2024
ANNUAL REPORT
Ava Sectional | La-Z-Boy
*Please see 2024 Proxy Statement for details
Annual Meeting
of Shareholders*
Tuesday, August 27, 2024 • 9:30 AM Eastern
Westin Detroit Metropolitan Airport
Wright Room • 2501 Worldgateway Place • Detroit, MI
Dear Stakeholders,
Our company was founded 97 years ago with a clear purpose of
bringing quality and comfort to people’s homes. Today, this consumer-
first approach and unrelenting commitment to producing high-quality,
comfortable furniture remains fundamental to how we work and continues
to propel our company forward. As we look to the future, we are building
on this strong legacy and our iconic La-Z-Boy brand, while taking
important actions that will make us even stronger for the next 100 years.
Fiscal 2024 was a dynamic year highlighted by solid execution and
strategic investments to further strengthen our enterprise while
navigating this uncertain economic environment. Industry dynamics
remained volatile; however, we remain confident in our ability to
outperform the market, gain share, and grow margins over the long
term. We are delivering on our commitments, while making a difference
for our stakeholders. In this report, you will see why I am proud of the journey we are on, and why I am
confident in our future.
Fiscal 2024 Summary
Fiscal 2024 was a year defined by challenging trends for the furniture industry, as higher for longer interest
rates and weak housing turnover, near 30-year lows, negatively impacted store traffic. Despite these
headwinds, we made steady progress for the business.
Our continued focus on growth, profitability, and execution enabled us to outperform our industry. We
delivered sales of $2.05 billion and Non-GAAP operating margin of 7.8%. Amid this dynamic backdrop,
total La-Z-Boy Furniture Galleries® network same-store sales were down just 2%, while sales across the
industry were down 6%. In addition, we achieved strong cash flow, making it possible to reinvest in our
business and return $85 million to shareholders through share repurchases and dividends, including raising
our dividend by 10%.
While we expect the challenging industry dynamics to remain for the foreseeable future, we are managing
our business effectively and confident that in doing so, we are poised to benefit when underlying industry
tailwinds return.
Executing on Our Century Vision Strategy
We are also making considerable progress when it comes to executing our Century Vision strategy, which will
transform our company and position us for the next century. Through this strategy, we are playing offense,
with a robust set of initiatives designed to drive disproportionate growth of La-Z-Boy Incorporated over the
long term and enable us to consistently gain share in the fragmented furniture and home furnishings market.
Maddox Recliner | La-Z-Boy
Meyer Sofa | La-Z-Boy
Melinda D. Whittington
La-Z-Boy Incorporated
President & CEO
A core pillar of the Century Vision growth strategy is to
expand La-Z-Boy brand reach. I am pleased to report that we
are doing just that, with momentum in our business building.
Our Retail segment continues to grow with the opening of
new stores, the acquisition of independently owned stores,
and by improving in-store fundamentals through strong
execution. We opened six new company-owned stores and
acquired eleven independent Furniture Galleries® during
the year. Our direct-to-consumer business – supported by
our foundational manufacturing capability – now represents
over 50% of enterprise revenues for the first time in history.
Additionally, our company-owned store base of 187 locations
stands at 53% of total La-Z-Boy Furniture Galleries® and is
nearly double the number from a decade ago.
Our broader Wholesale business also continues to expand
into new channels and growth with existing partners. Our
refined channel strategy has allowed us to grow both our
footprint and our share of voice, with strategic partnerships
such as Rooms to Go. We believe there are considerable
opportunities ahead to expand our brand reach to a
broader consumer base and bring products like the beloved
La-Z-Boy recliner into more homes.
Since launching the Long Live the Lazy brand campaign
this past year, we have been successful in increasing
brand awareness, consideration, and purchase intent,
capturing the attention of a broader consumer base. And,
with a strong history of innovation, we are continuing to
accelerate our consumer-driven product development
process. We are responding to consumer needs, including
recently launching on-trend furniture styles and fabrics,
performance fabrics, and increased functionality like
additional storage and technology capabilities.
Looking across our broader portfolio, we made significant
progress toward sustainable, profitable growth for Joybird,
our digitally native brand. During the year we opened our
12th Joybird store and continue to focus on elevating the
brand to deliver a balance of sales growth and profitability.
And across the enterprise, we are increasing the agility of
our supply chain and making considerable productivity
improvements by optimizing our global network. We will
continue to evolve our supply chain to build increased resiliency.
La-Z-Boy Incorporated is well positioned to achieve our
Century Vision goals, including sales growth double the
industry and double-digit operating margins over the long
term. The combination of continued progress internally,
along with furniture industry demand improving back to a
more normalized growth trajectory, are key levers that will
further enable our success.
Bailey Sofa | England Furniture
Sales,
Operating Margin,
and EPS
FY
2024
2023
2022
2021
2020*
2019
$1,734
$2,357
(53 Weeks)
$1,704
$2.16
$2.62
8.2%
$1,745
$2.14
7.8%
9.0%
8.1%
$3.11
$2,349
$3.86
9.5%
$2,047
$2.98
Sales ($ in Millions)
Non-GAAP Operating Margin**
7.8%
Non-GAAP EPS**
*Fiscal 2020 reflects two months of dramatic impact from COVID-19
**See Reconciliation of GAAP to Non-GAAP Financial Measures at the
end of the narrative section
*Long-term strategy to invest ~50% of Operating Cash Flow
into the business and return ~50% to shareholders
Creating Value for All Stakeholders
Aligned with our core values, we empower courage for a
sustainable culture, embrace curiosity for sustainable design,
and operate with compassion for a sustainable planet.
During the past year, we implemented improved waste and
recycling programs across the enterprise and entered into
new agreements to source renewable energy for our sites.
We also elevated our focus on driving responsible wood
sourcing practices across the supply chain. And internally,
we continue our progress in strengthening our culture,
including expanding our powerful Employee Resource
Groups. We strive to provide an environment where
everyone can bring their best selves to work, because we
know our people are our greatest assets.
We’re also making a positive impact in the communities where
we live and work. Through our “Summer of Caring,” “Season
of Caring,” and “La-Z-Boy Cares Dollars for Doers” initiatives,
our employees have generously offered their time, skills, and
resources to keep our long-standing tradition of community
involvement alive. Our philanthropic initiatives include the
La-Z-Boy Foundation, local community involvement, disaster
relief, and Ronald McDonald House Charities.
It is this dedication and commitment to living our core values
that continues to earn us national recognition. Last year,
La-Z-Boy Incorporated was recognized with Newsweek’s
“America’s Best Customer Service” award and ranked among
Furniture Today’s “Best Places to Work in Furniture.”
In Closing
Fiscal 2024 was another transformational year for La-Z-Boy
Incorporated. We enhanced our capabilities and improved
our operations. Our solid financial results were a strong
endorsement of the strategy that we have in place. We also
demonstrated that we can deliver strong results, even when
our environment is challenging. We are a stronger company
today, but we know our work is not done. Looking ahead,
the objective is clear. We must continue to focus on growth,
improve agility, and leverage our strong financial position to
make prudent investments to drive capabilities and further
enhance La-Z-Boy brand reach.
I am excited for what lies ahead for this great company
and iconic brand. Thank you to our customers, consumers,
employees, shareholders, and Board of Directors for the
trust you place in us every day. The momentum at La-Z-Boy
Incorporated is palpable and the best is still to come.
Melinda D. Whittington
President and CEO
Ainsley Sofa | Joybird
Capital Allocation:
Business Investments
And Returns To Shareholders*
($ in Millions)
Capital Expenditures
Share Repurchases
Dividends
Cash Used for Acquisitions
100%
90%
80%
70%
60%
50%
40%
20%
10%
30%
% Business Investment
$245
$91
$77
$49
$121
$43
$25
$7
$46
$171
$23
$23
$77
$48
$107
$44
$17
$38
$8
$126
$5
$69
$30
$22
$184
$53
$33
$54
$44
$28
FY
2024
2023
2022
2021
2020*
2019
Reconciliation Of GAAP To Non-GAAP
Financial Measures
Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), this presentation also includes Non-GAAP financial measures.
Management uses these Non-GAAP financial measures when assessing our ongoing performance. This presentation contains references to Non-GAAP operating margin and Non-GAAP EPS (earnings
per share), each of which may exclude, as applicable, sale-leaseback gains, purchase accounting charges or gains, business realignment charges or gains, supply chain optimization charges or gains, a
goodwill impairment charge, benefits from the CARES Act, investment impairment charges, and impacts from terminating the company’s defined benefit pension plan. The business realignment charges
include severance costs, asset impairment costs, and costs to relocate equipment and inventory related to organizational changes we undertook as a result of our response to COVID-19, including a
reduction in the company’s work force, temporary closure of certain manufacturing facilities and subsequent gains resulting from the sale of related assets. The supply chain optimization charges include
asset impairment costs, accelerated depreciation expense, lease termination gains, severance costs, and employee relocation costs resulting from the closure, consolidation, and centralization of various
global supply chain operations and includes the closure of our Torreón manufacturing facility (previously disclosed as Mexico optimization). The purchase accounting charges include the amortization
of intangible assets, fair value adjustments of future cash payments recorded as interest expense, and adjustments to the fair value of a contingent consideration liability. These Non-GAAP financial
measures are not meant to be considered superior to or a substitute for La-Z-Boy Incorporated’s results of operations prepared in accordance with GAAP and may not be comparable to similarly titled
measures reported by other companies. Reconciliations of such Non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the table above.
Management believes that presenting certain Non-GAAP financial measures will help investors understand the long-term profitability trends of our business and compare our profitability to prior and
future periods and to our peers. Management excludes purchase accounting charges because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the
acquisitions consummated and the success with which we operate the businesses acquired. While the company has a history of acquisition activity, it does not acquire businesses on a predictable cycle,
and the impact of purchase accounting charges is unique to each acquisition and can vary significantly from acquisition to acquisition. Similarly, business realignment charges and supply chain optimization
charges are dependent on the timing, size, number and nature of the operations being closed, consolidated or centralized, and the charges may not be incurred on a predictable cycle. Management also
excludes impacts from the CARES Act, termination of the company’s defined benefit pension plan, and investment impairment charges when assessing the company’s operating and financial performance
due to the one-time and infrequent nature of the transactions.
Bell Chair | Joybird
Monogram Collection: Virtue Entertainment Console | Kincaid
(Unaudited, $ amounts in thousands)
Fiscal 2019
% of
Sales
Fiscal 2020
% of
Sales
Fiscal 2021
% of
Sales
Fiscal 2022
% of
Sales
Fiscal 2023
% of
Sales
Fiscal 2024
% of
Sales
GAAP Operating Income
$129,674
7.4%
$118,762
7.0%
$136,736
7.9%
$206,756
8.8%
$211,439
9.0%
$150,796
7.4%
Sale-Leaseback Gain
–
–
–
(10,655)
–
–
Purchase Accounting Charges/(Gains)
6,917
(2,122)
16,024
(2,251)
338
1,105
Business Realignment Charges/(Gains)
–
–
3,883
(3,277)
609
–
Supply Chain Optimization Initiative
(Gain on Sale) and Charges
–
(4,359)
(50)
–
10,817
7,497
Goodwill Impairment
–
26,862
–
–
–
–
Non-GAAP Operating Income
$136,591
7.8%
$139,143
8.2%
$156,593
9.0%
$190,573
8.1%
$223,203
9.5%
$159,398
7.8%
(Unaudited)
Fiscal 2019
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
GAAP EPS
$1.44
$1.66
$2.30
$3.39
$3.48
$2.83
Sale-Leaseback Gain
–
–
–
(0.18)
–
–
Purchase Accounting Charges/(Gains)
0.12
(0.07)
0.33
(0.04)
–
0.02
Business Realignment Charges/(Gains)
–
–
0.07
(0.06)
0.01
–
Supply Chain Optimization Initiative
(Gain on Sale) and Charges
–
(0.07)
–
–
0.19
0.13
Goodwill Impairment
–
0.58
–
–
–
–
CARES Act Benefit
–
–
(0.08)
–
–
–
Investment Impairment
–
0.09
–
–
0.18
–
Pension Termination/(Refund)
0.58
(0.03)
–
–
–
–
Non-GAAP EPS
$2.14
$2.16
$2.62
$3.11
$3.86
$2.98
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 27, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 1-9656
LA-Z-BOY INCORPORATED
(Exact name of registrant as specified in its charter)
Michigan
38-0751137
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One La-Z-Boy Drive, Monroe, Michigan
48162-5138
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (734) 242-1444
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $1.00 par value
LZB
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Based on the closing sales price as reported on the New York Stock Exchange on October 27, 2023, the aggregate market value of the registrant's common stock held by
non-affiliates of the registrant on that date was approximately $1,207 million.
