LA-Z-BOY INC (LZB)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We have prepared this Management’s Discussion and Analysis as an aid to understanding our financial results. It should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes to Consolidated Financial Statements. After a cautionary note regarding forward-looking statements, we begin with an introduction to our key businesses and then provide discussions of our results of operations, liquidity and capital resources, and critical accounting policies.

Cautionary Note Regarding Forward-Looking Statements

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

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "likely," "non-recurring," "one-time," "outlook," "plans," "projects," "seeks," "short-term," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties, many of which are unforeseeable and beyond our control. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial performance.

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, 2025, 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"). 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 our Annual Report for the fiscal year ended April 26, 2025 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.

Introduction

Our Business

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 third 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 January 24, 2026, our supply chain operations included the following:

•Five major manufacturing locations and 11 distribution centers in the United States and three facilities in Mexico to support our speed-to-market and customization strategy

•A logistics company that distributes a portion of our products in the United States

•An upholstery manufacturing business in the United Kingdom. As of the end of the third quarter of fiscal 2026, we are in the process of closing this business and we expect to cease production by the end of fiscal 2026.

•A wholesale sales office that is responsible for distribution of our product in the United Kingdom and Ireland

•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

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

•The centerpiece of our retail distribution strategy is our network of 374 La-Z-Boy Stores, over 500 La-Z-Boy Comfort Studio® locations, and nearly 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."

◦La-Z-Boy Stores help consumers furnish their homes by combining the style, comfort, and quality of La-Z-Boy furniture with our available design services. We own 226 of the La-Z-Boy Stores, while the remainder are independently owned and operated.

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

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

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

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

◦Kincaid and England have their own dedicated proprietary in-store programs with 685 outlets and approximately 2.0 million square feet of proprietary floor space.

◦During the second quarter of fiscal 2026, the Company committed to a plan to dispose a portion of our Casegoods wholesale business. Refer to Note 4, Assets Held for Sale, to our consolidated financial statements for further information.

•Joybird sells product online and has 15 small-format stores in key markets.

Century Vision Strategy

Our goal is to deliver value to our shareholders over the long term by executing our Century Vision, our strategic plan for growth to our centennial year in 2027, in which we aim to grow sales and market share and strengthen our operating margins. The foundation of our strategic plan is to drive disproportionate growth of our two consumer brands, La-Z-Boy and Joybird, by delivering the transformational power of comfort with a consumer-first approach. We plan to drive growth in the following ways:

Expanding the La-Z-Boy brand reach

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus and expanded omni-channel presence. 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-trend upholstered furniture, particularly in the motion and reclining categories. We launched our brand campaign and marketing platform in fiscal 2024, Long Live the Lazy, with compelling, consumer inspired, messaging designed to increase recognition and consideration of the brand. We expect that this messaging will enhance the appeal of our brand with a broader consumer base. Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person. We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

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•Growing our La-Z-Boy Store network. We expect our strategic initiatives in this area to generate growth in our Retail segment through an increased company-owned store count and in 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 opportunistically acquiring existing La-Z-Boy Stores and opening new La-Z-Boy Stores where we see opportunity for growth, or where we believe we have opportunities for further market penetration.

•Expanding the reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy 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, approximately 1,900 other dealers sell La-Z-Boy products, which include some of the best-known names in the industry, providing us the benefit of multi-channel distribution. We believe there is significant growth potential for our consumer brands through these retail channels.

Profitably growing the Joybird brand

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

Enhancing our enterprise capabilities

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We have prepared this Management's Discussion and Analysis as an aid to understanding our financial results. It should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes to Consolidated Financial Statements. It also includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks. Refer to "Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report for a discussion of factors that may cause results to differ materially. Note that our 2026, 2025 and 2024 fiscal years all included 52 weeks.

Introduction

Our Business

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

For additional information about our business, refer to Part I, Item 1, Business of this report.

