period related to the sale of a manufacturing facility located in Wisconsin;

• A decrease in the total volume of notes receivable entered into with certain independently owned dealers in the current period as compared to the same period of the prior year.

Capital expenditures for the current year were $107.6 million a s compared to $78.4 million in the prior year.

At the end of the fiscal 2025, there were outstanding commitments for capital purchases of $69.2 million.

The Company plans to fund these commitments with cash on hand and/or cash generated from operations.

The Company expects capital spending in fiscal 2026 to be between $120 million and $130 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.

Cash used in investing activities for the twelve months ended May 30, 2026, was $115.6 million, as compared to $100.9 million in the twelve months ended May 31, 2025, primarily reflecting increased capital expenditures in the current year.

Cash used in the prior year included $6.0 million of offsetting proceeds from the sale of a manufacturing facility located in Wisconsin.

Capital expenditures for the current year were $122.3 million as compared to $107.6 million in the prior year.

At the end of fiscal 2026, there were outstanding commitments for capital purchases of $82.1 million.

The Company plans to fund these commitments through a combination of cash on hand and cash generated from operations.

The Company expects capital spending in fiscal 2027 to be between $125.0 million and $135.0 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment.

Cash Flow — Financing Activities

Cash used in financing activities for the twelve months ended May 31, 2025 was $150.3 million, compared to $258.8 million in the twelve months ended June 1, 2024.

Cash used in financing activities for the twelve months ended May 30, 2026 was $117.0 million, compared to $150.3 million in the twelve months ended May 31, 2025.

The decrease in cash used in the current year, compared to the prior year, was primarily due to:

• The Company repurchased 965,907 shares at a cost of $16.3 million in the current year as compared to 3,291,176 share repurchases totaling $84.9 million in the prior year.

• The refinancing of Term Loan A which resulted in proceeds of $90.0 million in the current year.

Offset in part by:

• Net payments on the credit agreement of $61.7 million in the current year compared to net payments of $36.7 million in the prior year.

• Net payments on the credit facility of $21.6 million in the current period compared to $61.7 million in the same period of the prior year.

• During the current period the Company entered into a three-year accounts receivable securitization facility.

Net proceeds from the facility totaled $42.9 million in the current period.

This was offset in part by:

• Scheduled principal payments on term loan debt as well as the refinancing of Term Loan B resulted in a net cash outflow of $69.5 million in the current period.

In the prior year, term loan debt was increased by $47.4 million due to the refinancing of Term Loan A, net of scheduled principal payments.

Sources of Liquidity

The Company has taken actions to safeguard its capital position in the current environment.

The Company is closely managing spending levels, capital investments, and working capital.

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For additional information, refer to Note 5 to the Consolidated Financial Statements.

(In millions) May 31, 2025 June 1, 2024

(In millions)

May 30, 2026 May 31, 2025

Cash and cash equivalents $ 167.7 $ 193.7

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which is estimated to be approximately $377.8 million on May 30, 2026.

The Company believes cash on hand, cash generated from operations, and borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, upcoming debt maturities, future dividends and share repurchases, subject to financing availability in the marketplace.

Material Cash Requirements

As of May 30, 2026, the Company's primary material cash requirements consisted of debt obligations, operating lease commitments, purchase obligations, pension and other post-employment benefit plan funding requirements, and dividend commitments.

Debt obligations, including associated interest payments, represented the Company's most significant contractual cash requirement, totaling approximately $1.6 billion.

Scheduled principal and interest payments are expected to be funded through a

combination of cash generated from operations, existing cash balances, and available borrowing capacity under the Company's credit arrangements.

The Company also had operating lease commitments of approximately $621.6 million, primarily related to manufacturing facilities, distribution centers, showrooms, offices, and retail locations.

Lease payments are expected to be made throughout the remaining lease terms, with approximately $111.8 million due in fiscal 2027 and the remainder payable over future periods.

Purchase obligations totaled approximately $61.4 million and primarily relate to commitments with suppliers for inventory, raw materials, and other goods and services used in the normal course of business.

The majority of these commitments are expected to be settled within the next fiscal year.

In addition, the Company expects to make future contributions related to pension and other post-employment benefit plans totaling approximately $58.3 million based on current funding estimates.

The timing and amount of future contributions may vary depending on changes in plan asset values, interest rates, regulatory requirements, and other actuarial assumptions.

The Company also had cash requirements related to declared stockholder dividends and other contractual commitments totaling approximately $17.0 million as of May 30, 2026.

Management expects these cash requirements to be funded through a combination of cash flows generated from operating activities, cash and cash equivalents on hand, and available borrowing capacity.