The number of shares of common stock, $1.00 par value, of the registrant outstanding as of June 10, 2024 was 41,949,567.
DOCUMENTS INCORPORATED BY REFERENCE:
(1)
Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for its 2024 Annual
Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.
LA-Z-BOY INCORPORATED
ANNUAL REPORT ON FORM 10-K FOR FISCAL 2024
TABLE OF CONTENTS
Page
Number(s)
Cautionary Note Regarding Forward-Looking Statements
3
PART I
Item 1
Business
4
Item 1A Risk Factors
11
Item 1B Unresolved Staff Comments
17
Item 1C Cybersecurity
17
Item 2
Properties
19
Item 3
Legal Proceedings
19
Item 4
Mine Safety Disclosures
19
Information About Our Executive Officers
19
PART II
Item 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
21
Item 6
Reserved
22
Item 7
Management's Discussion and Analysis of Financial Condition and Results of Operations
22
Item 7A Quantitative and Qualitative Disclosures About Market Risk
31
Item 8
Financial Statements and Supplementary Data
32
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
71
Item 9A Controls and Procedures
71
Item 9B Other Information
71
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
71
PART III
Item 10
Directors, Executive Officers, and Corporate Governance
72
Item 11
Executive Compensation
72
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
72
Item 13
Certain Relationships and Related Transactions, and Director Independence
72
Item 14
Principal Accountant Fees and Services
72
PART IV
Item 15
Exhibits and Financial Statement Schedules
73
Item 16
Form 10-K Summary
74
Note: The responses to Items 10 through 14 of Part III will be included in the La-Z-Boy Incorporated definitive proxy statement
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for the 2024 Annual Meeting of
Shareholders and are incorporated by reference herein.
2
Cautionary Note Regarding Forward-Looking Statements
In this Annual Report on Form 10-K ("Annual Report"), La-Z-Boy Incorporated and its subsidiaries (individually and
collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include information concerning
expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives
and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity,
investments, future economic performance, and our business and industry.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-
looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels,"
"forecasts," "hopes," "intends," "plans," "projects," "likely," "seeks," "short-term," "non-recurring," "one-time," "outlook,"
"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 Annual 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 this Annual Report under Item 1A, "Risk Factors" and Item 7,
"Management’s Discussion and Analysis of Financial Condition and Results of Operations". 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 Annual Report 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.
3
PART I
ITEM 1.
BUSINESS.
Edward M. Knabusch and Edwin J. Shoemaker started Floral City Furniture in 1927, and in 1928 the newly formed company
introduced its first recliner. In 1941, we were incorporated in the state of Michigan as La-Z-Boy Chair Company, and in 1996
we changed our name to La-Z-Boy Incorporated. Today, our La-Z-Boy brand is one of the most recognized brands in the
furniture industry.
We are the leading global producer of reclining chairs and one of the largest manufacturer/distributors of residential furniture in
the United States. The La-Z-Boy Furniture Galleries® 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 April 27, 2024, our supply chain operations included the following:
•
Five major manufacturing locations and 14 distribution centers in the United States and four 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
•
A wholesale sales office that is responsible for distribution of our product in the United Kingdom and Ireland
•
An upholstery manufacturing business in the United Kingdom
•
A global trading company in Hong Kong which 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: 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 355 La-Z-Boy Furniture Galleries® stores and 528
La-Z-Boy Comfort Studio® locations, each dedicated to marketing our La-Z-Boy branded products. We consider this
dedicated space to be "proprietary."
◦
La-Z-Boy Furniture Galleries® 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 187 of the La-Z-Boy Furniture
Galleries® stores, while the remainder are independently owned and operated.
◦
La-Z-Boy Comfort Studio® locations are defined spaces within larger independent retailers that are dedicated
to displaying and selling La-Z-Boy branded products. All 528 La-Z-Boy Comfort Studio® locations are
independently owned and operated.
◦
In total, we have approximately 7.6 million square feet of proprietary floor space dedicated to selling La-Z-
Boy branded products in North America.
◦
We also have approximately 2.8 million square feet of floor space outside of the United States and Canada
dedicated to selling La-Z-Boy branded products.
•
Our other brands, England, American Drew, Hammary, and Kincaid enjoy distribution through many of the same
outlets, with slightly over half of Hammary’s sales originating through the La-Z-Boy Furniture Galleries® store
network.
◦
Kincaid and England have their own dedicated proprietary in-store programs with 634 outlets and
approximately 1.9 million square feet of proprietary floor space.
•
In total, our proprietary floor space includes approximately 12.3 million square feet worldwide.
•
Joybird sells product primarily online and has 12 small-format stores in key urban markets.
4
Principal Products and Industry Segments
Our reportable operating segments include the Retail segment and the Wholesale segment. Our Retail segment primarily sells
upholstered furniture, in addition to some casegoods and other home furnishing accessories, to end consumers through our
company-owned La-Z-Boy Furniture Galleries® stores. Our Wholesale segment manufactures and imports upholstered and
casegoods (wood) furniture and sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio®
locations, branded space locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other
independent retailers.
We have provided additional detailed information regarding our segments and their products in Note 17, Segment Information,
to our consolidated financial statements and Item 7, "Management’s Discussion and Analysis of Financial Condition and
Results of Operations" section, both of which are included in this report.
Raw Materials and Parts
The principal raw materials and parts used for manufacturing that are purchased are cover (primarily fabrics and leather),
polyester batting and polyurethane foam for cushioning and padding, lumber and plywood for frames, steel for motion
mechanisms, electrical components for power units and various other metal components for fabrication of product. We
purchase most of our polyurethane foam from three suppliers, which have several facilities across the United States. We
purchase cover from a variety of sources, but we rely on a limited number of major suppliers. We purchase more than half of
our cover in a raw state (fabric rolls or leather hides) from suppliers in multiple countries including China, the United States,
and Brazil, then cut and sew it into cover in our cut and sew facilities in Mexico. We purchase the remainder of our cut and
sewn leather and fabric kits from three main suppliers primarily from China and Vietnam. We use these suppliers primarily for
their product design capabilities and to balance our mix of in-sourced and out-sourced production. If any of these suppliers
experience financial or other difficulties, we could experience temporary disruptions in our manufacturing process until we find
alternative sources of supply.
We manage our Asian supply chain through our global trading company in Hong Kong, which works to identify efficiencies
and savings opportunities, while verifying La-Z-Boy quality standards are being adhered to and managing the relationships with
our Asian suppliers.
During fiscal 2024, the cost of materials and parts used for manufacturing moderated and began to stabilize relative to the
volatility experienced in prior years as a result of the supply chain disruptions created by the COVID-19 pandemic. As we
begin fiscal 2025, we anticipate that prices of such materials and parts will remain relatively consistent with those seen at the
end of fiscal 2024, with potential increases due to economic volatility and price and wage inflation related to our core materials.
To the extent that we experience changes in our cost of materials and parts, we may adjust our selling prices or assess material
surcharges, accordingly. However, in the event of rising costs, increases in selling prices or implementation of surcharges may
not fully mitigate the impact of raw material cost increases, which could adversely impact operating profits.
Finished Goods Imports
Imported finished goods represented 6% and 7% of our consolidated sales in fiscal 2024 and 2023, respectively. In fiscal 2024,
we purchased approximately 75% of this imported product from six suppliers based in Vietnam. We use these suppliers
primarily to leverage our buying power, to control quality and product flow, and because their capabilities align with our
product design needs. If any of these suppliers experience financial or other difficulties, we could experience disruptions in our
product flow until we obtain alternate suppliers, which could be lengthy due to the longer lead time required for sourced wood
furniture from Asian manufacturers.
The prices we paid for imported products, including associated transportation costs, decreased throughout most of 2024
compared with fiscal 2023. While ocean freight costs decreased during the first half of the year, rates rose near the end of our
fiscal year as a result of supply challenges in global shipping routes. In fiscal 2025, while we anticipate our product costs will
be relatively flat overall, we expect slight increases in ocean freight costs due to continued container transit challenges in these
global shipping routes.
Seasonal Business
Our business has historically displayed seasonal patterns driven by consumer behavior with demand highest in the winter
months as discretionary spend tends to shift toward travel and leisure activities during the summer months. For our wholesale
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business, our fiscal fourth quarter has historically had the highest volume of delivered sales relative to other quarters. For our
retail businesses, which includes our company-owned retail stores, our fiscal third quarter typically has the highest volume of
delivered sales relative to other quarters.
In a typical year, we schedule production to maintain consistent manufacturing activity throughout the year whenever possible.
During the summer months, the furniture industry generally experiences weaker demand, and as such we typically shut down
our domestic plants for one week each fiscal year to perform routine maintenance on our equipment. Accordingly, for our
wholesale business, the first quarter is usually the Company's weakest quarter in terms of sales and earnings. Also driven by the
seasonal slowdown in the summer, each of our retail businesses typically experience their lowest sales in our fiscal first quarter.
During fiscal 2024, we experienced our largest sales in the fourth quarter for both our wholesale and retail businesses, which we
believe was consistent with overall trends in the furniture industry. We therefore do not believe that this is an indicator that our
seasonal trends are changing for our retail businesses and anticipate typical seasonality for both our wholesale and retail
businesses in fiscal 2025.
Economic Cycle and Purchasing Cycle
Our sales are impacted by the overall growth of the furniture industry, which is primarily influenced by economic growth,
existing and new housing activity, and consumer discretionary spending. In addition, consumer confidence, employment rates,
inflation and interest rates, consumer savings levels, international trade policies, and other factors could affect demand.
Upholstered furniture has a shorter life cycle than casegoods furniture because upholstered furniture is typically more fashion
and design-oriented and is often purchased one or two pieces at a time. Purchases and demand for consumer goods, including
upholstered furniture, fluctuate based on consumer confidence. Casegoods products, in contrast, are longer-lived and frequently
purchased in groupings or "suites," resulting in a much larger cost to the consumer. As a result, casegoods sales are more
sensitive to economic conditions, including growth or a slowdown in the housing market, whereas upholstered furniture
normally exhibits a less volatile sales pattern over an economic cycle.
Practices Regarding Working Capital Items
The following describes our significant practices regarding working capital items.
Inventory: For our upholstery business within our Wholesale segment, we maintain raw materials and work-in-process
inventory at our manufacturing locations. Finished goods inventory is maintained at our 14 distribution centers as well as our
manufacturing locations. Our distribution centers allow us to streamline the warehousing and distribution processes for our La-
Z-Boy Furniture Galleries® store network, including both company-owned stores and independently-owned stores. Our
distribution centers also allow us to reduce the number of individual warehouses needed to supply our retail outlets and help us
reduce inventory levels at our manufacturing and retail locations.
For our casegoods business within our Wholesale segment, we import wood furniture from Asian vendors, resulting in long
lead times on these products. To address these long lead times and meet our customers' delivery requirements, we typically
maintain higher levels of finished goods inventory in our warehouses, as a percentage of sales, of our casegoods products than
our upholstery products.
Our company-owned La-Z-Boy Furniture Galleries® stores have finished goods inventory at the stores for display purposes.
Our Joybird business maintains raw materials and work-in-process inventory at its manufacturing location. Joybird finished
goods inventory is maintained at our distribution centers, at its manufacturing and warehouse locations, or in-transit to the end
consumer.
