LZB 10-K & 10-Q changes, risk factors and insider trading

Our business is subject to a variety of risks. Any of the following risks could materially and adversely affect our business, financial condition, results of operations, financial condition,liquidity, or future prospects. The risks discussed below should be carefully considered, together with the other information provided in this Annual Report on Form 10-K, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 1C. Cybersecurity, and our financial statements, including the related notes. These risk factors do not identify all risks that we face. There may be additional risks that are presently unknown to us or that we currently believe to be immaterial that could affect us. Investors should carefully consider all risks, including those disclosed, before making an investment decision.

The furniture industry and our business are particularly sensitive to cyclical variations in the general economy and to uncertainty regarding future economic conditions because our principal products are consumer goods that may be considered postponable discretionary purchases. Economic downturns and prolonged negative economic conditions have affected, and could continue to affectaffect, general consumer spending, resulting in a decrease in the overall demand for such discretionary items, including homeresidential furniture and furnishings. Factors influencing consumer spending include, among others, general economic conditions, consumer disposable income, recession and fears of recession, United States government default or shutdown or the risk of such default or shutdown, inflation, unemployment, war and fears of war, changes in global trade policies, availability of consumer credit, consumer debt levels, consumer confidence, conditions in the housing market, fuel prices, interest rates, sales tax rates, civil disturbances and terrorist activities, natural disasters, adverse weather, and health epidemics or pandemics. We are unable to identify and predict to what extent such factors may further impact consumer spending on our products in the short and long term.

The residential furniture industry is highly competitive and fragmented. We currently compete with many other manufacturers and retailers, including online retailers. Some of these competitors offer widely advertised products or are large retail furniture dealers offering their own store-branded products. Competition in the residential furniture industry is based on, among other factors, quality, style of products, perceived value, price, promotional activities, customer service and experience, omnichannelomni-channel presence, and advertising. Changes in pricing and promotional activities of competitors may adversely affect our performance. In addition, due to the large number of competitors and their wide range of product offerings, we may not be able to effectively differentiate for consumers our products (throughin comfort, styling, finish, and other aspects of construction techniques) from those of our competitors. The highly competitive nature of the industry means we are constantly subject to the risk of losing market share, which would likely decrease our future sales, earnings, and liquidity.

A majority of our sales are to distribution channels that rely on physical stores to merchandise and sell our products and a significant shift in consumer preference toward purchasing products online could have a material adverse effect on our sales and operating margin. Over the past several years, the furniture industry in general has experienced a shift to more online purchasing. We are attempting to meet consumers where they prefer to shop by expanding our onlinedigital and omni-channel capabilities and improving the user experience at www.la-z-boy.com to drive more traffic to both our online site and our physical stores. We also own Joybird, a leading e-commerceomni-channel, direct to consumer retailer and manufacturer of upholstered furniture. Joybird sells a large portion of their product primarily online, where there is significant competition for customer attention among online and direct-to-consumer brands.

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

Our business and our reputation could be adversely affected by cybersecurity incidents and the failure to protect sensitive employee,information customer,relating consumer,to vendorcustomers, consumers, employees, contractors, suppliers, vendors and other third parties or Companyconfidential data.business information.

InabilityDisruptions to maintain and enhance our brandinformation andtechnology respond to changes in our current and potential consumers' tastes and trends in a timely mannersystems could adversely affect our business and results of operations.

The success of our business depends in large part on our ability to maintainmaintain, enhance, and enhanceprotect our brandsbrand image and reputation to increase our business by retaining consumers and attracting new ones. Our continued success depends in part on our ability to adapt to a rapidly changing media environment, including use of social media and online advertising campaigns, and more recently the growing use of AI and generative AI, as well as changes to consumer behavior based on these new technologies. Furniture productproducts isare fashion-oriented so changes in consumers' tastes and trends and the resultant change in our product mix, as well as failure to offer our consumers multiple avenueschannels for purchasing our products, could adversely affect our business and results of operations. As mentioned above, there is significant competition for customer attention among online and direct-to-consumer brands. WeOur attemptobjective is to minimize these risks by maintainingmaintain strong advertising and marketing campaigns promoting our brands.brands We also attemptand to minimize our risk by updatingupdate our current product designs, styles, quality, prices, and options to purchase our products in-store or online. If these efforts are unsuccessful or require us to incur substantial costs, our business, results of operations and financial or competitive condition could be adversely affected.