Based on current operating plans and liquidity levels, the Company believes it has sufficient resources to meet both its short-term and long-term cash requirements as they become due.

Contingencies

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The Company's fiscal year ends on the Saturday closest to May 31.

The fiscal year ended May 31, 2025, and the fiscal year ended June 1, 2024, both contained 52 weeks, and the fiscal year ended June 3, 2023, contained 53 weeks.

Contractual Obligations

Contractual obligations associated with our ongoing business and financing activities will result in cash payments in future periods.

The following table summarizes the amounts and estimated timing of these future cash payments.

Further information regarding debt obligations can be found in Note 5 of the Consolidated Financial Statements.

Additional information related to operating leases can be found in Note 6 of the Consolidated Financial Statements.

Payments due by fiscal year

(In millions) Total 2026 2027-2028 2029-2030 Thereafter

Short-term borrowings and long-term debt (1)

$ 1,337.0 $ 16.0 $ 50.7 $ 1,270.3 $ —

Estimated interest on debt obligations (1)

242.3 59.7 125.3 57.3 —

Operating leases 597.5 88.0 183.4 146.4 179.7

Purchase obligations 52.8 52.8 — — —

Pension and other post employment benefit plans funding (2)

5.8 1.8 1.1 1.0 1.9

Stockholder dividends (3)

12.7 12.7 — — —

4.6 0.5 0.9 0.8 2.4

Total $ 2,252.7 $ 231.5 $ 361.4 $ 1,475.8 $ 184.0

(1) Includes the current portion of long-term debt.

Contractual cash payments on long-term debt obligations are disclosed herein based on the amounts borrowed as of May 31, 2025, and the maturity date of the underlying debt.

Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of May 31, 2025.

Actual cash outflows may differ significantly due to changes in borrowings or interest rates.

(2) Pension plan funding commitments are known for a 12-month period for those plans that are funded;

unfunded pension and post-retirement plan funding amounts are equal to the estimated benefit payments .

As of May 31, 2025, the total projected benefit obligation for our domestic and international employee pension benefit plans was $77.9 million.

(3) Represents the dividend payable as of May 31, 2025.

Future dividend payments are not considered contractual obligations until declared.

(4) Other contractual obligations primarily represent long-term commitments related to deferred and supplemental employee compensation benefits, and other post-employment benefits.

The fiscal year ended May 30, 2026, the fiscal year ended May 31, 2025, and the fiscal year ended June 1, 2024, all contained 52 weeks.

Critical Accounting Policies and Estimates

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We believe that of our significant accounting policies, which are described in Note 1 of our consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity.

Business Combinations

Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies.

We use our best estimates and assumptions to accurately assign fair values to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets.

We allocate the fair value of purchase consideration to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is allocated to goodwill.

The allocation of the purchase consideration requires management to make significant

estimates and assumptions, especially with respect to intangible assets.

These estimates are reviewed with our advisors and can include, but are not limited to:

• future expected cash flows from acquired customer relationships and trade names,

• assumed royalty rates that could be payable if we did not own the trademarks, and

• discount rates.

Our estimates of fair value are based upon reasonable assumptions but are inherently uncertain and unpredictable, and as a result, actual results may differ from these estimates.

During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the values of assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

There were no material acquisitions during fiscal 2025, fiscal 2024 or fiscal 2023.

Goodwill and Indefinite-lived Intangibles

Goodwill, Indefinite-lived Intangibles and Long-lived Assets

We perform our annual impairment assessment for goodwill and other indefinite-lived intangible assets each year as of March 31 or more frequently if events or changes in circumstances indicate an impairment might be possible.

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Certain business acquisitions have resulted in the recording of goodwill.

At May 31, 2025, and June 1, 2024, we had goodwill recorded within the Consolidated Balance Sheets of $1,152.4 million and $1,226.3 million , respectively.

At May 30, 2026, and May 31, 2025, we had goodwill recorded within the Consolidated Balance Sheets of $1,161.3 million and $1,152.4 million , respectively.

Goodwill is tested for impairment at the reporting unit level annually, or more frequently, when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value.

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If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value.

During the third quarter of fiscal year 2025, the Company identified indicators of a triggering event which could indicate the carrying amount of the reporting units may not be supported by the fair value.

Although our annual impairment test is performed during the fourth quarter, we perform a qualitative assessment each interim reporting period to determine whether there are indicators of a triggering event in the quarter.

Through this assessment management identified an impairment triggering event associated with lower-than-expected operating results.

This suggested that the fair value of one or more of our reporting units may have fallen below their carrying amount.

Accordingly, we performed a quantitative valuation of each reporting unit during the quarter.