Our inventory decreased $13.0 million as of year end fiscal 2024 compared with year end fiscal 2023 as we continue to stabilize
inventory levels and align production with incoming order trends. We actively manage our inventory levels on an ongoing basis
to ensure they are appropriate relative to our sales volume, while maintaining our focus on service to our customers.
Accounts Receivable: Our accounts receivable increased $13.7 million as of year end fiscal 2024 compared with year end fiscal
2023, primarily reflecting higher sales from our Wholesale business to external dealers during the fourth quarter of fiscal 2024
compared with same period a year ago.
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Additionally, our allowance for receivable credit losses was $0.3 million higher at the end of fiscal 2024 compared with the end
of fiscal 2023 reflecting a higher receivable balance. We monitor our customers' accounts, limit our credit exposure to certain
independent dealers and strive to decrease our days' sales outstanding where possible.
Accounts Payable: Our accounts payable decreased $11.0 million as of year end fiscal 2024 compared with year end fiscal
2023, primarily reflecting lower inventory purchases.
Customer Deposits: We collect a deposit from our customers at the time a customer order is placed in one of our company-
owned retail stores or through our websites, www.la-z-boy.com and www.joybird.com. Customer deposits decreased $17.0
million as of fiscal year end 2024 compared with fiscal year end 2023, primarily due to a slight reduction in backlog.
Customers
We sell directly to end consumers through our company-owned La-Z-Boy Furniture Galleries® stores that make up our Retail
segment, our small-format Joybird stores, and our websites, www.la-z-boy.com and www.joybird.com. Sales in our Wholesale
segment are primarily to third-party furniture retailers. While mainly located throughout the United States and Canada, we also
have customers located in various other countries, including the United Kingdom, China, Australia, South Korea and New
Zealand.
We have formal agreements with many furniture retailers for them to display and merchandise products from one or more of
our operating units and sell them to consumers in dedicated retail space, either in stand-alone stores or dedicated proprietary
galleries, studios or branded spaces within their stores. We consider this dedicated space to be "proprietary." For our Wholesale
segment, our fiscal 2024 customer mix based on sales was approximately 60% proprietary, 10% major dealers (large, regional
retailers), and 30% other independent retailers.
The success of our product distribution model relies heavily on having retail floor space that is dedicated to displaying and
marketing our products. Maintaining, updating, and, when appropriate, expanding our proprietary distribution network is a key
part of our overall sales and marketing strategy. We intend, over the long-term, to not only increase the number of stores in the
network but also to continue to improve their quality, including upgrading old-format stores to our new concept design through
remodels and relocations. We continue to maintain and update our current stores to improve the quality of the network. During
fiscal 2024 the La-Z-Boy Furniture Galleries® store network opened 8 new stores and relocated or remodeled 19 stores. In fiscal
2025, the La-Z-Boy Furniture Galleries® store network further plans to open 12 to 15 stores and relocate or remodel 25 to 35
stores, all of which will feature our latest store designs. Additionally, during fiscal 2025 we plan to open or update
approximately 100 La-Z-Boy Comfort Studio® locations as well as 40 branded space locations.
Independent dealers for our proprietary La-Z-Boy Furniture Galleries® store network provide distribution in specific
geographical areas and enable us to concentrate our marketing to a dedicated product line across the entire network benefitting
La-Z-Boy, these dealers, and our consumers. It also allows dealers in this proprietary group to take advantage of best practices,
with which other proprietary dealers have succeeded, and we facilitate forums for these dealers to share them. These La-Z-Boy
Furniture Galleries® stores provide our consumers a full-service shopping experience with a large variety of products,
knowledgeable sales associates, and design service consultants.
Orders and Backlog
We typically build upholstery units based on specific orders, either for dealer stock or to fill consumers' custom orders. We
import casegoods product primarily to fill our internal orders, rather than customer or consumer orders, resulting in higher
finished goods inventory on hand as a percentage of sales. We define backlog as any written order that has not yet been
delivered, whether to an independent furniture retailer, an independently-owned La-Z-Boy Furniture Galleries® store, or the end
consumer through our company-owned La-Z-Boy Furniture Galleries® stores.
Historically, the size of our backlog at a given time varies and may not be indicative of our future sales and, therefore, we do
not rely entirely on backlogs to predict future sales. Our wholesale backlog was $136.6 million as of April 27, 2024. This
represents a 10% decrease from a fiscal 2023 year end backlog of $151.3 million, which was revised to reflect an adjustment to
the dollar impact of cancellations that occurred during fiscal 2023. At the end of fiscal 2023, backlog and lead times had
generally returned to pre-pandemic levels and the slight decrease in fiscal 2024 was mainly due to shipments outpacing
incoming orders as a result of lower industry-wide demand. We anticipate our backlog will remain relatively stable in fiscal
2025.
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Competitive Conditions
We are one of the largest manufacturer/distributors of residential (living and family room, bedroom, and dining room) furniture
in the United States, as measured by annual sales volume.
The home furnishings industry competes primarily on the basis of product styling and quality, comfort, customer service
(product availability and delivery), price, and location. We compete by emphasizing our brand and the comfort, quality, styling,
customization, value of our products, and our available design services. In addition, we remain committed to innovation while
striving to provide outstanding customer service, exceptional dealer support, and efficient on-time delivery. Maintaining,
updating, and expanding our proprietary distribution system, including identifying desirable retail locations, is a key strategic
initiative for us in striving to remain competitive. We compete in the mid to upper-mid price point, and a shift in consumer taste
and trends to lower-priced products could negatively affect our competitive position. Additionally, our wholesale business faces
increased market pressures from foreign manufacturers entering the United States market and increased direct purchases from
foreign suppliers by large United States retailers.
The La-Z-Boy Furniture Galleries® stores operate in the retail furniture industry in the United States and Canada, and different
stores have different competitors based on their geographic locations. In addition, alternative distribution channels have
increasingly affected our retail markets. Direct-to-consumer brands bypass brick and mortar retailers entirely, or in some cases,
have developed a product that can be shipped more easily than traditional upholstered furniture, thus increasing competition for
our products. The increased ability of consumers to purchase furniture through various furniture manufacturers' and digital-only
retailers' internet websites has also increased competition in the industry. Although digital retailers operate with lower overhead
costs than a brick-and-mortar retailer, customer acquisition costs and advertising spend are typically much higher. Department
stores and big box retailers with an online presence also offer products that compete with some of our product lines.
Trademarks, Licenses and Patents
We own the La-Z-Boy trademark, which is essential to the Wholesale and Retail segments of our business. We also own the
Joybird trademark, which, along with the La-Z-Boy trademark, is essential to our e-commerce business. Additionally, we own a
number of other trademarks that we utilize in marketing our products. We consider our La-Z-Boy trademark to be among our
most valuable assets and we have registered that trademark and others in the United States and various other countries where
our products are sold. These trademarks have a perpetual life, subject to renewal. We license the use of the La-Z-Boy trademark
to certain international partners and dealers outside of North America. We also license the use of the La-Z-Boy trademark on
contract office furniture, outdoor furniture, and non-furniture products, as these arrangements enhance our brand awareness,
broaden the perceptions of La-Z-Boy, and create visibility of the La-Z-Boy brand in channels outside of the residential furniture
industry. In addition, we license to our branded dealers the right to use our La-Z-Boy trademark in connection with the sale of
our products and related services, on their signs, and in other ways, which we consider to be a key part of our marketing
strategies. We provide more information about those dealers under "Customers."
We hold a number of United States and foreign patents that we actively enforce. We have followed a policy of filing patent
applications for the United States and select foreign countries on inventions, designs and improvements that we deem valuable,
but these patents do expire at various times.
While our intellectual property rights in the aggregate are important to the operation of our business, we do not believe that any
existing patent, license, trademark or other intellectual property right (other than the La-Z-Boy trademark) is of such importance
that its loss or termination would have a material adverse effect on our business taken as a whole. We vigorously protect our
trademarks and patents against third-party infringement.
Compliance with Environmental Regulations
Our manufacturing operations involve the use and disposal of certain substances regulated under environmental protection laws
and regulations and, from time to time, we may be involved in a small number of remediation actions and site investigations
concerning these substances. Based on a review of all currently known facts and our experience with previous environmental
matters, we currently do not believe it is probable that we will have any additional loss for environmental matters that would be
material to our consolidated financial statements.
8
Human Capital
Employees
We employed approximately 10,200 full-time equivalent employees at the end of fiscal 2024, compared with approximately
10,500 employees at the end of fiscal 2023. The decrease in headcount was primarily due to the initiative to drive improved
efficiencies through optimized staffing levels at our Mexico operations. As of the end of fiscal 2024 we employed
approximately 7,800 employees in our Wholesale segment, 1,600 in our Retail segment, 500 in our Joybird business, with the
remaining employees being corporate personnel. We employ the majority of our employees on a full-time basis.
Purpose and Values
At La-Z-Boy, we believe in the transformational power of comfort. We provide an excellent consumer experience, create high
quality products and empower people to transform rooms, homes and communities with comfort. Our teams are committed to
our core values of Courage, Curiosity and Compassion. We are not afraid to try new things, we are relentless in our mission to
understand our business and consumers, and we honor our almost 100-year legacy that was built on family.
Sustainability
As we build the La-Z-Boy of tomorrow, our goal is to make the world a better place through the transformational power of
comfort. Aligned with our core values, we embrace curiosity for sustainable design, operate with compassion for a sustainable
planet, and empower courage for a sustainable culture.
Sustainable Design. We embrace curiosity and our inquisitiveness helps us identify innovative opportunities for our products
that uphold our commitment to quality, rely on sustainable materials and drive best practices in our supplier partnerships.
Sustainable Planet. We strive to operate La-Z-Boy with compassion for the environment. We are committed to responsible
stewardship and integrate environmentally sound and sustainable practices into our daily decisions. We work to reduce
emissions, increase recycling efforts, and conserve water in all areas of our business.
Sustainable Culture. At La-Z-Boy, we support our employees so they can make courageous choices and help our business
thrive. Our people practices are linked to our sustainability initiatives. The sustainable culture we are building is designed to
empower employees to do what is right in the workplace and in our communities. From supporting our employees’ careers and
providing a safe and ethical work environment to giving back to the communities where we live and work, people are always at
the heart of our brand.
Compliance and Ethics
La-Z-Boy is dedicated to upholding the highest ethical standards and working with honesty and integrity in all aspects of our
business operations. Our Code of Conduct provides a clear and thorough ethics standard for all employees, officers, and
directors with respect to interactions with customers, vendors, and other staff. Employees also undergo annual training on ethics
and the Code of Conduct. We also maintain an Ethics Hotline to make it easy for employees and suppliers to report any
concerns. This line is available 24 hours a day and is operated by a third-party. Reports are taken by trained professionals and
promptly forwarded to our Corporate Compliance team. Employees may also communicate any concerns through a dedicated
online portal.
Diversity, Inclusion and Belonging
We believe in creating and fostering a workplace in which all our employees feel valued, included, and empowered to do their
best work and contribute their ideas and perspectives. We are committed to recruiting and retaining diverse talent so that our
workforce better reflects the communities in which we operate our business globally. We recognize that our employees’ unique
backgrounds, experiences and perspectives enable us to create the optimal work environment and deliver on our mission.
Aligning with our purpose and values, we intend to continue to be curious, courageous, and compassionate in our efforts to
foster an environment that attracts the best talent, values diversity of life experiences and perspectives, and encourages
innovation to accelerate the transformational power of comfort.