Century Vision Strategy

As La-Z-Boy approaches its centennial anniversary in 2027, we remain focused on executing our Century Vision strategy to grow sales and market share through growth of our consumer brands, La-Z-Boy and Joybird, and sustainably grow our operating margin well beyond this milestone year. Building on a century of innovation, comfort, craftsmanship, and consumer

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trust, we are working to leverage our iconic brand to expand market reach and strengthen our engagement with consumers, dealers and partners. Through continued investment in brand evolution, retail expansion, digital transformation, innovation, and consumer insights, we aim to deliver the transformational power of comfort to future generations with a consumer-first approach while honoring our almost 100 year heritage that has made La-Z-Boy one of America's most recognized and enduring brands. Our Century Vision strategy continues to have significant runway and we are executing through the following initiatives:

Expanding the La-Z-Boy brand reach

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus, expanded omni-channel 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 meaningful product innovation, particularly in the motion and reclining categories. We also utilize consumer insights to optimize our messaging and marketing campaigns to increase recognition and consideration of La-Z-Boy among both existing and prospective customers. Our Long Live the Lazy campaign, launched in 2024, continues to 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 differentiation, and strengthen relevance with a broader consumer 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 retail business. We expect to grow our Retail segment through organic same-store sales growth and by increasing company-owned stores through the opening of new stores and acquisitions. Opportunistically acquiring existing La-Z-Boy Stores and opening new La-Z-Boy Stores where we see opportunity for growth or further market 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 Stores, we have increased our ownership percentage in this store network from 45% to 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 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, over 1,000 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

•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 driving profitable growth through the opening of additional small-format stores in key markets, expanding distribution channels, driving customer acquisition and awareness through digital marketing, and continued optimization of cost structure.

Enhancing our enterprise capabilities

•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 consumers, employees, and analytic capabilities, and by delivering a human-centered employee experience. We continue to have initiatives focused on enhancing these capabilities with a consumer-first focus.

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Reportable Segments

Our reportable operating segments include the Retail segment and the Wholesale segment.

•Retail Segment. Our Retail segment consists of one operating segment comprised of our 230 company-owned La-Z-Boy 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 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, through small-format stores in key markets, and through other distribution channels. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

Results of Operations

The following discussion provides an analysis of our results of operations and reasons for material changes therein for fiscal year 2026 as compared with fiscal year 2025. Refer to "Results of Operations" in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2025 Annual Report on Form 10-K, filed with the SEC on June 17, 2025, for an analysis of the fiscal year 2025 results as compared to fiscal year 2024.

Fiscal Year 2026 and Fiscal Year 2025

Supply Chain Optimization

As a result of a significant customer transition in the current consumer demand environment in the United Kingdom, during fiscal 2025, we recorded charges of $20.6 million for the full impairment of the United Kingdom's reporting unit's goodwill and $2.1 million in SG&A expense for the impairment of various long-lived assets. During fiscal 2025, we also recorded severance charges of $1.1 million in cost of sales to optimize our manufacturing capacity within the United Kingdom.

During fiscal 2026, due to continued challenges in the macroeconomic environment in the United Kingdom, we announced the closure of the United Kingdom manufacturing business and operations ceased at the end of fiscal 2026. We recorded charges of $5.8 million in cost of sales related to this action, primarily for severance and the write-down of remaining inventory balances.

All charges in fiscal 2026 and 2025 were recorded within the Wholesale segment. The comparative impact of these actions in fiscal 2026 relative to fiscal 2025 did not have a meaningful impact on our gross margin or SG&A expense as percentage of sales for La-Z-Boy Incorporated or the Wholesale segment. Refer to the segment discussion below for the comparative impact of the goodwill impairment recorded in fiscal 2025.