From time to time, like many businesses, we have experienced significant disruption in our supply chain as a result of external factors, such as the COVID-19 pandemic, resulting in unprecedented increases in material, freight and transportation costs, as well as significant unavailability or delay of raw materials, parts or finished goods. Future significant disruptions of this nature in our supply chain, in the furniture industry, within our independent dealer network or among our third-party wholesalers, or other unusual developments could cause significant disruption to our business and negatively affect our results.results of operations.

In manufacturing furniture, we use various types of wood, fabrics, leathers,leather, upholstered filling material, including polyurethane foam, steel, other raw materials, and metal components. Additionally, our manufacturing processes and plant operations use various electrical equipment and components and tooling. Because we are dependent on outside suppliers for these items, fluctuations in their price, availability, and quality have had, and could continue to have, a negative effect on our cost of sales and our ability to meet our customers' demands. We have a higher concentration in upholstery sales, including motion furniture, than many of our competitors, and the effects of price and wage inflation related to steel, polyurethane foam, wood, electrical components for power units, leather and fabric or quantity shortages of such materials or parts have had, and could continue to have, a significant negative impact on our business. Competitive and marketing pressures may prevent us from passing along price increases to our customers, and the inability to meet our customers' demands could cause us to lose sales.

Further, most of our polyurethane foam comes from three suppliers. These suppliers have several facilities across the United States, but adverse weather, natural or man-made disasters, or public health crises (such as pandemics or epidemics) could result in delays or restrictions in shipments of polyurethane foam to our plants. Similarly, adverse weather (including increased risk of catastrophic events as a result of climate change), natural or man-made disasters, public health crises (such as pandemics or epidemics), labor disputes, possible acts of terrorism, port and canal blockages and congestion, and availability of shipping containers have resulted, and could in the future resultresult, in delays in shipments or thean absenceinability ofto obtain required raw materials or components from any of our suppliers.

A change in the financial condition of our domestic and foreign fabric and leather suppliers could impede their ability to provide products to us in a timely manner. Upholstered furniture is fashion oriented, and if we are unable to acquire sufficient fabric variety, or to predict or respond to changes in fashion trends, we might lose sales and have to sell excess inventory at reduced prices. Doing so would have a negative effect on our sales and earnings.

We have operations in countries outside the United States, some of which are located in emerging markets. Long-term economic and political uncertainty in some of the countries in which we operate, such as the United Kingdom, Mexico,Mexico and Thailand, could result in the disruption of markets and negatively affect our business. Our casegoods business imports products manufactured by foreign sources, mainly in Vietnam, and our Wholesale segment purchases cut-and-sewn fabric and leather sets, electronic component parts, and some finished goods from Chinese and other foreign vendors. Our cut-and-sewn leather and fabric sets are primarily purchased from suppliers that operate in Vietnam and China and the majority of our raw fabric, including the fabric productsthat areis alsoused by our Vietnam fabric set suppliers, is purchased from suppliers that primarily operate in China. OneWhile ofwe thesecontinue primaryto suppliersdiversify providesour bothvendor cut-and-sewnsources, leather sets and fabric products. Asas a result of factors outside of our control, at times our sourcing partners have not been able to, and in the future may not be able to, produce or deliver goods in a timely fashion or in the required quantities or the quality of their product may lead us to reject it, causing disruptions in our domesticbusiness operations and delays in shipments to our customers.

From time to time we may acquire independent La-Z-Boy Furniture Galleries® storesStores or other retaildirect to consumer businesses, such as Joybird. We also plan to remodel and relocate existing stores and experiment with new store formats and may close underperforming stores. Our assets include goodwill and other intangible assets acquired in connection with these acquisitions. Profitability of acquired, remodeled, relocated, and new format stores will depend on lease rates (for stores we lease) and retail sales and profitability justifying the costs of such acquisition, remodeling, and relocation. If we do not meet our sales or earnings expectations for these stores or businesses, we have in the past incurredincurred, and may in the future incurincur, charges for the impairment of long-lived assets, the impairment of right-of-use lease assets, the impairment of goodwill, or the impairment of other intangible assets.

Due to the nature of our business and our payment terms, we may not be able to collect amounts owed to us by customers,customers or other third-parties, which may adversely affect our sales, earnings, financial condition, and liquidity.