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Our diversity, inclusion and belonging initiatives include:
•
Integrating diversity, inclusion and belonging into our overall corporate strategy and developing impactful practices
and initiatives to advance our Company’s diversity, inclusion and belonging journey;
•
Leveraging our Diversity, Inclusion and Belonging Council to provide enterprise-wide leadership focused on
supporting all our employees, developing training and learning opportunities for our employees on diversity,
unconscious bias and other topics, and creating sustainable plans to increase diversity in talent acquisition;
•
Expanding our support of employee resource groups ("ERGs"), which include groups focused on Multicultural, Pride
(LGBTQ+), Working Parents & Caregivers, Women, and Salute (Armed Forces). Our ERGs provide learning and
mentorship experiences for our diverse employees, supporting our objective of creating diversity awareness across our
organization, and helping our employees use their collective voices to positively impact our Company and the
communities in which we operate our business and live;
•
Revisiting, assessing and implementing changes to our processes, in an effort to continue mitigating unconscious bias
and enhancing our inclusion recruiting strategy;
•
Enhancing and expanding our supplier inclusion network;
•
Expanding inclusive leaders training throughout the organization;
•
Creating space for individuals to share their perspective, values and voice to our global population through employee
written articles, our internal podcast, and multiple video series on our internal communications platform and;
•
Demonstrating our Company’s commitment at the highest levels of leadership, including having our President and
Chief Executive Officer sign the CEO Action for Diversity & Inclusion™ pledge to advance diversity and inclusion in
the workplace
Safety and Health
We prioritize the health and safety of our employees, partners and the people in communities where we operate.
As the largest industrial manufacturer in many regions where we do business, we recognize our potential impact on surrounding
communities. We actively partner with local agencies in these communities to build proactive emergency and contingency plans
for any major incidents that may occur at our facilities and any natural disasters that may impact the region.
We work to forge relationships with agencies, such as the Occupational Safety and Health Administration (OSHA), to
understand how we can best adhere to health and safety practices. Additionally, the National Safety Council (NSC) has
recognized La-Z-Boy with multiple awards for safety performance and leadership throughout the Company’s history. This
includes our recognition as a seven-time recipient of the Corporate Culture of Safety Award.
Training and Development
We encourage employee growth, curiosity, and courage. We provide our workforce, in all areas of our business,
opportunities for both personal and career advancement, such as offering on-the-job trainings to help employees be more
effective in both current and future roles. This includes training in the operations and retail environment to maintain high-
quality standards as we make and sell our products. We strive to promote employees internally and to provide new managers
with the skills necessary to succeed. Further, we have a leadership development program to train employees who are new to
managing teams.
Employee Town Halls and Employee Engagement
"LZB Live", our quarterly global town hall, and other employee town halls are held in person and streamed to give our
employees an opportunity to ask questions of our Chief Executive Officer, Chief Financial Officer, and other senior executive
leaders and to continue to build and support our mission, purpose, and values. Additionally, the Company provides
opportunities for employee recognition from peers and leaders through our BRAVO program, and also periodically administers
employee engagement surveys.
Community Giving
Throughout our 97-year history, giving back to our communities has been woven through La-Z-Boy’s culture following the
example set by our founders. When it comes to giving, our vision is to improve the lives of others by developing exceptional
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programs based on partnerships where employees feel a sense of connection and pride in their communities and our mission is
to enhance the quality of life in the communities in which we live and serve through leadership, financial contributions, and
volunteer efforts.
Our philanthropic initiatives include the La-Z-Boy Foundation, local community involvement, disaster relief, and our signature
charity, Ronald McDonald House Charities. La-Z-Boy is honored to be the official furniture provider for Ronald McDonald
House Charities. Throughout fiscal 2024, La-Z-Boy has continued our support of providing furniture and financial
contributions to non-profit organizations with special emphasis on arts/culture/humanities, community enrichment, education,
and health and human services.
Our employees further exemplify the spirit of giving through leadership and volunteer efforts in their own communities, and for
numerous non-profit organizations, which include the United Way, Relay for Life, Habitat for Humanity, and others. The
Company participates in the "The La-Z-Boy Summer of Caring" during the summer and "The La-Z-Boy Season of Caring"
during the winter, seasonal initiatives that encourage and support employee volunteerism.
Internet Availability
Our Forms 10-K, 10-Q, 8-K, proxy statements on Schedule 14A, and amendments to those reports are available free of charge
through links on our internet website, www.la-z-boy.com, as soon as reasonably practicable after they are electronically filed
with, or furnished to, the Securities and Exchange Commission ("SEC"). Copies of any materials we file or furnish to the SEC
can also be obtained free of charge through the SEC's website at www.sec.gov. The information on our website is not
incorporated by reference into this report or any other reports we file with, or furnish to, the SEC.
ITEM 1A.
RISK FACTORS.
Our business is subject to a variety of risks. Any of the following risks could materially and adversely affect our business,
results of operations, financial condition, 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.
Macroeconomic, Market and Strategic Risk Factors
Declines in certain economic and market conditions that impact consumer confidence and consumer spending, or cause
further disruption in our business, could negatively impact our sales, results of operations and liquidity.
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 affect general consumer spending, resulting in a decrease in the overall demand for such discretionary items,
including home 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, 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.
During the COVID-19 pandemic, like many businesses, we experienced significant disruption in our supply chain resulting in
unprecedented increases in material and freight costs, as well as significant unavailability or delay of parts or finished goods.
Future significant disruptions of this nature in our supply chain, in the furniture industry, within our independent dealer network
or third-party wholesalers, or other unusual developments could cause significant disruption to our business and negatively
affect our results.
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Loss of market share and other financial or operational difficulties due to competition would likely result in a decrease in
our sales, earnings, and liquidity.
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, service to the customer, 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 differentiate our products (through
styling, finish, and other 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 online 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-commerce retailer and manufacturer of upholstered furniture. Joybird sells 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 or liquidity.
Operational Risk Factors
Our business and our reputation could be adversely affected by cybersecurity incidents and the failure to protect sensitive
employee, customer, consumer, vendor or Company data.
Cyber-attacks designed to gain access to and extract sensitive information or otherwise affect or compromise the
confidentiality, integrity, and availability of information, including phishing attempts, denial of service attacks, and malware or
ransomware incidents, have occurred over the last several years at a number of major U.S. companies and have resulted in,
among other things, the unauthorized release of confidential information, material business disruptions, and negative brand and
reputational impacts. Despite widespread recognition of the cyber-attack threat and improved data protection methods, cyber-
attacks on organizations continue to be sophisticated, persistent, and ever-changing, making it difficult to prevent and detect
these attacks. Similar to many other retailers, we receive, process, store, use and share data about our customers, consumers,
employees, contractors, suppliers, vendors and others, including payment information and personally identifiable information,
as well as other personal, confidential and proprietary information. Additionally, we rely on third-party service providers to
execute certain business processes and maintain certain information technology systems and infrastructure, and we supply such
third-party providers with the data required for those services.
During fiscal 2024, we were subject, and in the future, we will likely continue to be subject, to attempts to breach the security
of our networks and IT infrastructure through cyber-attack, malware, ransomware, computer viruses, phishing attempts, social
engineering and other means of unauthorized access. A breach of our systems, either internally, through potential vulnerabilities
of our employees' home networks, or at our third-party technology service providers, could adversely affect our business
operations and result in the loss or misappropriation of, and unauthorized access to, sensitive information. As a result of a
breach involving the unauthorized release of sensitive information, our reputation could be adversely affected resulting in a loss
of our existing customers and potential future customers, or we could face claims, demands, lawsuits, regulatory investigations
and could incur fines, penalties, or become subject to injunctive relief imposing additional compliance obligations. An
electronic security breach resulting in the unauthorized release of sensitive data from our information systems or those of our
third-party service providers could also materially increase the costs we already incur to protect against these risks, including
costs associated with insurance coverage and potential remediation measures. We continue to balance the additional risk with
the cost to protect us against a breach and have taken steps to ensure that losses arising from a breach would be covered in part
by insurance that we carry, although the costs, potential monetary damages, and operational consequences of responding to
cyber incidents and implementing remediation measures may be in excess of our insurance coverage or be not covered by our
insurance at all.
We have implemented a hybrid work approach for certain employees. Although we continue to implement strong physical and
cybersecurity measures to ensure that our business operations remain functional and to ensure uninterrupted service to our
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customers, our systems and our operations remain vulnerable to cyberattacks and other disruptions due to the fact that a portion
of our employees work remotely and we cannot be certain that our mitigation efforts will be effective.
We rely extensively on information technology systems to process transactions, summarize results, and manage our business
and that of certain independent dealers. Disruptions in both our primary and back-up systems could adversely affect our
business and results of operations.
Our primary and back-up information technology systems are subject to damage or interruption from power outages,
telecommunications failures, hardware and software failures, computer hacking, cybersecurity breaches, computer viruses,
phishing attempts, cyber-attacks, malware and ransomware attacks, errors by employees, natural disasters, adverse weather, and
similar events. We also rely on technology systems and infrastructure provided by third-party service providers, who are subject
to these same cyber and other risks. Interruptions of our critical business information technology systems or failure of our back-
up systems could result in longer production times or negatively impact customers resulting in damage to our reputation and a
reduction in sales. If our critical information technology systems or back-up systems were damaged or ceased to function
properly, we might have to make a significant investment to repair or replace them. If a ransomware attack or other
cybersecurity breach occurs, either internally or at our third-party technology service providers, it is possible we could be
prevented from accessing our data which may cause interruptions or delays in our business, cause us to incur remediation costs
or require us to pay ransom to a hacker which takes over our systems, or damage our reputation. While we carry insurance that
would mitigate losses from certain damage, interruption, or breach of our information technology systems, insurance may be
insufficient to compensate us fully for potential significant losses.
Further, information systems of our suppliers or service providers may be vulnerable to attacks by hackers and other security
breaches, including computer viruses and malware, through the internet, email attachments and persons with access to these
information systems. If our suppliers or service providers were to experience a system disruption, attack or security breach that
impacts a critical function, it could result in disruptions in our supply chain, the loss of sales and customers, potential liability
for damages to our customers, reputational damage and incremental costs, which could adversely affect our business, results of
operations and profitability.
Inability to maintain and enhance our brand and respond to changes in our current and potential consumers' tastes and
trends in a timely manner could adversely affect our business and results of operations.
The success of our business depends on our ability to maintain and enhance our brands to increase our business by retaining
consumers and attracting new ones. Furniture product is 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 avenues 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. We attempt to minimize these risks by maintaining strong advertising
and marketing campaigns promoting our brands. We also attempt to minimize our risk by updating 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.
Fluctuations in the price, availability and quality of raw materials could cause delays that could result in our inability to
timely provide goods to our customers. Such fluctuations have increased, and could continue to increase, our cost and
therefore decrease our earnings.
In manufacturing furniture, we use various types of wood, fabrics, leathers, 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 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
13
epidemics), labor disputes, possible acts of terrorism, port and canal blockages and congestion, and availability of shipping
containers have and could in the future result in delays in shipments or the absence of required raw materials or components
from any of our suppliers.
A change in the financial condition of our domestic and foreign fabric 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.
Changes in the availability and cost of foreign sourcing and economic and political uncertainty in countries outside of the
United States in which we operate or from which we purchase product, could adversely affect our business and results of
operations.
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, 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
sets are primarily purchased from suppliers that operate in China and the majority of our fabric products are also purchased
from suppliers that operate in China. One of these primary suppliers provides both cut-and-sewn leather sets and fabric
products. As 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 the quality of their product may lead us to reject it, causing
disruptions in our domestic operations and delays in shipments to our customers.
Financial Risk Factors
Our current retail markets and other markets that we may enter in the future may not achieve the growth and profitability
we anticipate. We could incur charges for the impairment of long-lived assets, goodwill, or other intangible assets if we fail
to meet our earnings expectations for these markets.
From time to time we may acquire independent La-Z-Boy Furniture Galleries® stores or other retail 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 acquisition, remodeling, and relocation. If we do not meet our sales or earnings expectations
for these stores or businesses, we have in the past incurred and may in the future incur 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.
We also operate a wholesale sales office that is responsible for distributing La-Z-Boy products in the United Kingdom and
Ireland, as well as a manufacturing business in the United Kingdom which was acquired in fiscal 2022. Our assets include
goodwill and other intangible assets, including acquired customer relationships, in connection with our acquisition of the
wholesale business. If we do not meet our sales or earnings expectations for these operations, we may incur charges for the
impairment of goodwill or the impairment of our intangible assets.