Business Realignment

As part of our plan to dispose a portion of our Casegoods wholesale business, during fiscal 2026 we completed the sale of the Casegoods headquarters building and related fixed assets, resulting in a $3.9 million gain recorded in SG&A expense. Additionally, we recorded an impairment charge of $3.1 million in cost of sales to reduce inventory classified as held for sale to

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its fair value on the upholstery portion of our Casegoods business which was sold during the fourth quarter of fiscal 2026. Both the gain on sale and impairment charge were recorded in the Wholesale segment and did not have a meaningful impact on our gross margin or SG&A expense as percentage of sales in fiscal 2026 compared with fiscal 2025 for La-Z-Boy Incorporated. Refer to the segment discussion below for the impact on the Wholesale segment.

During the first quarter of fiscal 2027, we closed on the sale of the remaining assets in the Casegoods disposal group. Refer to Note 21, Subsequent Events, for further information.

La-Z-Boy Incorporated

Sales

Consolidated sales in fiscal 2026 increased $17.4 million, or 1%, compared with the prior year, primarily driven by incremental sales resulting from our Retail acquisitions and new store expansion along with higher delivered wholesale sales in our core North America La-Z-Boy branded upholstery business driven by strategic pricing and surcharges. These increases were partially offset by lower delivered same-store sales in our Retail segment, along with lower delivered volume in our Casegoods and Joybird businesses.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, decreased 30 basis points in fiscal 2026 compared with the prior year.

•Gross margin increased 10 basis points during fiscal 2026 compared with fiscal 2025, as a 50 basis point benefit from a change in our consolidated mix due to growth in our Retail segment, which has a higher gross margin than our Wholesale segment, was largely offset by higher distribution costs, primarily related to our distribution and home delivery transformation.

•Selling, general, and administrative ("SG&A") expenses increased 40 basis points during fiscal 2026 compared with fiscal 2025.

◦Changes in our consolidated mix led to a 40 basis point increase in SG&A expense as a percentage of sales in fiscal 2026 compared with fiscal 2025 driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

◦SG&A expense as a percentage of sales in fiscal 2026 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 our retail expansion in support of our long-term strategy of growing our Retail segment.

◦Partially offsetting the items above, SG&A expense as percentage of sales in fiscal 2026 decreased due to a $7.6 million and $3.9 million gain on the sale of buildings and fixed assets related to sale-leaseback transactions of four retail stores and our Casegoods headquarters building, respectively.

We explain these items further when we discuss each segment's results later in this Management's Discussion and Analysis.

Retail Segment

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Sales

The Retail segment's sales increased $52.3 million, or 6%, in fiscal 2026 compared with fiscal 2025, primarily due to $60.1 million of incremental sales resulting from our fiscal 2026 retail store acquisitions and the full-year impact of our fiscal 2025 retail store acquisitions, along with $31.7 million of sales from the addition of new retail stores, net of closed stores. These increases were partially offset by a decline in delivered same-store sales.

Total written sales increased 8% in fiscal 2026 compared with fiscal 2025 while written same-store sales decreased 3% over the same period, primarily due to lower consumer demand as a result of the current macroeconomic environment. 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.

Operating Margin

The Retail segment's operating margin decreased 30 basis points in fiscal 2026 compared with fiscal 2025.

•Gross margin increased 40 basis points during fiscal 2026 compared with the prior year, primarily due to a favorable shift in product mix towards higher margin upholstery products.

•SG&A expenses as a percentage of sales increased 70 basis points during fiscal 2026 compared with fiscal 2025.

◦SG&A expense as a percentage of sales increased compared with the prior year 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.

◦Partially offsetting the item above, during the fourth quarter of fiscal 2026, we recognized a $7.6 million gain on sale-leaseback transactions for the buildings and related fixed assets of four retail stores, resulting in an 80 basis point decrease in SG&A expense as a percentage of sales.