We grant payment terms to most wholesale customers ranging from 15 to 60 days. Some of our customers have experienced, and may in the future experience, cash flow and credit-related issues. If a major event with negative economic effects were to occur, and such effects have occurred in the past, we may not be able to collect amounts owed to us or such payment may only occur after significant delay. While we perform credit evaluations of our customers,customers and other third-parties, those evaluations may not prevent uncollectible trade accounts receivable.receivable or debt. Credit evaluations involve significant management diligence and judgment, especially in the current environment. Should more customers than we anticipate experience liquidity issues, if payment is not received on a timely basis, or if a customer or other third-party declares bankruptcy or closes stores, we may have difficulty collecting amounts owed to us by these customers,customers or other third parties, which could adversely affect our sales, earnings, financial condition and liquidity.

From time to time, we may acquire independent La-Z-Boy Furniture Galleries® storesStores or other retail businesses or pursue other growth opportunities through strategic acquisitions. We have completed several such acquisitions in recent years. If we choose to acquire businesses in the future, there can be no assurance that we will be able to find suitable businesses to purchase, acquire such businesses on acceptable terms, or realize the benefits of any acquisition we pursue. The success of any completed acquisition will depend on our ability to effectively integrate and manage the business after the acquisition. The identification of suitable acquisition or strategic investment candidates, as well as the management and integration of any acquired businesses, can be costly and time-consuming and can distract our leadership team from our current operations.

We manufacture components and finished goods in the United States, MexicoStates and the United KingdomMexico; source raw materials domestically and from foreign countries; purchase components and finished goods manufactured in foreign countries, including ChinaVietnam and VietnamChina; participate in consolidated joint ventures in Thailand; and operate a wholesale and retail business in Canada. As a result, we are subject to risks relating to changes in the domestic or international regulatory environment or trade policies, including new or increased duties, tariffs, retaliatory tariffs, trade limitations, and termination or renegotiation of bilateral and multilateral trade agreements impacting our business.

The United States has enacted certain tariffs on many items sourced from China,China and other countries, including certain furniture, accessories, furniture parts, and raw materials that are imported into the United States and that we use in our domestic operations. We may not be able to fully or substantially mitigate the impact of these tariffs, pass price increases on to our customers, or secure adequate alternative sources of products or materials. The tariffs, along with any additional tariffs or retaliatory trade restrictions implemented by the United States or other countries, could negatively impact customer sales, including potential delays in product received from our vendors, our cost of goods sold and results of operations. Conversely, if certain tariffs are eliminated or reduced, we may face additional competition from foreign manufacturers entering the United States market and from domestic retailers who rely on imported goods, putting pressure on our prices and margins, which could adversely affect our results of operations. Finally, our business, including our sales and margins, could be adversely affected by the imposition in Canada, China, Mexico, Thailand, Vietnam, the United Kingdom or other foreign countries of import bans, quotas, and increases in tariffs.

Our business and our reputation could be adversely affected by the failure to comply withwith, or the costcosts of compliance withwith, evolving regulations relating to our obligation to protect sensitive employee,information customer,relating consumer,to vendorcustomers, consumers, employees, suppliers, and vendors or Companyconfidential data.business information.

We receive, process, store, use and share datasensitive information about our customers, consumers, employees, contractors, suppliers, vendors and others,other third parties, including payment information and personally identifiable information, as well as other personal, confidential and proprietarybusiness information. There are numerous federal, state, local and foreign laws and regulations regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. Regulatory focus on data privacy and security concerns continues to increase globally, and laws and regulations concerning the collection, use, and disclosure of personal information are expanding and becoming more complex, while being subject to uncertain and differing interpretations that may be inconsistent among countries or conflict with other rules. For example, the European General Data Protection Regulation (“GDPR”) applies to us and creates a range of requirements and compliance obligations regarding the treatment of personal data, including the public disclosure of significant data breaches, and imposes significant penalties for non-compliance. Several state laws include additional requirements with respect to disclosure and deletion of personal information of residents, as well as civil penalties for violations and a private right of action for data breaches. These privacy and data protection laws may increase our costs of compliance and risks of non-compliance, which could result in substantial penalties, negative publicity and harm to our brand. These risks may be heightened by our online marketing and customer engagement activities. It is possible that these laws may be interpreted or applied in a manner that is adverse to us, unforeseen, or otherwise inconsistent from one jurisdiction to another or with our practices, or that we may not adequately adapt our internal policies and/or procedures to evolving regulations, any of which could result in litigation, regulatory investigations, enforcement actions, fines, penalties and potential legal liability, require us to change our practices in a manner adverse to our business or limit access to our products and services in certain countries. As a result, our reputation and brand, which are critical to our business operations, may be harmed, we could incur substantial costs, including costs related to litigation, or we could lose both customers and revenue.