The Company used the discounted cash flow method under a weighting of the income and market approach to estimate the fair value of our reporting units.

During the fourth quarter of the current year, the Company performed its annual impairment assessment.

For the current year, the Company elected to take a quantitative valuation approach for all four reporting units.

The Company used a weighting of the income and market approaches to estimate the fair value of our reporting units.

These approaches are based on a discounted cash flow analysis and observable comparable company information that use several inputs, including:

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The test for impairment requires the Company to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples.

We estimated the fair value of each reporting unit using a discounted cash flow analysis.

The discounted cash flow analysis used the present value of projected cash flows and a residual value.

The Company employed a market-based approach in selecting the discount rate used in our analysis.

The discount rate selected represents the market rate of return equal to what the Company believes a reasonable investor would expect to achieve on investments of similar size to each reporting unit.

The Company believes the discount rates selected in the quantitative assessment is appropriate in that it exceeds the estimated weighted average cost of capital for our business as a whole.

As a result of the third quarter fiscal year 2025 goodwill impairment test, the Company recognized a total non-cash impairment charge of $30.1 million and $62.2 million in its Global Retail and Holly Hunt reporting units, respectively.

The goodwill impairment charges were primarily caused by reduced sales and profitability projections as well as an increase in the discount rate.

After these impairment charges and before the changes in reporting units resulting from our third quarter fiscal year 2025 segment re-organization, the Global Retail and Holly Hunt reporting units had remaining goodwill of $357.0 million and $33.0 million, respectively.

The quantitative assessment in the third quarter of fiscal year 2025 resulted in the fair values of the Americas Contract, International Contract and Coverings reporting units exceeding their respective carrying values (the "cushion") by 32%, 63% and 10%, respectively.

The discount rate selected represents the market rate of return equal to what the Company believes a market participant would expect to achieve on investments of similar size to each reporting unit.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit.

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Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.

In completing the goodwill impairment test, the respective fair values were estimated using discount rates ranging from 12.0% to 15.0% and long-term growth rates ranging from 2.5% to 3.0%.

The Company evaluated the sensitivity of changes in projected growth rates, discount rates and long-term growth rates for the reporting units with goodwill remaining as of March 1, 2025.

• A decrease in the forecasted sales by 500 basis points in all years or an increase in the discount rate of 100 basis points, leaving all other assumptions static, would not result in impairment for the Americas Contract, International Contract or Coverings reporting units.

• A decrease in the operating margin of 100 basis points in all years, leaving all other assumptions static, would not result in impairment for the Americas Contract or International Contract reporting units.

For the Coverings reporting unit it would result in impairment of $3.0 million.

• A reduction in the projected sales growth rate, decline in operating margins, an increase in the discount rate or a decline in the long-term sales growth rate for the Holly Hunt or Global Retail reporting units may result in the need to record an additional impairment charge.

Additionally, in the third quarter of fiscal year 2025 the Company implemented an organizational change that resulted in a change in the reportable segments and reporting units.

As a result, the Company performed the required impairment assessments directly before and immediately after the change in reporting units.

As a result of this change, $26.1 million of goodwill was reassigned from the Americas Contract reporting unit to the International Contract reporting unit, based on the relative fair value approach.

Additionally, the $33.0 million of remaining goodwill for the Holly Hunt reporting unit was moved to the Global Retail reporting unit.

Subsequent to this change the Company has four reporting units, North America Contract, International Contract, Global Retail and Coverings.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2025.

The Company elected to test each reporting unit qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic

Testing Goodwill for Impairment.

Through the performance of this qualitative assessment we determined that there were no indicators of impairment.

In completing the goodwill impairment test, the respective fair values were estimated using discount rates ranging from 13.5% to 16.5% and a long-term growth rate of 2.5%.

The increase in the discount rates, from a range of 12.0% to 15.0% in the prior year, was primarily attributable to higher company-specific risk premiums reflecting current market conditions.

The current year quantitative assessment resulted in the fair values of the North America Contract, International Contract, Global Retail and Coverings reporting units exceeding their respective carrying values by 45.5%, 3.1%, 1.1% and 8.5%, respectively.

While no impairment was recognized in the current year, the International Contract, Global Retail and Coverings reporting units remain sensitive to changes in key assumptions, including projected revenue growth, operating margins, and discount rates.

Management will continue to monitor these reporting units, as adverse changes in market conditions or operating performance could result in future impairment charges.

The Company evaluated the sensitivity of changes in projected revenue growth rates, operating margin rates and discount rates for the reporting units as of March 31, 2026.

For any reporting unit not specifically identified below, the simulated sensitivity changes would not have resulted in an impairment charge.