Wholesale Segment

Sales

The Wholesale segment's sales increased 0.2%, or $2.4 million, in fiscal 2026 compared with fiscal 2025, driven by modest growth across the majority of our wholesale businesses resulting from strategic pricing and surcharge actions, partially offset by lower delivered volume in our Casegoods business and international wholesale business. The 15-store retail acquisition that occurred at the beginning of the third quarter of fiscal 2026 led to higher intersegment sales and a decrease in external sales in fiscal 2026 compared with the prior year.

Operating Margin

The Wholesale segment's operating margin increased 180 basis points in fiscal 2026 compared with fiscal 2025.

•Gross margin decreased 50 basis points during fiscal 2026 compared with fiscal 2025.

◦Higher distribution costs, primarily related to our distribution and home delivery transformation drove a 70 basis point decrease in gross margin in fiscal 2026 compared with the prior year.

◦Fiscal 2026 also experienced higher manufacturing overhead costs relative to the prior year, driving a 50 basis point decrease in gross margin in fiscal 2026, compared with the prior year.

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◦Partially offsetting the items above, gross margin increased 80 basis points in fiscal 2026 compared with fiscal 2025 due to lower input costs, led by favorable inbound ocean freight, improved sourcing and effective inventory management.

•SG&A expense as a percentage of sales decreased 90 basis points during fiscal 2026 compared with fiscal 2025.

◦SG&A expense as a percentage of sales decreased 50 basis points in fiscal 2026, compared with the prior year, from lower warranty expense due to a reduction in our warranty liability driven by a change in which we provide external dealers an upfront service allowance for certain labor and delivery costs for La-Z-Boy products that they sell and have previously sold.

◦Additionally, as noted above, we completed the sale of our Casegoods headquarters building and related fixed assets, resulting in a $3.9 million gain and a comparative 30 basis point improvement in SG&A as a percentage of sales in fiscal 2026, compared with the prior year.

•A $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, drove a comparative 140 basis points increase in operating margin in fiscal 2026 compared with the prior year.

Corporate and Other

Sales

Corporate and Other sales decreased $16.7 million in fiscal 2026 compared with fiscal 2025, primarily due to a $15.3 million, or 10%, decrease from Joybird, which contributed $130.8 million in sales in fiscal 2026. The decrease in Joybird sales was primarily due to lower delivered volume partially offset by a favorable shift in product mix. Written sales for Joybird decreased 7% in fiscal 2026 compared with fiscal 2025, as this consumer segment continues to be particularly volatile in the current macroeconomic environment.

Intercompany eliminations increased in fiscal 2026 compared with fiscal 2025 due to higher sales from our Wholesale segment to our Retail segment, driven by higher sales in the Retail segment.

Operating Loss

Our Corporate and Other operating loss increased $37.7 million in fiscal 2026 compared with fiscal 2025, primarily due to a $20.0 million non-cash impairment charge to reduce the carrying value of Joybird's goodwill, an increase in Joybird's operating loss resulting from lower delivered sales volume, and a higher intercompany profit elimination adjustment relative to the prior year. Refer to Note 7, Goodwill and Other Intangible Assets, for further information regarding our fiscal 2026 goodwill impairment testing.

Non-Operating Income (Expense)

Interest Income

Interest income was $3.0 million lower in fiscal 2026 compared with fiscal 2025. The decrease in interest income was primarily driven by lower interest rates along with lower interest-bearing cash balances.

Other Income (Expense), Net

Other income (expense), net was $1.8 million of expense in fiscal 2026 compared with $3.0 million of expense in fiscal 2025.

The expense in fiscal 2026 was primarily due to currency translation adjustments reclassified from accumulated other comprehensive income to net income due to the closure of our manufacturing operations in the United Kingdom. The expense in fiscal 2025 was primarily due to unfavorable changes in exchange rates related to our operations in Mexico and Thailand.

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Income Taxes

Our effective income tax rate was 25.9% for fiscal 2026 and 31.4% for fiscal 2025. The effective tax rate in fiscal 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 effective tax rate in fiscal 2025 included 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 18, Income Taxes, for additional information.