We may be subject to product liability and other claims or undertake to recall one or more products, which could adversely affect our reputation, business, results of operations and reputation.financial condition.

Although we maintain liability insurance in amounts that we believe are reasonable, in most cases, we are responsible for large, self-insured retentions and legal defense costs. We may not be able to maintain such insurance on acceptable terms, if at allall, in the future, or that product liability or other claims will notmay exceed the amount of our insurance coverage, or that all such matters wouldmay not be covered by our insurance. As a result, product liability and other claims could have a material adverse effect on our reputation, business, results of operations and financial condition.

Changes in United States or international income tax laws and regulations may have an adverse effect on our business in the future. We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective income tax rate in the future could be adversely affected by a number of factors, including changes in the mix of earnings in countries with differing statutory tax rates, changes in tax laws, the outcome of income tax audits in various jurisdictions, and any repatriation of non-U.S. earnings for which the Company has not previously provided for U.S. taxes. We regularly assess these matters to determine the adequacy of our tax provision, which is subject to significant judgement.judgment.

Our operations are subject to risks of unsettled political conditions, natural or man-made disasters, adverse weather, climate change, acts of war, terrorism, organized crime, pandemics and other public health concerns. If any of these events cause disruptions or damage in our manufacturing plants, distribution facilities, company-owned La-Z-Boy Furniture Galleries® storesStores or corporate headquarters, or the facilities of our vendors, or if such events impact the availability of raw materials or cause disruption in our supply chain, that could make servicing our customers more difficult or result in the potential loss of sales and customers. In addition, we may incur costs in repairing any damage beyond our applicable insurance coverage. Any of these outcomes could have an adverse affect on our business and results of operations.

We are the leading global producer of reclining chairs and one of the largest manufacturers/distributors of residential furniture in the United States. The La-Z-Boy Furniture Galleries® storesStores retail network is the thirdsecond largest retailer of single-branded furniture in the United States. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, Kincaid®, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames. During fiscal 2026, we also imported, distributed, and retailed accessories and casegoods (wood) furniture products under the Kincaid® and American Drew® tradenames, and following the completion of the sale of certain assets of the Kincaid® and American Drew® wholesale businesses on May 29, 2026, we continue to retail such products. Refer to Note 4, Assets Held for Sale and Note 21, Subsequent Events, to our consolidated financial statements for further information.

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus andfocus, expanded omni-channel presence.presence, and digital transformation. Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer-base growth opportunities. We leverage our consumer insights to develop and deliver on-trendmeaningful upholsteredproduct furniture,innovation, particularly in the motion and reclining categories. We launchedalso utilize consumer insights to optimize our brand campaignmessaging and marketing platform in fiscal 2024, Long Live the Lazy, with compelling, consumer inspired, messaging designedcampaigns to increase recognition and consideration of La-Z-Boy among both existing and prospective customers. Our Long Live the brand.Lazy Wecampaign, expectlaunched thatin this2024, messagingcontinues willto resonate through its compelling, consumer-inspired message. In 2025, we successfully launched a refreshed brand identity - the first significant evolution of the La-Z-Boy brand in more than two decades - designed to modernize the brand, enhance thedifferentiation, appealand ofstrengthen our brandrelevance with a broader consumer base.audience across retail and digital footprints. 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 believe that our digital transformation will improve traffic both online and in our retail locations.

•Growing our La-Z-Boy Furnitureretail Galleries® store network.business. We expect our strategic initiatives in this area to generate growth ingrow our Retail segment through anorganic increasedsame-store sales growth and by increasing company-owned storestores countthrough the opening of new stores and inacquisitions. our Wholesale segment as our proprietary distribution network expands. 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 opportunisticallyOpportunistically acquiring existing La-Z-Boy Furniture Galleries® storesStores and opening new La-Z-Boy Furniture Galleries® storesStores where we see opportunity for growth,growth or where we believe we have opportunities for further market penetration.penetration continues to be a priority. Over the last five years, as a result of opening new company-owned stores and acquiring independent La-Z-Boy Furniture Galleries® stores,Stores, we have increased our ownership percentage in this store network from 44%45% to 55%.61%. With 378 stores currently in the La-Z-Boy Store network, we believe there is opportunity to open approximately ten stores annually, with the majority being company-owned, targeting a network of 450 stores.