• A decrease in the forecasted sales by 500 basis points in all years, leaving all other assumptions static, would result in impairment for the International Contract, Global Retail and Coverings reporting units of $99.4 million, $177.3 million and $18.9 million, respectively.

• A decrease in the operating margin of 100 basis points in all years, leaving all other assumptions static, would result in impairment for the International Contract and Global Retail reporting units of $46.6 million and $70.9 million, respectively.

• An increase in the discount rate of 100 basis points, leaving all other assumptions static, would result in impairment for the International Contract and Global Retail reporting units of $29.2 million and $36.6 million, respectively.

The sensitivities above are calculated assuming all other variables remain constant.

However, changes in these assumptions may not occur in isolation.

A change in multiple assumptions could compound the calculated impairment impact on our reporting units.

During the third quarter of fiscal 2025, management identified impairment triggering events resulting from lower-than-expected operating performance and, accordingly, performed a quantitative goodwill impairment assessment for each reporting unit.

As a result, the Company recognized non-cash goodwill impairment charges of $30.1 million and $62.2 million related to the Global Retail and Holly Hunt reporting units, respectively.

This impairment was driven primarily by reduced sales and profitability projections, as well as higher discount rates.

Additionally, in connection with a third-quarter organizational realignment that modified the Company's reportable segments and reporting units, goodwill was reassigned using a relative fair value approach.

This resulted in the transfer of $26.1 million from the Americas Contract reporting unit to International Contract and the reassignment of the remaining $33.0 million of Holly Hunt goodwill to the Global Retail reporting unit.

Following this reorganization, the Company's reporting units consisted of North America Contract, International Contract, Global Retail, and Coverings.

We performed our annual quantitative impairment test as of March 31, 2026.

Subsequently, we performed a qualitative assessment from April 1, 2026 to May 30, 2026 to determine if any triggering events occurred.

No such events were identified.

Indefinite-lived Intangible Assets

Certain business acquisitions have resulted in the recording of trade names as indefinite-lived intangible assets, which are not amortized.

At May 31, 2025, and June 1, 2024, the Company held trade name assets with a carrying value of $432.5 million and $465.5 million, respectively.

At May 30, 2026, and May 31, 2025, the Company held trade name assets with a carrying value of $435.3 million and $432.5 million , respectively.

The Company evaluates indefinite-lived trade name intangible assets for impairment using a qualitative assessment annually.

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An impairment charge is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date.

During the third quarter of fiscal year 2025 the Company identified indicators that impairment was more likely than not for certain of the indefinite-lived intangible assets.

Accordingly, the Company performed quantitative assessments during the third quarter of fiscal year 2025 to testing the indefinite-lived intangible assets which showed indicators that impairment was more likely than not.

This quantitative assessment resulted in the recognition of $37.7 million in non-cash impairment charges related to the Knoll and Muuto trade names.

The other indefinite-lived intangible assets were determined to have no impairment.

In performing this quantitative assessment, we estimate the fair value of these intangible assets using the relief-from-royalty method which requires assumptions related to:

During the fourth quarter of fiscal year 2026 the Company performed its annual test of the indefinite-lived intangible assets.

The Company performed qualitative tests over all of the indefinite-lived intangible assets, with the exception of the Knoll, Muuto, and Holly Hunt trade name assets.

The Company elected to perform quantitative tests over these assets due to the history of recent impairments and corresponding expectation that there was little cushion between the fair values and carrying values of these assets.

As a result of the qualitative and quantitative test over indefinite-lived intangible assets, we concluded there were no impairments in the current year.

In performing quantitative assessments, we estimate the fair value of these intangible assets using the relief-from-royalty method which requires assumptions related to:

• actual and forecasted revenue growth rates,

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• a market participant discount rate based on a weighted-average cost of capital.

In completing the third quarter fiscal year 2025 assessment of indefinite-lived trade name impairment, the respective fair values were estimated using discount rates ranging from 12.00% to 13.00%, royalty rates ranging from 1.50% to 4.50% and long-term growth rates ranging from 2.5% to 3.0%.

In the current year assessment, the Knoll and Muuto trade name asset fair values exceeded their carrying values by 6.8% and 2.1%, respectively.

These fair values were estimated using discount rates ranging from 12.7% to 13.0%, royalty rates ranging

from 2.0% to 4.5% and long-term growth rates ranging from 2.5% to 3.0%.

The Company’s estimates of the fair value of its indefinite-lived intangible assets are sensitive to changes in the key assumptions above as well as projected financial performance.

If the estimated cash flows related to the Company's indefinite-lived intangibles were to decline in future periods, the Company may need to record additional impairment charges.