Liquidity and Capital Resources

Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash from operations, and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures, including fiscal 2027 contractual obligations.

We had cash and cash equivalents of $303.2 million at April 25, 2026, compared with $328.4 million at April 26, 2025. Included in our cash and cash equivalents at April 25, 2026, was $62.3 million held by foreign subsidiaries, the majority of which we have determined to be permanently reinvested. In addition, we had investments to enhance our returns on cash of $5.5 million at April 25, 2026, compared with $2.6 million at April 26, 2025.

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

Operating Activities

During fiscal 2026, net cash provided by operating activities was $204.1 million, primarily attributable to net income, adjusted for non-cash items, and a reduction in inventory levels to align production with incoming order trends. Net cash provided by operating activities in fiscal 2026 was $16.8 million higher than the same period a year ago primarily due to favorable changes to working capital and deferred taxes along with a smaller reduction of customer deposits, partially offset by an increase in prepaid income taxes and lower net income, adjusted for non-cash items.

Investing Activities

During fiscal 2026, net cash used for investing activities was $138.6 million, an increase of $40.2 million compared with the prior year primarily due to increased cash paid for acquisitions and lower proceeds from the sale of investments, partially offset by higher proceeds from the sale of assets. Cash used for investing activities in fiscal 2026 included the following:

•Cash used for acquisitions was $86.4 million, primarily related to the 15-store acquisition of the retail business in the Southeast region of the United States.

•Cash used for capital expenditures in the period was $76.3 million, which were primarily related to La-Z-Boy Stores (new stores and remodels), manufacturing-related investments, and spending related to our distribution and home delivery transformation. We expect capital expenditures to be in the range of $90 to $110 million for fiscal 2027, with continued spending on our distribution and home delivery transformation, manufacturing-related investments, and investments in our La-Z-Boy store (new stores and remodels). We have no material contractual commitments outstanding for future capital expenditures.

•Proceeds from the sale of assets were $26.1 million, primarily from the sale and leasebacks of four retail stores and their related fixed assets, the Casegoods headquarters building and related fixed assets, and the upholstery portion of our Casegoods business. Refer to Note 4, Assets Held for Sale for additional information.

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Financing Activities

During fiscal 2026, net cash used for financing activities was $91.1 million, a decrease of $11.5 million compared with the prior year, primarily due to lower share repurchases, partially offset by reduced proceeds from exercised stock options and higher dividend payments. Cash used for financing activities in fiscal 2026 included the following:

•Cash paid to repurchase 1.3 million shares of company stock was $47.3 million. Our board of directors has authorized the repurchase of Company stock and as of April 25, 2026, 2.4 million shares remained available for repurchase pursuant to this authorization.

•Cash paid to our shareholders in quarterly dividends was $37.9 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms. We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time at the board's discretion.

•Cash paid for tax withholding on stock issued as part of our employee benefit plans, net of proceeds from exercised stock options, was $4.2 million.

In April 2026, our board of directors rescinded the remaining repurchase authorization as of May 14, 2026, and established a new stock repurchase program, effective as of May 14, 2026, authorizing the repurchase of up to $300 million of Company stock. The new authorization does not have an expiration date. With the operating cash flows we anticipate generating in fiscal 2027, we expect to continue repurchasing Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.

On October 15, 2021, we entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, the other agents and lenders named therein and the other parties thereto (as amended prior to July 1, 2025, the "Credit Agreement"). The Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of $200 million, which includes a $50 million letter of credit sub-limit (the "Credit Facility").

On July 1, 2025, we entered into an amendment to the Credit Agreement (the "Credit Agreement Amendment"). The Credit Agreement Amendment, among other things, (i) extended the maturity date of the Credit Facility from October 15, 2026 to July 1, 2030, (ii) increased the accordion basket for additional revolving commitments and/or incremental term loans from $100 million to $125 million, (iii) removed the secured overnight financing rate ("SOFR") credit spread adjustment, and (iv) decreased the consolidated fixed charge coverage ratio required to be satisfied under the Company’s financial covenant.