•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® storeStore 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,Store, La-Z-Boy Comfort Studio®, or La-Z-Boy branded space experience and provide design services. In addition to our branded distribution channels, approximatelyover 1,9001,000 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. We believe there is significant growth potential for our consumer brands through these retail channels.

•Profitably growing the Joybird brand with a digital-first consumer 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 long-term potential and our strategic initiatives in this area focus on fuelingdriving profitable growth through the opening of additional small-format stores in key urban markets, anexpanding increasedistribution inchannels, driving customer acquisition and awareness through digital marketing spend to drive awarenessmarketing, and customercontinued acquisition, ongoing investments in technology, and an expansionoptimization of productcost assortment.structure.

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth. Key to successful growth is ensuring we have the capabilities to support that growth, including an agile supply chain, modern technology for consumersconsumers, employees, and employees,analytic capabilities, and by delivering a human-centered employee experience. ThroughWe ourcontinue Century Vision strategic plan, weto have several initiatives focused on enhancing these capabilities with a consumer-first focus.

•Retail Segment. Our Retail segment consists of one operating segment comprised of our 203230 company-owned La-Z-Boy Furniture Galleries® stores.Stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other home furnishing accessories, to end consumers through these stores.

•Wholesale Segment. Our Wholesale segment consists primarily of four operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, our casegoods operating segment that sells furniture under three brands (American Drew®, Hammary®, and Kincaid®), and our international operating segment which includes our international La-Z-Boy wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. 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,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-commerceomni-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 primarily online through its website, www.joybird.com andwww.joybird.com, through small-format stores in key urbanmarkets, markets.and through other distribution channels. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

Additionally,As asa result of a significant customer transition andin athe challengingcurrent consumer demand environment in the United Kingdom, during the fourth quarter of fiscal 2025, we recorded charges within the Wholesale segment of $20.6 million for the full impairment of the United KingdomKingdom's reporting unit's goodwill and $2.1 million in SG&A expense for the impairment of various long-lived assetsassets. in the United Kingdom. Refer to Note 6, Goodwill and Other Intangible Assets, for further information regarding ourDuring fiscal 2025 impairment testing. Further, as2025, we continue to drive efficiencies and optimize our manufacturing capacity in the United Kingdom to meet current demand, during the fourth quarter of fiscal 2025 wealso recorded severance-relatedseverance charges of $1.1 million in cost of sales to optimize our manufacturing capacity within the WholesaleUnited segment.Kingdom.

Consolidated sales in fiscal 20252026 increased $62.2$17.4 million, or 3%,1%, compared with the prior year, primarily driven by incremental sales resulting from our Retail acquisitions and new store expansion,expansion along with higher delivered wholesale volumesales in our core North America La-Z-Boy branded upholstery business,business includingdriven growthby fromstrategic pricing and surcharges. These increases were partially offset by lower delivered same-store sales in our majorRetail wholesalesegment, dealers,along andwith higherlower delivered volume in our Casegoods and Joybird business.businesses.

◦SG&A expense as a percentage of sales in fiscal 20252026 also 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 acquisitions of independently owned La-Z-Boy Furniture Galleries® andour retail storeexpansion expansion, both toin support of our long-term strategy of growing our Retail segment.

The Retail segment's sales increased $43.2$52.3 million, or 5%,6%, in fiscal 20252026 compared with fiscal 2024,2025, primarily due to $42.4$60.1 million of incremental sales resulting from our fiscal 20252026 retail store acquisitions and the full-year impact of our fiscal 20242025 retail store acquisitions, along with $15.3$31.7 million of sales from ourthe addition of new retail store expansion,stores, net of closed stores. These increases were partially offset by a decline in delivered same-store sales.

WrittenTotal written sales increased 8% in fiscal 2026 compared with fiscal 2025 while written same-store sales decreased 1%3% inover fiscalthe 2025same compared with fiscal 2024,period, primarily due to lower consumer demand as a result of athe challengingcurrent macroeconomic environment. Same-store sales include the sales of all currently active stores whichthat have been open and company-owned for each comparable period.period and excludes the benefit of net new stores and acquired stores.

•Gross margin increased 1040 basis points during fiscal 20252026 compared with the prior year, primarily due to a slightfavorable shift in product mix towards higher margin upholstery products.