We may require funding from external sources, which may not be available at the levels we require or may cost more than
we expect, and as a result, our expenses and results of operations could be negatively affected.
We regularly review and evaluate our liquidity and capital needs. We believe that our cash and cash equivalents, short-term
investments, cash from operations, and amounts available under our credit facility will be sufficient to finance our operations
and expected capital requirements for at least the next 12 months.
In the event that we draw on our credit facility, outstanding amounts may become immediately due and payable upon certain
events of default, including a failure to comply with the financial covenants in the credit agreement—a consolidated net lease
adjusted leverage ratio requirement and a consolidated fixed-charge coverage ratio requirement—or with certain other
affirmative and negative covenants in the credit agreement. If we are unable to access additional credit at the levels we require,
or the cost of credit is greater than expected, it could adversely affect our results of operations or financial condition.
14
Due to the nature of our business and our payment terms, we may not be able to collect amounts owed to us by customers,
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, those evaluations may not prevent
uncollectible trade accounts receivable. 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 declares bankruptcy or closes stores, we may have difficulty collecting amounts owed to us by
these customers, which could adversely affect our sales, earnings, financial condition and liquidity.
Legal and Regulatory Risk Factors
Our business and our reputation could be adversely affected by the failure to comply with or the cost of compliance with
evolving regulations relating to our obligation to protect sensitive employee, customer, consumer, vendor or Company data.
We receive, process, store, use and share data about our customers, consumers, employees, contractors, suppliers, vendors and
others, including payment information and personally identifiable information, as well as other personal, confidential and
proprietary 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.
Changes in the domestic or international regulatory environment or trade policies could adversely affect our business and
results of operations.
We are subject to numerous laws and regulations, including those relating to labor and employment, customs, sanctions, truth-
in-advertising, consumer protection, e-commerce, privacy, health and safety, real estate, environmental and zoning and
occupancy, intellectual property and other laws and regulations that regulate retailers, manufacturers or otherwise govern our
business. Changes in laws and regulations in the United States or internationally may require us to modify our current business
practices or otherwise increase our costs of compliance, which could adversely affect our results of operations.
Because we manufacture components and finished goods in Mexico and the United Kingdom, purchase components and
finished goods manufactured in foreign countries, including China and Vietnam, participate in consolidated joint ventures in
Thailand, and operate a wholesale and retail business in Canada, 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, including certain furniture, accessories, furniture parts, and
raw materials which 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
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,
15
including our sales and margins, could be adversely affected by the imposition in Mexico, the United Kingdom or other foreign
countries of import bans, quotas, and increases in tariffs.
Changes in regulation of our international operations, including anti-corruption laws and regulations, could adversely
affect our business and results of operations.
Our operations outside of the United States and sale of product in various countries subject us to U.S. and foreign laws and
regulations, including but not limited to the UK Bribery Act 2010, the U.S. Foreign Corrupt Practices Act, the U.S. Export
Administration Act, and other anti-bribery and anti-corruption statutes. These laws and regulations include prohibitions on
improper payments to government officials, restrictions on where we can do business, what products we can supply to certain
countries, and what information we can provide to certain governments. Violations of these laws, which are complex,
frequently changing, and are often subject to varying interpretation and enforcement, may result in civil or criminal penalties or
sanctions that could have a significant adverse effect on our business and results of operations. It is possible that our employees,
contractors, or agents could violate our policies and procedures or otherwise fail to comply with these laws and regulations.
We may be subject to product liability and other claims or undertake to recall one or more products, which could adversely
affect our business, results of operations and reputation.
Millions of our products, sold over many years, are currently used by consumers. We have voluntarily recalled products in the
past, and while none of those recalls has resulted in a material expense or other significant adverse effect, a significant product
recall or other product-related litigation could result in future additional expense, penalties, and injury to our brands and
reputation, and adversely affect our business and results of operations. In addition, we are involved in lawsuits, claims and
proceedings incident to the ordinary course of our business. Litigation is inherently unpredictable. Any claims against us,
whether meritorious or not, could result in costly litigation that could adversely affect our business and results of operations.
Although we maintain liability insurance in amounts that we believe are reasonable, in most cases, we are responsible for large,
self-insured retentions and defense costs. We may not be able to maintain such insurance on acceptable terms, if at all in the
future, or that product liability or other claims will not exceed the amount of insurance coverage, or that all such matters would
be covered by our insurance. As a result, product liability and other claims could have a material adverse effect on our business,
results of operations and financial condition.
General Risk Factors
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, any one of which could
adversely affect our business and results of operations.
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® stores
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 make certain assumptions, judgments and estimates that impact the amounts reported in our consolidated financial
statements, which, if not accurate, may impact our financial results.
Certain assumptions, judgments and estimates impact amounts reported in our consolidated financial statements, including but
not limited to, inventories, goodwill, intangible assets, product warranty liabilities, insurance and legal-related liabilities, and
income taxes. To derive our assumptions, judgments and estimates, we use historical experience and various other factors that
we believe are reasonable as of the date we prepare our consolidated financial statements. Our goodwill, resulting from certain
acquisitions, is based on the expected future performance of the operations acquired and at least annually, we reassess the
goodwill for impairment. Changes in business conditions or other events could materially change the projection of future cash
flows or the discount rate we used in the fair value calculation of the goodwill. Actual results could differ materially from our
estimates, and such differences may impact our financial results.
16
We may not be able to recruit and retain key employees and skilled workers in a competitive labor market or we could
experience continued increases in labor costs, which could adversely affect our business and results of operations.
If we cannot successfully recruit and retain key employees and skilled workers or we experience the unexpected loss of those
employees, our operations may be negatively impacted. A shortage of qualified personnel along with continued labor cost
inflation may require us to further enhance our compensation in order to compete effectively in the hiring and retention of
qualified employees.
Changes in tax policies could adversely affect our business and results of operations.
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.
Our strategy, goals and disclosures related to Environmental, Social, and Governance ("ESG") matters expose us to
numerous risks, including risks to our reputation and stock price.
There has been increased focus from our stakeholders, including consumers, employees, and investors, on our ESG practices.
We have established goals and other objectives related to ESG matters. These goals reflect our current plans and are not
guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these goals and objectives
present numerous operational, reputational, financial, legal, and other risks, any of which could have a material negative impact,
including on our reputation, stock price, and results of operation. We could also incur additional costs and require additional
resources to implement various ESG practices to make progress against our public goals and to monitor and track our
performance with respect to such goals.
The standards for tracking and reporting on ESG matters are relatively new and continue to evolve. Collecting, measuring, and
reporting ESG information and metrics can be difficult and time consuming. Our selected disclosure framework or standards
may need to be changed from time to time, which may result in a lack of consistent or meaningful comparative data from period
to period. In addition, our interpretation of reporting frameworks or standards may differ from those of others and such
frameworks or standards may change over time, any of which could result in significant revisions to our goals or reported
progress in achieving such goals.
Our ability to achieve any ESG-related goal or objective is subject to numerous risks, many of which are outside of our control,
including: the availability and cost of low-or non-carbon-based energy sources and technologies, evolving regulatory
requirements affecting ESG standards or disclosures, the availability of vendors and suppliers that can meet our sustainability,
diversity and other standards, and the availability of raw materials that meet and further our sustainability goals. If our ESG
practices do not meet evolving consumer, employee, investor or other stakeholder expectations and standards or our publicly-
stated goals, then our reputation, our ability to attract or retain employees and our competitiveness, including as an investment
and business partner, could be negatively impacted. Furthermore, if our competitors’ ESG performance is perceived to be better
than ours, potential or current customers and investors may elect to do business with our competitors instead, and our ability to
attract or retain employees could be negatively impacted. Our failure, or perceived failure, to pursue or fulfill our goals, targets,
and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also expose us to
government enforcement actions and private litigation.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C.
CYBERSECURITY.
Risk Management and Strategy
The Company has developed an information security program to address risks from cybersecurity threats. The program includes
policies and procedures that identify how security measures and controls are developed, implemented, and maintained. A risk
assessment is conducted annually. The risk assessment along with risk-based analysis and judgment are used to select security
controls to address risks. During this process, the following factors, among others, are considered: likelihood and severity of
17
risk, impact on the Company and others if a risk materializes, feasibility and cost of controls, and impact of controls on
operations and others. Specific controls that are used to some extent by the Company include endpoint threat detection and
response (EDR), identity and access management (IAM), privileged access management (PAM), logging and monitoring
involving the use of security information and event management (SIEM), multi-factor authentication (MFA), firewalls and
intrusion detection and prevention, and vulnerability and patch management.
Third-party security firms are used by the Company in different capacities to provide or operate some of these controls and
technology systems. Third parties are also used to conduct assessments, such as vulnerability scans and penetration testing of
the Company and its systems. The Company uses a variety of processes to address cybersecurity threats related to the use of
third-party technology and services.
The Company has a written incident response plan ("IRP") and conducts tabletop exercises to enhance incident response
preparedness. Business continuity and disaster recovery plans are used to prepare for the potential for a disruption in technology
we rely on. The Company is a member of an industry cybersecurity intelligence and risk sharing organization. Certain
employees, including those with access to Company-provided e-mail accounts, undergo security awareness training when hired
and annually.
The Company has an enterprise risk management committee comprised of key business and functional leaders to address
enterprise risks, and cybersecurity is a risk category addressed by that group. In addition to assessing major risks, management
identifies and monitors such risks. At least annually, the Company’s executive leadership reviews with the Board of Directors
the major risks identified in the enterprise risk management process, as well as the steps identified to mitigate such risks. Each
of the business and functional leaders responsible for the management of these identified risks also regularly discuss with the
Board changes in assessment of these risks and mitigation plans.
The Company (or third parties it relies on) may not be able to fully, continuously, and effectively implement security controls
as intended. As described above, we utilize a risk-based approach and judgment to determine the security controls to implement
and it is possible we may not implement appropriate controls if we do not recognize or underestimate a particular risk. In
addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate risks. And
events, when detected by security tools or third parties, may not always be immediately understood or acted upon.
The Company is not aware of any cybersecurity threat or any material cybersecurity incident to date, including as a result of
any previous cybersecurity incidents, that has materially affected or is reasonably likely to materially affect us, including our
business strategy, results of operations, or financial condition.
Additionally, in Item 1A Risk Factors under the heading of "Operational Risk Factors," forward-looking cybersecurity threats
that could have a material impact on the Company are discussed. Those sections of Item 1A should be read in conjunction with
this Item 1C.
Governance
The Chief Information Officer ("CIO") is the management position with primary oversight responsibility for the team
responsible for the development, operation, and maintenance of our information security program. Pursuant to the Company’s
written IRP, the CIO is a member of the executive incident response team and severity classifications in the IRP are used to
escalate matters to the executive incident response team. The CIO has more than 20 years of comprehensive IT experience
across a breadth of technologies. The CIO is also a member of the Company’s executive leadership team and meets regularly
with the CEO, CFO and other members of the executive leadership team. The CIO reports directly to the Board, at least twice a
year, on cybersecurity risks and strategy and attends Board meetings to be available to discuss cybersecurity matters with the
Board. Oversight of the information security program at the Board level sits with the Audit Committee. The CIO reports to the
Audit Committee on risks and internal controls related to cybersecurity and information technology and systems at least
annually and attends quarterly Committee meetings to be available to discuss such matters with the Audit Committee.
18
ITEM 2.
PROPERTIES.
Properties owned or leased at April 27, 2024 by segment:
(Amounts in millions)
Square Feet
Wholesale
9.2
Retail
3.8
Corporate and Other
0.6
Active manufacturing, warehousing and distribution centers, office, showroom and retail facilities
13.6
Idle facilities
0.1
Total property
13.7
Our active facilities and retail locations are located across the United States and in Mexico, Thailand, Canada, China, Hong
Kong, and the United Kingdom. We own our world headquarters building in Monroe, Michigan and all of our domestic
manufacturing plants with the exception of our Newton, Mississippi facility, which is leased. A joint venture in which we
participate owns our Thailand plant. We lease the majority of our retail stores and showrooms, warehouses and distribution
centers, certain office space and our manufacturing facilities in Mexico and the United Kingdom. For information on operating
lease terms for our properties, refer to Note 6, Leases, to our consolidated financial statements, which is included in Item 8,
Financial Statements and Supplementary Data, of this report.