Borrowings under the Credit Facility may be used by the Company for general corporate purposes. The Credit Facility will mature on July 1, 2030, and provides us the ability to extend the maturity date for 2 additional P1Y-year periods, subject to the satisfaction of customary conditions.

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

As of April 25, 2026, we have no borrowings outstanding under the Credit Facility and we were in compliance with our financial covenants under the Credit Facility.

Exchange Rate Changes

Due to changes in exchange rates, our cash and cash equivalents increased by $0.4 million from the end of fiscal year 2025 to the end of fiscal year 2026. These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

Contractual Obligations

Lease Obligations. We lease real estate for retail stores, distribution centers, warehouses, plants, showrooms and office space and also have equipment leases for tractors/trailers, IT and office equipment, and vehicles. As of April 25, 2026, we had operating and finance lease payment obligations of $657.8 million and $2.3 million, respectively, with $111.1 million and $1.0 million, payable within 12 months, respectively. Refer to Note 6, Leases, for additional information.

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Purchase Obligations. We had open purchase orders of $242.1 million, the majority of which are payable within 12 months, primarily related to contracts for indirect services, which are generally cancellable before services commence, along with orders from suppliers of raw materials and finished goods, which are generally cancellable if production has not begun.

Other

Our consolidated balance sheet as April 25, 2026 reflected a $1.2 million net liability for uncertain income tax positions. We do not expect that the net liability for uncertain income tax positions will significantly change within the next 12 months. The remaining balance will be settled or released as tax audits are effectively settled, statutes of limitation expire, or other new information becomes available.

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

Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("US GAAP"). In some cases, these principles require management to make difficult and subjective judgments regarding uncertainties and, as a result, such estimates and assumptions may significantly impact our financial results and disclosures. We base our estimates on currently known facts and circumstances, prior experience and other assumptions we believe to be reasonable. We use our best judgment in valuing these estimates and may, as warranted, use external advice. Actual results could differ from these estimates, assumptions, and judgments and these differences could be significant. We make frequent comparisons throughout the year of actual experience to our assumptions to reduce the likelihood of significant adjustments. We record adjustments when differences are known. We consider the following accounting estimates to be critical as they require us to make assumptions that are uncertain at the time the estimate was made and changes to the estimate would have a material impact on our financial statements.

Indefinite-Lived Intangible Assets and Goodwill

Indefinite-lived intangible assets include our American Drew® trade name and the reacquired right to own and operate La-Z-Boy Stores we have acquired. Prior to our retail acquisitions, we licensed the exclusive right to own and operate La-Z-Boy Stores (and to use the associated trademarks and trade name) in those markets to the dealers whose assets we acquired, and we reacquired these rights when we purchased the dealers' other assets. The reacquired rights to own and operate La-Z-Boy Stores are indefinite-lived because our retailer agreements are perpetual agreements that have no specific expiration date and no renewal options. A retailer agreement remains in effect as long as the independent retailer is not in default under the terms of the agreement.

Our goodwill relates to the acquisitions of La-Z-Boy Stores and Joybird®, an omni-channel retailer and manufacturer of upholstered furniture. The reporting unit for goodwill arising from retail store acquisitions is our Retail operating segment and the goodwill arising from the acquisition of Joybird is the Joybird operating segment.