•◦SG&A expensesexpense as a percentage of sales increased 150 basis points during fiscal 2025 compared with the prior year,year primarily due to fixed cost deleverage from lower delivered same-store sales combined with increased selling expenses and fixed costs resulting from our acquisitions of independently owned La-Z-Boy Furniture Galleries® and retail store expansion,expansion bothof to12 supportnet new stores over the last 12 months, supporting our long-term strategy of growing our Retail segment.

The Wholesale segment's operating margin decreasedincreased 130180 basis points in fiscal 20252026 compared with fiscal 2024.2025.

•Gross margin increaseddecreased 3050 basis points during fiscal 20252026 compared with fiscal 2024.2025.

◦LowerHigher inputdistribution costs, ledprimarily byrelated reducedto commodityour pricesdistribution and improvedhome sourcing,delivery transformation drove a 9070 basis point increasedecrease in gross margin duringin fiscal 20252026 compared with the prior year.

◦TheFiscal comparative2026 impactalso ofexperienced higher manufacturing overhead costs relative to the Supplyprior Chainyear, Optimization charges noted above in Mexico and the United Kingdom resulted indriving a net 2050 basis point increasedecrease in gross margin in fiscal 20252026, compared with fiscalthe 2024.prior year.

•SG&A expense as a percentage of sales increaseddecreased 1090 basis points during fiscal 20252026 compared with fiscal 2024.2025.

•Operating margin decreased 150 basis points due to aA $20.6 million non-cash impairment charge in fiscal 2025 to reduce the carrying value of goodwill associated with our wholesale and manufacturing businesses in the United Kingdom.Kingdom, Referdrove toa Notecomparative 6,140 Goodwillbasis andpoints Otherincrease Intangiblein Assets,operating formargin further information regarding ourin fiscal 20252026 impairmentcompared testing.with the prior year.

Corporate and Other sales increaseddecreased $6.7$16.7 million in fiscal 20252026 compared with fiscal 2024,2025, primarily due to a $7.5$15.3 million, or 5%,10%, increasedecrease from Joybird, which contributed $146.1$130.8 million in sales in fiscal 2025.2026. The increasedecrease in Joybird sales was drivenprimarily bydue higherto lower delivered volume partially offset by increaseda promotionalfavorable activityshift relativein toproduct the prior year.mix. Written sales for Joybird weredecreased flat7% in fiscal 20252026 compared with fiscal 2024.2025, as this consumer segment continues to be particularly volatile in the current macroeconomic environment.

Our Corporate and Other operating loss decreasedincreased $8.5$37.7 million in fiscal 20252026 compared with fiscal 2024,2025, primarily fromdue improvedto Joybirda $20.0 million non-cash impairment charge to reduce the carrying value of Joybird's goodwill, an increase in Joybird's operating performance,loss resulting infrom breakevenlower profit,delivered sales volume, and favorablea higher intercompany profit elimination adjustmentsadjustment relative to the sameprior periodyear. aRefer yearto ago.Note This7, wasGoodwill partiallyand offsetOther byIntangible lowerAssets, intercompanyfor operatingfurther profitinformation fromregarding our globalfiscal trading2026 companygoodwill inimpairment Hong Kong.testing.

Interest income was $0.6$3.0 million lower in fiscal 20252026 compared with fiscal 2024.2025. The decrease in interest income was primarily driven by lower interest rates.rates along with lower interest-bearing cash balances.

Other income (expense), net was $3.0 million ofThe expense in fiscal 20252026 comparedwas withprimarily $0.1due millionto currency translation adjustments reclassified from accumulated other comprehensive income to net income due to the closure of expenseour manufacturing operations in fiscalthe 2024.United Kingdom. The expense in fiscal 2025 was primarily due to unfavorable changes in exchange rate lossesrates related to our operations in Mexico and Thailand.

Our effective income tax rate was 25.9% for fiscal 2026 and 31.4% for fiscal 20252025. andThe 24.8%effective fortax rate in fiscal 2024.2026 included the favorable tax impact of closing the United Kingdom manufacturing business partially offset by the one-time tax effect of a non-deductible goodwill impairment charge related to the Joybird reporting unit. The increase in the effective tax rate in fiscal 2025 compared with the prior year was primarily the result ofincluded the one-time tax effect of a non-deductible goodwill impairment charge related to the United Kingdom reporting unit along with unfavorable changes in the valuation allowance. Refer to Note 17,18, Income Taxes, for additional information.