ITEM 3.
LEGAL PROCEEDINGS.
We are involved in various legal proceedings arising in the ordinary course of our business. Based on a review of all currently
known facts and our experience with previous legal matters, we have recorded expense in respect of probable and reasonably
estimable losses arising from legal matters and we currently do not believe it is probable that we will have any additional loss
that would be material to our consolidated financial statements.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
19
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Listed below are the names, ages and current positions of our executive officers and, if they have not held those positions for at
least five years, their former positions during that period. All executive officers serve at the pleasure of the board of directors.
Melinda D. Whittington, age 57
•
President and Chief Executive Officer since April 2021
•
Senior Vice President and Chief Financial Officer from June 2018 to April 2021
Robert G. Lucian, age 61
•
Senior Vice President and Chief Financial Officer since April 2021
•
Vice President, Finance from January 2019 to April 2021
Robert Sundy, age 48
•
President, La-Z-Boy Brand and Chief Commercial Officer since April 2023
•
Senior Vice President and Chief Commercial Officer from January 2021 to April 2023
•
Head of Brand Marketing, Licensing and Creative Studios – North American Region of Whirlpool Corporation, a
manufacturer and marketer of home appliances, from April 2016 to January 2021
Rebecca M. Reeder, age 54
•
President, Retail La-Z-Boy Furniture Galleries since April 2023
•
Senior Vice President, Retail of Chico's FAS, a women's clothing and accessories retailer, from April 2018 to April 2023
Terrence J. (TJ) Linz, age 42
•
President, Portfolio Brands since April 2023
•
President, La-Z-Boy Retail Division from April 2019 to April 2023
Carol Y. Lee, age 52
•
Vice President and Chief Information Officer since June 2022
•
VP/CIO, Information Technology of Consolidated Hospitality Supplies, LLC, an operating supplies and equipment
provider for hospitality distribution, from August 2021 to June 2022
•
Senior Director, Global Digital Technology Solutions of American Hotel Register Company, a supplier brand of
hospitality products and services, from July 2019 to August 2021
•
Director of Application Development of American Hotel Register Company, a supplier brand of hospitality products and
services, from April 2016 to July 2019
Michael A. Leggett, age 51
•
Senior Vice President and Chief Supply Chain Officer since May 2022
•
Vice President and Chief Supply Chain Officer from December 2021 to April 2022
•
Vice President Global Supply Chain Operations of Dentsply Sirona Inc., a dental products and technologies
manufacturer, from February 2019 to December 2021
Raphael Z. Richmond, age 54
•
Vice President, General Counsel and Chief Compliance Officer since April 2021
•
Senior Director of Corporate Compliance and Employment Law from April 2019 to April 2021
Katherine E. Vanderjagt, age 42
•
Vice President and Chief Human Resources Officer since December 2018
20
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
Dividend Information
Although we expect to continue to pay quarterly dividends, the payment of future cash dividends is within the discretion of our
board of directors and will depend on our earnings, capital requirements and operating and financial condition, as well as excess
availability under the credit agreement, among other factors.
Shareholders
Our common stock trades on the New York Stock Exchange under the trading symbol "LZB". We had approximately 1,568
registered holders of record of La-Z-Boy's common stock as of June 10, 2024. A substantially greater number of holders of La-
Z-Boy common stock are "street name" or beneficial holders, whose shares of record are held by banks, brokers, and other
financial institutions.
Performance Graph
The graph below shows the cumulative total return for our last five fiscal years that would have been realized (assuming
reinvestment of dividends) by an investor who invested $100 on April 27, 2019, in our shares of common stock, in the S&P 500
Composite Index, and in the Dow Jones U.S. Furnishings Index.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
La-Z-Boy Incorporated
S&P 500 Composite Index
Dow Jones U.S. Furnishings Index
4/27/2019
4/25/2020
4/24/2021
4/30/2022
4/29/2023
4/27/2024
40
80
120
160
200
Company/Index/Market
4/27/2019
4/25/2020
4/24/2021
4/30/2022
4/29/2023
4/27/2024
La-Z-Boy Incorporated
$
100.00
$
66.09
$
136.87
$
84.77
$
95.14
$
112.26
S&P 500 Composite Index
$
100.00
$
98.44
$
147.49
$
147.87
$
151.80
$
188.57
Dow Jones U.S. Furnishings Index
$
100.00
$
65.78
$
164.79
$
114.92
$
113.64
$
121.08
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Our board of directors has authorized the repurchase of Company stock. We spent $12.8 million on discretionary repurchases in
the fourth quarter of fiscal 2024 to repurchase 0.3 million shares. During fiscal 2024, we spent $52.8 million to repurchase 1.6
million shares and as of April 27, 2024, 5.7 million shares remained available for repurchase pursuant to the board
authorization. With the operating cash flows we anticipate generating in fiscal 2025, we expect to continue repurchasing
Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.
21
The following table summarizes our repurchases of Company stock during the quarter ended April 27, 2024 and includes shares
purchased from employees to satisfy their withholding tax obligations upon vesting of restricted shares:
(Amounts in thousands, except per share data)
Total number of
shares
repurchased (1)
Average price
paid per share
Total number of
shares repurchased
as part of publicly
announced plan (2)
Maximum number
of shares that may
yet be repurchased
under the plan
Fiscal February (January 28 - March 2, 2024)
— $
—
—
6,011
Fiscal March (March 3 - March 30, 2024)
346 $
36.79
346
5,665
Fiscal April (March 31 - April 27, 2024)
1 $
33.54
—
5,665
Fiscal Fourth Quarter of 2024
347
346
5,665
(1)
In addition to the 346,463 shares we repurchased during the quarter as part of our publicly announced, board-authorized plan described above, this
column includes 911 shares we repurchased from employees to satisfy their withholding tax obligations upon vesting of restricted shares with an
average share price of $34.21.
(2)
On October 28, 1987, our board of directors announced the authorization of the plan to repurchase Company stock. The plan originally authorized
1.0 million shares, and since October 1987, 33.5 million shares have been added to the plan for repurchase. The authorization has no expiration date.
Recent Sales of Unregistered Securities
There were no sales of unregistered securities during fiscal year 2024.
ITEM 6.
RESERVED.
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 2024 and 2023 fiscal years included 52 weeks, whereas fiscal year 2022 included 53 weeks.
Introduction
Our Business
We are the leading global producer of reclining chairs and one of the largest manufacturer/distributors of residential furniture in
the United States. The La-Z-Boy Furniture Galleries® 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.
For additional information about our business, refer to Part I, Item 1, Business of this report.
Century Vision Strategy
Our goal is to deliver value to our shareholders over the long term by executing Century Vision, our strategic plan for growth to
our centennial year in 2027 and beyond, 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
22
on-trend upholstered furniture, particularly in the motion and reclining categories. We launched our new brand
campaign and marketing platform in fiscal 2024, Long Live the Lazy, with compelling, consumer inspired, messaging
designed to increase recognition and consideration of the brand. We expect this new messaging will enhance the
appeal of our brand with a broader consumer base. 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.
•
Growing our La-Z-Boy Furniture Galleries® 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 Furniture Galleries® stores and opening new La-Z-
Boy Furniture Galleries® stores where we see opportunity for growth, or where we believe we have opportunities for
further market penetration. Over the last five years, as a result of opening new company-owned stores and acquiring
independent La-Z-Boy Furniture Galleries® stores, we increased our ownership percentage in this store network from
44% to 53%.
•
Expanding the reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many
channels including the La-Z-Boy Furniture Galleries® store network and the La-Z-Boy Comfort Studio® locations, our
store-within-a-store format. 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, or La-Z-Boy Comfort Studio®, experience and provide design services. In addition to our
branded distribution channels, approximately 2,200 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. During fiscal 2019, we purchased
Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture with a direct-to-consumer model. We
believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling
profitable growth through an increase in digital marketing spend to drive awareness and customer acquisition, ongoing
investments in technology, an expansion of product assortment, and providing additional small-format stores in key
urban markets to enhance our consumers' omni-channel experience.
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 and employees, and by delivering a human-centered employee
experience. Through our Century Vision strategic plan, we have several initiatives focused on enhancing these
capabilities with a consumer-first focus.
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 187 company-owned La-Z-
Boy Furniture Galleries® 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 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
23
furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood)
furniture such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment
sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England
Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.
•
Corporate and Other. Corporate and Other includes the shared costs for corporate functions, including human
resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with
companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be
other business activities and have aggregated them with our other insignificant operating segments, including our
global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture
such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture such as
occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website,
www.joybird.com and through small-format stores in key urban markets. 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 2024 as compared with fiscal year 2023. 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 2023 Annual Report on Form 10-K, filed with the
SEC on June 20, 2023, for an analysis of the fiscal year 2023 results as compared to fiscal year 2022.
Fiscal Year 2024 and Fiscal Year 2023
Supply Chain Optimization
During the third quarter of fiscal 2023, we made the decision to close our manufacturing facility in Torreón, Mexico as part of
our initiative to drive improved efficiencies through optimized staffing levels within our plants. As a result of this action,
charges were recorded within the Wholesale segment in the third and fourth quarters of fiscal 2023, totaling $9.2 million in
selling, general, and administrative ("SG&A") expense for the impairment of various assets, primarily long-lived assets, and
$1.6 million in cost of sales, primarily related to severance. During the first quarter of fiscal 2024, we terminated our lease on
the Torreón facility and recognized a $1.2 million gain in SG&A expense within the Wholesale segment related to the
settlement of our lease obligation on the previously impaired long-lived assets.
During the second quarter of fiscal 2024, we announced further actions intended to drive efficiencies and optimize our
manufacturing capacity in our global supply chain operations. As part of this initiative, we made the decision to shift upholstery
production from our Ramos, Mexico operations to our other upholstery plants and relocate our cut and sew operations back to
Ramos, Mexico, resulting in the permanent closure of our leased cut and sew facility in Parras, Mexico, which is expected to be
completed by the end of the first quarter of fiscal 2025. As a result of these actions, charges were recorded within the Wholesale
segment in the second, third, and fourth quarters of fiscal 2024, totaling $4.3 million in cost of sales, primarily related to
severance, and $4.2 million in SG&A expense for the accelerated depreciation and impairment of fixed assets.
La-Z-Boy Incorporated
(52 weeks)
(52 weeks)
(FY24 vs FY23)
(Amounts in thousands, except percentages)
4/27/2024
4/29/2023
% Change
Sales
$ 2,047,027 $ 2,349,433
(12.9) %
Operating income
150,796
211,439
(28.7) %
Operating margin
7.4 %
9.0 %
Sales
Consolidated sales in fiscal 2024 decreased $302.4 million, or 13%, compared with the prior year. Sales in fiscal 2023 were
fueled by the delivery of a significant backlog resulting from heightened demand in prior periods. Absent this backlog, sales
were relatively flat in fiscal 2024 compared with fiscal 2023, as incremental sales from our Retail acquisitions and the addition
of new major wholesale dealers were essentially offset by selective pricing taken on products and delivery services, along with
promotional actions, to maintain competitiveness.
24
Operating Margin
Operating margin, which is calculated as operating income as a percentage of sales, decreased 160 basis points in fiscal 2024
compared with the prior year.
•
Gross margin increased 200 basis points during fiscal 2024 compared with fiscal 2023.
◦
Lower input costs, led by reduced commodity prices and improved sourcing, drove an increase in gross
margin in fiscal 2024 compared with the prior year.
◦
Gross margin further benefited from a favorable shift in product mix within our Retail segment toward higher
margin products.
◦
Partially offsetting the benefits above, plant inefficiencies resulting from lower production volume and
transition costs related to our supply chain optimization initiative in Mexico drove a decline in gross margin
during fiscal 2024 compared with the prior year
◦
Gross margin further decreased from selective pricing and promotional actions taken in fiscal 2024 to
maintain competitiveness.