We test indefinite-lived intangibles and goodwill for impairment on an annual basis in the fourth quarter of our fiscal year, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. We have the option to first assess qualitative factors in order to determine if it is more likely than not that the fair value of our intangible assets or reporting units are greater than their carrying value. If the qualitative assessment leads to a determination that the intangible asset/reporting unit’s fair value may be less than its carrying value, or if we elect to bypass the qualitative assessment altogether, we are required to perform a quantitative impairment test by calculating the fair value of the intangible asset/reporting unit and comparing the fair value with its associated carrying value. When we perform the quantitative test for indefinite-lived intangible assets, or when we apply purchase accounting for acquisitions of retail stores, we establish the fair value of our indefinite-lived trade names and reacquired rights based upon the relief from royalty method, which requires the use of significant estimates and assumptions including forecasted sales growth and royalty rates. When we perform the quantitative test for goodwill, we establish the fair value for the reporting unit based on the income approach, in which we utilize a discounted cash flow model, the market approach, in which we utilize market multiples of comparable companies, or a combination of both approaches. The income approach requires the use of significant estimates and assumptions including forecasted sales growth, operating income projections, and discount rates and changes in these assumptions may materially impact our fair value assessment.

During fiscal 2026, we performed the quantitative impairment test on two reporting units as discussed below.

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Joybird Reporting Unit

The Joybird reporting unit, which had goodwill of $55.4 million at the time of the impairment test, was deemed to be impaired as the carrying value of the reporting unit exceeded its fair value, and was reduced to $35.5 million during the fourth quarter of fiscal 2026 . We determined the fair value of this reporting unit by applying a combination of the income approach based on its future cash flows and the market approach based on the guideline public company method, weighted 75% and 25%, respectively. The key assumptions that factored into the valuation under the income approach were the projections of revenue and operating income of the business, as well as the terminal growth rate, tax rate, and discount rate used to present value these future cash flows.

Retail Reporting Unit

The Retail reporting unit, which has goodwill of $207.8 million at April 25, 2026, has an estimated fair value that significantly exceeds its carrying value. We determined the fair value of this reporting unit using the income approach based on its future cash flows. The key assumptions that factored into the valuation were the projections of revenue and operating income of the business, as well as the terminal growth rate, tax rate, and discount rate used to present value these future cash flows.

Refer to Note 7, Goodwill and Other Intangible Assets, for further information regarding our fiscal 2026 impairment testing.

Product Warranties

We account for product warranties by accruing an estimated liability when we recognize revenue on the sale of warrantied product. We estimate future warranty claims on product sales based on sales volume and claim experience and periodically make adjustments to reflect changes in actual experience. We incorporate repair costs in our liability estimates, including materials, labor, and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product to our customers and consumers. We use considerable judgment in making our estimates and record differences between our estimated and actual costs when the differences are known.

Stock-Based Compensation

We measure stock-based compensation cost for both equity-based awards and liability-based awards on the grant date based on the awards' fair value and recognize expense over the vesting period. For liability-based awards, we remeasure the liability for these awards and adjust their fair value at the end of each reporting period until paid. We recognize compensation cost for stock-based awards that vest based on performance conditions ratably over the vesting periods when the vesting of such awards becomes probable. Determining the probability of award vesting requires judgment, including assumptions about future operating performance. While the assumptions we use to calculate and account for stock-based compensation awards represent management's best estimates, these estimates involve inherent uncertainties and the application of our management's best judgment. As a result, if we revise our assumptions and estimates, our stock-based compensation expense could be materially different in the future.

We estimate the fair value of each performance award grant that vests based on a market condition using a Monte Carlo valuation model. The Monte Carlo model incorporates more complex variables than closed-form models such as the Black-Scholes option valuation model used for option grants. The Monte Carlo valuation model simulates a distribution of stock prices to yield an expected distribution of stock prices over the remaining performance period. The stock-paths are simulated using volatilities calculated with historical information using data from a look-back period that is equal to the vesting period. The model assumes a zero-coupon, risk-free interest rate with a term equal to the vesting period. The simulations are repeated many times and the mean of the discounted values is calculated as the grant date fair value for the award. The final payout of the award as calculated by the model is then discounted back to the grant date using the risk-free interest rate.

Recent Accounting Pronouncements

Refer to Note 1, Accounting Policies, to our consolidated financial statements for a discussion of recently adopted accounting standards and other new accounting standards.

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