During fiscal 2025,2026, net cash used for investing activities was $98.4$138.6 million, an increase of $16.8$40.2 million compared with the prior year primarily due to anincreased increasecash inpaid capitalfor expendituresacquisitions and lower proceeds from the sale of investments, partially offset by lowerhigher cashproceeds paymentsfrom forthe La-Z-Boysale Furnitureof Galleries® acquisitions.assets. Cash used for investing activities in fiscal 20252026 included the following:

We disclosed our risk factors in our Annual Report on Form 10-K for the fiscal year ended April 26,25, 2025.2026. There have been no material changes to our risk factors during the first nine monthsquarter of fiscal 2026.2027.

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, acquisitions,acquisitions and divestitures, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, and our business and industry.

Our actual future results and trends may differ materially from those we anticipate depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our Annual Report for the fiscal year ended April 26,25, 2025,2026, under Item 1A, "Risk Factors" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in our other filings with the Securities and Exchange Commission ("SEC").Commission. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this report, our Annual Report for the fiscal year ended April 26,25, 20252026, or any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason.

We are the leading global producer of reclining chairs and one of the largest manufacturers/distributors of residential furniture in the United States. The La-Z-Boy Stores retail network is the thirdsecond largest retailer of single-branded furniture in the United States. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, Kincaid®, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames.

As of JanuaryJuly 24,25, 2026, our supply chain operations included the following:

•FiveFour major manufacturing locations and 119 distribution centers in the United States and threetwo facilities in Mexico to support our speed-to-market and customization strategy

•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 We also participate in two consolidated joint ventures in Thailand that support our international businesses: one that operates a manufacturing facility and another that operates a wholesale sales office. Additionally, we have contracts with several suppliers in Asia to produce products that support our pure import model for casegoods.

We sell our products through multiple channels: directly to consumers through retail stores that we own and operate; to furniture retailers or distributors in the United States, Canada, and approximately 5045 other countries, including the United Kingdom, China, Australia, South Korea and New Zealand, directly to consumers through retail stores that we own and operate,Zealand; and through our websites, www.la-z-boy.com and www.joybird.com.

•The centerpiece of our retail distribution strategy is our network of 374379 La-Z-Boy Stores, over 500 La-Z-Boy Comfort Studio® locations, and nearlyover 900 La-Z-Boy branded space locations, each dedicated to marketing our La-Z-Boy branded products. We consider this dedicated space to be "proprietary."

•Our other brands, England, American Drew, Hammary,Hammary®, and KincaidJoybird enjoy distribution through manyvarious of the same outlets, with over half of Hammary’s sales originating through the La-Z-Boy Store network.channels.

◦Kincaid and England havehas theirits own dedicated proprietary in-store programs with 685465 outlets and approximately 2.01 million square feet of proprietary floor space.

•◦Joybird sells product onlineonline, andin has 1516 small-format stores in key markets.markets, and through other distribution channels.

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus andfocus, expanded omni-channel presence.presence, and digital transformation. Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer-base growth opportunities. We leverage our consumer insights to develop and deliver on-trendmeaningful upholsteredproduct furniture,innovation, particularly in the motion and reclining categories. We launchedalso utilize consumer insights to optimize our brand campaignmessaging and marketing platform in fiscal 2024, Long Live the Lazy, with compelling, consumer inspired, messaging designedcampaigns to increase recognition and consideration of La-Z-Boy among both existing and prospective customers. Our Long Live the brand.Lazy Wecampaign, expectlaunched thatin this2024, messagingcontinues willto resonate through its compelling, consumer-inspired message. In 2025, we successfully launched a refreshed brand identity - the first significant evolution of the La-Z-Boy brand in more than two decades - designed to modernize the brand, enhance thedifferentiation, appealand ofstrengthen our brandrelevance with a broader consumer base.audience across retail and digital footprints. 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 believe that our digital transformation will improve traffic both online and in our retail locations.

•Expanding the reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy 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 Store, La-Z-Boy Comfort Studio®, or La-Z-Boy branded space experience and provide design services. In addition to our branded distribution channels, approximatelyover 1,9001,000 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. We believe there is significant growth potential for our consumer brands through these retail channels.

•Profitably growing the Joybird brand with a digital-first consumer experience. Joybird is a leading omni-channel, direct to consumer retailer and manufacturer of upholstered furniture. We believe that Joybird is a brand with significantlong-term potential and our strategic initiatives in this area focus on fuelingdriving profitable growth through the opening of additional small-format stores in key markets, anexpanding increasedistribution inchannels, driving customer acquisition and awareness through digital marketing spend to drive awarenessmarketing, and customercontinued acquisition, ongoing investments in technology, and an expansionoptimization of productcost assortment.structure.