•
While selling, general, and administrative ("SG&A") expenses were down $22.4 million in fiscal 2024 compared with
the prior year, SG&A expenses as a percentage of sales increased 360 basis points over the same period, primarily due
to lower delivered sales relative to fixed costs.
We explain these items further when we discuss each segment's results later in this Management's Discussion and Analysis.
Retail Segment
(52 weeks)
(52 weeks)
(FY24 vs FY23)
(Amounts in thousands, except percentages)
4/27/2024
4/29/2023
% Change
Sales
$
855,126 $
982,043
(12.9) %
Operating income
111,682
161,571
(30.9) %
Operating margin
13.1 %
16.5 %
Sales
The Retail segment's sales decreased $126.9 million, or 13%, in fiscal 2024 compared with fiscal 2023, primarily due to the
adverse comparison to historic sales levels in fiscal 2023, which were fueled by the delivery of previously built backlog. This
decrease in sales was partially offset by a $25.2 million increase in sales related to our fiscal 2024 retail store acquisitions and
the full-year impact of our fiscal 2023 retail store acquisitions.
Written same-store sales decreased 3% in fiscal 2024 compared with fiscal 2023, primarily due to softer industry-wide demand
as a result of a challenging macroeconomic environment. Same-store sales include the sales of all currently active stores which
have been open and company-owned for each comparable period.
Operating Margin
The Retail segment's operating margin decreased 340 basis points in fiscal 2024 compared with fiscal 2023.
•
Gross margin increased 120 basis points during fiscal 2024 compared with the prior year, primarily due to favorable
shift in product mix towards higher margin products.
•
While SG&A expenses decreased during fiscal 2024 compared with the prior year, SG&A expenses as a percentage of
sales increased 460 basis points over the same period, primarily due to lower delivered sales relative to selling
expenses and fixed costs, mainly occupancy expenses.
25
Wholesale Segment
(52 weeks)
(52 weeks)
(FY24 vs FY23)
(Amounts in thousands, except percentages)
4/27/2024
4/29/2023
% Change
Sales
$ 1,048,431 $ 1,215,429
Intersegment sales
398,847
474,819
Total sales
1,447,278
1,690,248
(14.4) %
Operating income
99,373
115,215
(13.7) %
Operating margin
6.9 %
6.8 %
Sales
The Wholesale segment's sales decreased 14%, or $243.0 million, in fiscal 2024 compared with fiscal 2023. The decrease in
sales primarily reflects a decline in delivered unit volume reflecting the absence of the significant backlog built from prior
periods that delivered throughout fiscal 2023, combined with lower furniture demand across the entire industry due to a
challenging macroeconomic environment. To a lesser extent, sales also decreased in fiscal 2024 compared with fiscal 2023 as a
result of selective pricing on products and delivery services, along with promotional actions, taken to maintain competitiveness.
Operating Margin
The Wholesale segment's operating margin increased 10 basis points in fiscal 2024 compared with fiscal 2023.
•
Gross margin increased 210 basis points during fiscal 2024 compared with fiscal 2023.
◦
Lower input costs, led by reduced commodity prices and improved sourcing, drove a 390 basis point increase
in gross margin during fiscal 2024 compared with the prior year.
◦
Partially offsetting the item above, plant inefficiencies resulting from lower production volume and transition
costs related to our supply chain optimization initiative in Mexico led to a 90 basis point decrease in gross
margin during fiscal 2024 compared with the prior year.
◦
Gross margin further decreased 90 basis points in fiscal 2024 compared with the prior year, from selective
pricing and promotional actions taken to maintain competitiveness.
•
SG&A expense as a percentage of sales increased 200 basis points during fiscal 2024 compared with fiscal 2023.
◦
While SG&A expenses decreased in fiscal 2024 compared with the prior year, SG&A expenses as a
percentage of sales increased, primarily due to reduced fixed cost leverage from lower delivered sales.
◦
Additionally, higher marketing expense in support of our Long Live the Lazy campaign launch drove a 60
basis point increase in SG&A expense as a percentage of sales in fiscal 2024 compared with the prior year.
Investments in this campaign support all La-Z-Boy branded products, including those sold through our Retail
segment.
Corporate and Other
(52 weeks)
(52 weeks)
(FY24 vs FY23)
(Amounts in thousands, except percentages)
4/27/2024
4/29/2023
% Change
Sales
$
153,769 $
166,190
(7.5) %
Intercompany eliminations
(409,146)
(489,048)
(16.3) %
Operating loss
(60,259)
(65,347)
(7.8) %
Sales
Corporate and Other sales decreased $12.4 million in fiscal 2024 compared with fiscal 2023, primarily due to a $7.8 million, or
5% decrease from Joybird, which contributed $138.6 million in sales in fiscal 2024. Joybird's overall delivered volume declined
in fiscal 2024, largely due to softer demand in the furniture and home furnishings industry experienced over the last year.
Written sales for Joybird were down 8% in fiscal 2024 compared with fiscal 2023, reflecting the industry-wide demand
challenges noted above.
26
Intercompany eliminations decreased in fiscal 2024 compared with fiscal 2023 due to lower sales from our Wholesale segment
to our Retail segment, driven by lower sales in the Retail segment.
Operating Loss
Our Corporate and Other operating loss decreased $5.1 million in fiscal 2024 compared with fiscal 2023, primarily from
improved Joybird operating performance. This was partially offset by unfavorable intercompany inventory profit elimination
adjustments, lower operating profit from our global trading company in Hong Kong and a comparative decrease in fiscal 2024
related to an $0.8 million gain recognized in fiscal 2023 to reduce the fair value of the Joybird contingent consideration liability
based on our projections at that time.
Non-Operating Income (Expense)
Interest Income
Interest income was $8.8 million higher in fiscal 2024 compared with fiscal 2023. The increase in interest income was primarily
driven by higher interest rates on higher cash balances.
Other Income (Expense), Net
Other income (expense), net was $0.1 million of expense in fiscal 2024 compared with $11.8 million of expense in fiscal 2023.
The expense in fiscal 2023 was primarily due to a $10.3 million impairment of our investments in a privately held start-up
company combined with exchange rate losses.
Income Taxes
Our effective income tax rate was 24.8% for fiscal 2024 and 26.2% for fiscal 2023. 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 2025 contractual obligations.
We had cash, cash equivalents and restricted cash of $341.1 million at April 27, 2024, compared with $346.7 million at
April 29, 2023. Included in our cash, cash equivalents and restricted cash at April 27, 2024, is $80.7 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 $6.8 million at April 27, 2024, compared with $11.6 million at April 29, 2023.
The following table illustrates the main components of our cash flows:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
Cash Flows Provided By (Used For)
Net cash provided by operating activities
$
158,127 $
205,167
Net cash used for investing activities
(81,554)
(70,120)
Net cash used for financing activities
(81,227)
(37,139)
Exchange rate changes
(926)
(86)
Change in cash, cash equivalents and restricted cash
$
(5,580) $
97,822
Operating Activities
During fiscal 2024, net cash provided by operating activities was $158.1 million, a decrease of $47.0 million compared with the
prior year mainly due to lower net income and less favorable changes in working capital relative to the prior year, partially
27
offset by smaller reduction in customer deposits, reflecting a reduced backlog. Our cash provided by operating activities in
fiscal 2024 was primarily attributable to net income, adjusted for non-cash items and a $19.9 million decrease in inventory. This
was partially offset by a $22.7 million decrease in customer deposits, reflecting the reduced backlog, and a $16.8 million
increase in receivables, reflecting higher sales from our Wholesale business to external dealers during the fourth quarter of
fiscal 2024 compared with same period a year ago.
Investing Activities
During fiscal 2024, net cash used for investing activities was $81.6 million, an increase of $11.4 million compared with the
prior year primarily due to an increase in La-Z-Boy Furniture Galleries® acquisitions and lower proceeds from the sale of
investments, net of investment purchases, all partially offset by lower capital expenditures. Cash used for investing activities in
fiscal 2024 included the following:
•
Cash used for capital expenditures in the period was $53.6 million compared with $68.8 million during fiscal 2023,
which is primarily related to upgrades at our manufacturing and distribution facilities, La-Z-Boy Furniture Galleries®
(new stores and remodels) and Joybird store projects. We expect capital expenditures to be in the range of $70 to
$80 million for fiscal 2025, primarily related to improvements and expansion of our Retail stores, replacement of
machinery and equipment for various manufacturing and distribution facilities, and technology upgrades. We have no
material contractual commitments outstanding for future capital expenditures.
•
Cash used for acquisitions was $39.4 million, related to the acquisition of the Bradenton and Sarasota, Florida, Illinois
and Indiana, Colorado Springs, Colorado and Lafayette, Louisiana retail businesses.
•
Proceeds from the sale of investments, net of investment purchases, was $6.5 million.
Financing Activities
On October 15, 2021, we entered into a five-year $200 million unsecured revolving credit facility (as amended, the “Credit
Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes. We may increase
the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of
each lender to participate in such increase, up to an additional amount of $100 million. The Credit Facility will mature on
October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the
satisfaction of customary conditions. As of April 27, 2024, we have no borrowings outstanding under the Credit Facility.
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 27, 2024, we were in compliance with our financial covenants under the Credit Facility.
We believe our cash and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit
Facility, will provide adequate liquidity for our business operations over the next 12 months.
During fiscal 2024, net cash used for financing activities was $81.2 million, an increase of $44.1 million compared with the
prior year, primarily due to higher share repurchases, partially offset by proceeds from exercised stock options. Cash used for
financing activities in fiscal 2024 included the following:
•
Our board of directors has authorized the repurchase of Company stock and we spent $52.8 million during fiscal 2024
to repurchase 1.6 million shares. As of April 27, 2024, 5.7 million shares remained available for repurchase pursuant
to this authorization. With the operating cash flows we anticipate generating in fiscal 2025, we expect to continue
repurchasing Company stock.
•
Cash paid to our shareholders in quarterly dividends was $32.7 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.
•
Proceeds from exercised stock options, net of stock issued and taxes withheld as part of our employee benefit plans,
was $10.9 million.
•
Cash paid for holdback payments made on prior-period acquisitions was $5.0 million for a guaranteed payment related
to the acquisition of Joybird, which was the final payment related to this acquisition.
28
Exchange Rate Changes
Due to changes in exchange rates, our cash, cash equivalents, and restricted cash decreased by $0.9 million from the end of
fiscal year 2023 to the end of fiscal year 2024. 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 27, 2024, we had
operating and finance lease payment obligations of $557.8 million and $2.0 million, respectively, with $94.6 million and $0.7
million, payable within 12 months, respectively. Refer to Note 6, Leases, for additional information.
Purchase Obligations. We had purchase obligations of $181.7 million, all payable within 12 months, related to open purchase
orders, primarily with foreign and domestic casegoods, leather, and fabric suppliers, which are generally cancellable if
production has not begun. Open purchase orders also include contracts for indirect services, which are generally cancellable
before services commence.
Other
Our consolidated balance sheet as April 27, 2024 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
Furniture Galleries® stores we have acquired. Prior to our retail acquisitions, we licensed the exclusive right to own and operate
La-Z-Boy Furniture Galleries® 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 Furniture Galleries® 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 Furniture Galleries® stores, the La-Z-Boy wholesale business in the United
Kingdom and Ireland, the La-Z-Boy manufacturing business in the United Kingdom, and Joybird®, an e-commerce retailer and
manufacturer of upholstered furniture. The reporting unit for goodwill arising from retail store acquisitions is our Retail
operating segment. Goodwill arising from the acquisition of our wholesale business in the United Kingdom and Ireland and the
acquisition of our manufacturing business in the United Kingdom is combined into the United Kingdom reporting unit. The
reporting unit for goodwill arising from the acquisition of Joybird is the Joybird operating segment.
29
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, 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 2024, we performed the quantitative impairment test on two reporting units and determined that neither was
impaired as discussed below.