For the Knoll trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales would have resulted in $12.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $15.0 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $11.0 million of impairment charges.

For the Muuto trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales would have resulted in $7.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $4.0 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $6.0 million of impairment charges.

In fiscal 2024, the Company performed quantitative assessments in testing the Knoll product brand and Muuto brand indefinite-lived intangible assets for impairment, which resulted in the carrying values of the trade names exceeding their fair values by $8.9 million and $7.9 million, respectively.

Accordingly, impairment charges of $16.8 million in total were recognized.

During fiscal 2023, the Company determined through a qualitative assessment that the Knoll trade name carrying value was more than likely above its fair value.

As a result, the Company performed a quantitative assessment to determine the fair value and as a result recognized a $19.7 million non-cash impairment charge to the indefinite-lived trade name.

If the estimated cash flows related to the Company's indefinite-lived intangibles were to decline in future periods, the Company may need to record impairment charges.

For the Knoll trade name, keeping all other assumptions constant, a 500 basis point decrease in forecasted sales would have resulted in a $15.0 million pre-tax impairment charge;

a decrease in the royalty rate of 25 basis points would have resulted in an $8.0 million of impairment charge;

and a 100 basis point increase in the discount rate would have resulted in a $4.0 million impairment charge.

For the Muuto trade name, keeping all other assumptions constant, a 500 basis point decrease in forecasted sales would have resulted in $12.0 million pre-tax impairment charge;

a decrease in the royalty rate of 25 basis points would have resulted in an $3.0 million of impairment charge;

and a 100 basis point increase in the discount rate would have resulted in a $5.0 million impairment charge.

The sensitivities above are calculated assuming all other variables remain constant.

However, changes in these assumptions may not occur in isolation.

A change in multiple assumptions could compound the calculated impairment impact on our indefinite-lived intangible assets.

In fiscal 2025, the Company performed quantitative assessments in testing the Knoll product brand and Muuto brand indefinite-lived intangible assets for impairment, which resulted in the carrying values of the trade names exceeding their fair values by $37.7 million, resulting in impairment charges.

If the estimated cash flows related to the Company's indefinite-lived intangibles were to decline in future periods, the Company may need to record additional impairment charges.

Each indefinite-lived intangible asset was reviewed for impairment using a qualitative assessment as of March 31, 2025.

The Company elected to test each asset qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350):

Testing Goodwill for Impairment.

Through the performance of this qualitative assessment we determined that there were no indicators of impairment.

We performed our annual quantitative impairment test as of March 31, 2026.

Subsequently, we performed a qualitative assessment from April 1, 2026 to May 30, 2026 to determine if any triggering events occurred.

No such events were identified.

Long-lived Assets

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If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded to adjust the asset to its estimated fair value.

As of and for the year ended May 30, 2026 we have not identified any asset groups where the estimated undiscounted future cash flows are not in excess of their carrying values.

In the first quarter of fiscal 2025, the decision was made to cease the use of certain leased locations resulting in impairment charges of $17.4 million related to the right of use assets associated with these locations.

In the fourth quarter of fiscal 2024, the decision was made to cease the use of certain leased locations resulting in impairment charges of $5.5 million related to the right of use assets associated with these locations.

During fiscal 2023, the decision was made to cease operating Fully as a stand-alone brand and sales channel and instead sell certain Fully products through other channels already existing within the Global Retail business.

Management identified this decision as an indicator of impairment, and accordingly recorded impairment of certain long-lived assets within the Fully asset group of $21.5 million.

The Company believes its assumptions for assessing the impairment of its long-lived assets, goodwill and indefinite-lived trade names are reasonable, but if actual results are not consistent with management's estimates and assumptions, a material impairment charge could occur, which could have a material adverse effect on our consolidated financial statements.

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This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements include those relating to future events, anticipated results of operations, our expectations regarding future market conditions, our business strategies, our assessment of risks we face, and other aspects of our operations or operating results.

face, and other aspects of our operations or operating results.

These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import.

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These forward-looking statements involve certain risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including, but not limited to:

• The effects of the ongoing conflict and broader geopolitical instability in the Middle East, including with respect to negative impacts on our supply chain, decreased sales within the region or beyond due to supply chain constraints, and broader inflationary and macroeconomic effects;

• Changes to U.S.

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• Consumer spending levels, which have a significant impact on demand for our products within our Global Retail segment;

• Global and national economic conditions such as heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, escalating tensions in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events;

• Global and national economic conditions such as heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, the escalating conflict in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events;

• Cybersecurity threats and risks;

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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 7. Management’s Discussion and Analysis