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth. Key to successful growth is ensuring we have the capabilities to support that growth, including an agile supply chain, modern technology for consumersconsumers, employees, and employees,analytic capabilities, and by delivering a human-centered employee experience. ThroughWe ourcontinue Century Vision strategic plan, weto have several initiatives focused on enhancing these capabilities with a consumer-first focus.

•Wholesale Segment. Our Wholesale segment consists primarily of fourthree operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, our Casegoods operating segment that sells furniture under three brands (American Drew®, Hammary®, and Kincaid®),subsidiary and our international operating segment, which includes our international La-Z-Boy wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. 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 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 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.markets, and through other distribution channels. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

Fiscal 20262027 ThirdFirst Quarter Compared with Fiscal 20252026 ThirdFirst Quarter

Operating margin, which is calculated as operating income as a percentage of sales, decreased 120490 basis points in both the third quarter and first nine monthsquarter of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago.

•Gross margin, which is calculated as gross profit as a percentage of sales, decreasedincreased 120 basis points and 60140 basis points in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago.

◦Partially offsetting the items above, changesChanges in our consolidated mix droveled anto a 210 basis point increase in gross margin in the thirdfirst quarter and first nine months of fiscal 2026,2027 respectively,compared duewith tothe same period a year ago driven by growth inof our Retail segment, which has a higher gross margin than our Wholesale segment.

•SG&A◦Favorable expensestariff asimpact, aincluding percentagerefunds and pricing actions net of salestariff wascosts, flatdrove andan increasedadditional 60increase basisin pointsgross margin in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027 compared with the same periodsperiod a year ago.

◦In the third quarter of fiscal 2026, changesChanges in our consolidated mix alsoled droveto ana 220 basis point increase in SG&A expense as a percentage of sales in the first quarter of fiscal 2027 compared with the same period a year ago,ago duedriven toby growth inof our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

The Retail segment’s sales increased $24.3$21.4 million, or 11%, and $29.5 million, or, 5%10%, in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago. The increase wasago primarily due to $23.4 million and $37.7$16.4 million of incremental sales in the third quarter and first nine months of fiscal 2026, respectively, resulting from our retail store acquisitions that occurred inover fiscalthe 2025last and12 2026,months along with increased$6.3 million of sales from ourthe addition of new retail store expansion,stores, net of closed stores. These increases were partially offset by a slight decline in delivered same-store sales during the third quarter and first nine months of fiscal 2026.sales.

Total written sales increased 11% and 7%16% in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago. Written same-store sales decreased 4% andincreased 3% over the same periods,period, primarilydriven dueby tostrong lowerin-store consumer demand as a result of a challenging macroeconomic environment.execution. Same-store sales include the sales of all currently active stores that have been open and company-owned for each comparable period and excludes the benefit of net new stores and acquired stores.

The Retail segment's operating margin decreasedincreased 20 basis points and 19010 basis points in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago.

•Gross margin increased 20 basis points and 3070 basis points in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago, primarily due to reduced promotional activity on casegoods products and accessories relative to the prior year along with a favorable shift in product mix towards higher margin upholstery products.product.

•SG&A expenses as a percentage of sales increased 40 basis points and 22060 basis points in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod 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 12 net new stores over the last 12 months, supporting our long-term strategy of growing our Retail segment.sales.

The Wholesale segment's operating margin decreased 130500 basis points and was flat in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago.

•Gross margin decreasedincreased 280 basis points and 12040 basis points in the thirdfirst quarter and first nine months of fiscal 2026, respectively,2027, compared with the same periodsperiod a year ago.

◦HigherFavorable distributiontariff impact, including refunds and pricing actions net of tariff costs, primarily related to our distribution and home delivery transformation drove ana 80240 basis point decreaseincrease in gross margin in both the third quarter and first nine monthsquarter of fiscal 2026,2027 compared with the same periodsperiod a year ago.

◦SG&APartially expenseoffsetting asthe aitem percentageabove, ofgross sales alsomargin decreased 80100 basis points in the first nine monthsquarter of fiscal 2026,2027 compared with the same period a year ago, due to a reduction in our warranty liability as a result of the changeSupply Chain Optimization actions related to our SLRC, Mexico facility described above, along with lower warranty expense led by improved warranty trends.above.