Joybird Reporting Unit
The Joybird reporting unit, which has goodwill of $55.4 million at April 27, 2024, has an estimated fair value that exceeds is
carrying value by approximately 6%. 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. We performed a sensitivity analysis on the discount rate and terminal growth rate and
using a range of reasonable inputs, the fair value of the Joybird reporting unit either exceeded its carrying value or did not
exceed its carrying value by an immaterial amount, for each of the various scenarios analyzed. The key assumption that factored
into the valuation under the market approach was the market multiples applied to revenue.
United Kingdom Reporting Unit
The United Kingdom reporting unit, which has goodwill of $20.1 million at April 27, 2024, has an estimated fair value that
exceeds is carrying value by approximately 28%. 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 2024 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
30
judgment. As a result, if we revise our assumptions and estimates, our stock-based compensation expense could be materially
different in the future.
If we grant options, we estimate the fair value of each option grant using a Black-Scholes option-pricing model. We estimate
expected volatility based on the historic volatility of our common shares. We estimate the average expected life using the
contractual term of the stock option and expected employee exercise and post-vesting employment termination trends. We base
the risk-free rate on U.S. Treasury issues with a term equal to the expected life assumed at the date of grant. We have elected to
recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur.
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.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
While we had no variable rate borrowings at April 27, 2024, we could be exposed to market risk from changes in risk-free
interest rates if we incur variable rate debt in the future. Based on our current and expected levels of exposed liabilities,
management estimates that a one percentage point change in interest rates would not have had a material impact on our results
of operations for fiscal 2024.
We are exposed to market risk from changes in the value of foreign currencies primarily related to our manufacturing facilities
in Mexico, our wholesale and retail businesses in Canada, our wholesale and manufacturing businesses in the United Kingdom,
and our majority-owned joint ventures in Thailand. In Mexico, we pay wages and other local expenses in Mexican Pesos. In our
Canadian wholesale business, we pay wages and other local expenses in Canadian Dollars. We recognize sales and pay wages
and other local expenses related to our wholesale and manufacturing businesses in the United Kingdom in Great British Pounds,
and our Canadian retail business in Canadian Dollars. In Thailand, we pay wages and other local expenses in the Thai Baht.
Nonetheless, gains and losses resulting from market changes in the value of foreign currencies have not had and are not
currently expected to have a material effect on our consolidated results of operations. A decrease in the value of foreign
currencies in relation to the U.S. Dollar could impact the profitability of some of our vendors and translate into higher prices
from our suppliers, but we believe that, in that event, our competitors would experience a similar impact.
We are exposed to market risk with respect to commodity and transportation costs, principally related to commodities we use in
producing our products, including steel, wood and polyurethane foam, in addition to transportation costs for delivering our
products. As commodity prices and transportation costs rise, we determine whether a price increase to our customers to offset
these costs is warranted. To the extent that an increase in these costs would have a material impact on our results of operations,
we believe that our competitors would experience a similar impact.
We are exposed to market risk with respect to duties and tariffs assessed on raw materials, component parts, and finished goods
we import into countries where we operate. Additionally, we are exposed to duties and tariffs on our finished goods that we
export from our assembly plants to other countries. As these tariffs and duties increase, we determine whether a price increase
to our customers to offset these costs is warranted. To the extent that an increase in these costs would have a material impact on
our results of operations, we believe that our competitors would experience a similar impact. 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, which could put pressure on our prices and may adversely impact our
result of operations.
31
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Management's Report to Our Shareholders
Management's Responsibility for Financial Information
Management is responsible for the consistency, integrity and preparation of the information contained in this Annual Report on
Form 10-K. The consolidated financial statements and other information contained in this Annual Report on Form 10-K have
been prepared in accordance with accounting principles generally accepted in the United States of America and include
necessary judgments and estimates by management.
To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance
that assets are safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable
assurance is based upon recognition that the cost of the controls should not exceed the benefit derived. We believe our systems
of internal control provide this reasonable assurance.
The board of directors exercised its oversight role with respect to our systems of internal control primarily through its audit
committee, which is comprised of independent directors. The committee oversees our systems of internal control, accounting
practices, financial reporting and audits to assess whether their quality, integrity, and objectivity are sufficient to protect
shareholders' investments.
In addition, our consolidated financial statements have been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report also appears in this Annual Report on Form 10-K.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term
is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our
internal controls over financial reporting based upon the framework in "Internal Control—Integrated Framework (2013)" set
forth by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management
concluded that our internal control over financial reporting was effective as of April 27, 2024. PricewaterhouseCoopers LLP, an
independent registered public accounting firm, audited the effectiveness of the Company's internal control over financial
reporting as of April 27, 2024, as stated in its report which appears herein.
32
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of La-Z-Boy Incorporated
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of La-Z-Boy Incorporated and its subsidiaries (the “Company”)
as of April 27, 2024 and April 29, 2023, and the related consolidated statements of income, of comprehensive income, of
changes in equity and of cash flows for each of the three years in the period ended April 27, 2024, including the related notes
and schedule of valuation and qualifying accounts for each of the three years in the period ended April 27, 2024 appearing
under Item 16 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal
control over financial reporting as of April 27, 2024, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of April 27, 2024 and April 29, 2023, and the results of its operations and its cash flows for each of
the three years in the period ended April 27, 2024 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of April 27, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the COSO.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it classifies certain
costs associated with its distribution centers.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
33
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Accrued Product Warranties for the Wholesale Reportable Segment
As described in Note 12 to the consolidated financial statements, as of April 27, 2024, the Company’s consolidated accrued
product warranties liability balance was $28.9 million, of which the Wholesale reportable segment comprises a significant
portion. Management accrues an estimated liability for product warranties when revenue is recognized on the sale of warrantied
products. Management estimates future warranty claims on product sales based on sales volume and historical claims
experience and periodically adjusts the provision to reflect changes in actual experience. The liability estimate incorporates
repair costs, including materials, labor and overhead amounts necessary to perform repairs, and any costs associated with
delivering the repaired product to customers.
The principal considerations for our determination that performing procedures relating to the accrued product warranties for the
Wholesale reportable segment is a critical audit matter are (i) the significant judgment by management when developing the
accrual and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures relating to the estimation
methodology and the applicability of historical cost of materials and labor used in the methodology.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
accrued product warranties for the Wholesale reportable segment. These procedures also included, among others (i) testing
management’s process for developing the accrual; (ii) evaluating the appropriateness of the estimation methodology applied in
developing the accrual; (iii) evaluating the applicability of the historical cost of materials and labor used in the methodology;
and (iv) testing the completeness and accuracy of the historical cost of materials and labor.
Goodwill Impairment Assessment – Joybird Reporting Unit
As described in Notes 1 and 7 to the consolidated financial statements, as of April 27, 2024, the Company’s consolidated
goodwill balance was $214.5 million, and the goodwill associated with the Corporate and Other reportable segment was $55.4
million, which is inclusive of the Joybird reporting unit. Management tests goodwill for impairment on an annual basis in the
fourth quarter of the fiscal year, or more frequently if events or changes in circumstances indicate that the carrying value may
be impaired. In situations where the fair value is less than the carrying value, an impairment charge would be recorded for the
shortfall. To estimate the fair value of the Joybird reporting unit, management applied a combination of the income approach
and the market approach, weighted 75% and 25%, respectively. The income approach used discounted future cash flows and
the market approach used the guideline public company method, which derives a valuation from market multiples based on
revenue for comparable public companies and was adjusted for a control premium. Management’s cash flow projections for the
Joybird reporting unit included assumptions relating to sales and operating income projections and terminal growth rate as well
as other assumptions relating to discount rate and tax rate which are used in the discounted cash flow model.
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment
of the Joybird reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair
value estimate of the Joybird reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing
procedures and evaluating management’s significant assumptions related to sales and operating income projections and the
discount rate used in the discounted cash flow model, and the market multiples based on revenue for comparable public
companies used in the market approach; and (iii) the audit effort involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
34
management’s goodwill impairment assessment, including controls over the valuation of the Joybird reporting unit, which
included controls over significant assumptions related to the sales and operating income projections, the discount rate and the
market multiples based on revenue for comparable public companies. These procedures also included, among others (i) testing
management’s process for developing the fair value estimate of the Joybird reporting unit; (ii) evaluating the appropriateness of
the discounted cash flow model and market approach used by management; (iii) testing the completeness and accuracy of
underlying data used in the discounted cash flow model and market approach; and (iv) evaluating the reasonableness of the
significant assumptions used by management related to the sales and operating income projections and the discount rate used in
the discounted cash flow model, and the market multiples based on revenue for comparable public companies used in the
market approach. Evaluating management’s assumptions related to the sales and operating income projections involved
evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of
the Joybird reporting unit; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were
consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to
assist in evaluating (i) the appropriateness of the Company’s discounted cash flow model and market approach and (ii) the
reasonableness of the discount rate assumption used in the discounted cash flow model and market multiples based on revenue
for comparable public companies assumption used in the market approach.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
June 17, 2024
We have served as the Company’s auditor since 1968.
35
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands, except per share data)
4/27/2024
4/29/2023
4/30/2022
Sales
$ 2,047,027
$ 2,349,433
$ 2,356,811
Cost of sales
1,165,357
1,384,700
1,477,017
Gross profit
881,670
964,733
879,794
Selling, general and administrative expense
730,874
753,294
673,038
Operating income
150,796
211,439
206,756
Interest expense
(455)
(536)
(895)
Interest income
15,482
6,670
1,338
Other income (expense), net
(71)
(11,784)
(1,708)
Income before income taxes
165,752
205,789
205,491
Income tax expense
41,116
53,848
53,163
Net income
124,636
151,941
152,328
Net income attributable to noncontrolling interests
(2,010)
(1,277)
(2,311)
Net income attributable to La-Z-Boy Incorporated
$ 122,626
$ 150,664
$ 150,017
Basic weighted average common shares
42,878
43,148
44,023
Basic net income attributable to La-Z-Boy Incorporated per share
$
2.86
$
3.49
$
3.41
Diluted weighted average common shares
43,280
43,240
44,294
Diluted net income attributable to La-Z-Boy Incorporated per share
$
2.83
$
3.48
$
3.39
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
36
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Net income
$
124,636 $
151,941 $
152,328
Other comprehensive income (loss)
Currency translation adjustment
(1,955)
(604)
(5,804)
Net unrealized gain (loss) on marketable securities, net of tax
391
153
(668)
Net pension amortization, net of tax
419
807
1,394
Total other comprehensive income (loss)
(1,145)
356
(5,078)
Total comprehensive income before noncontrolling interests
123,491
152,297
147,250
Comprehensive income attributable to noncontrolling interests
(1,207)
(1,364)
(1,509)
Comprehensive income attributable to La-Z-Boy Incorporated
$
122,284 $
150,933 $
145,741
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
37
LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except par value)
4/27/2024
4/29/2023
Current assets
Cash and equivalents
$
341,098 $
343,374
Restricted cash
—
3,304
Receivables, net of allowance of $5,076 at 4/27/2024 and $4,776 at 4/29/2023
139,213
125,536
Inventories, net
263,237
276,257
Other current assets
93,260
106,129
Total current assets
836,808
854,600
Property, plant and equipment, net
298,224
278,578
Goodwill
214,453
205,008
Other intangible assets, net
47,251
39,375
Deferred income taxes – long-term
10,283
8,918
Right of use lease assets
446,466
416,269
Other long-term assets, net
59,957
63,515
Total assets
$ 1,913,442 $ 1,866,263
Current liabilities
Accounts payable
96,486
107,460
Lease liabilities, short-term
77,027
77,751
Accrued expenses and other current liabilities
263,768
290,650
Total current liabilities
437,281
475,861
Lease liabilities, long-term
404,724
368,163
Other long-term liabilities
58,077
70,142
Shareholders' equity
Preferred shares – 5,000 authorized; none issued
—
—
Common shares, $1 par value – 150,000 authorized; 42,440 outstanding at 4/27/2024 and
43,318 outstanding at 4/29/2023
42,440
43,318
Capital in excess of par value
368,485
358,891
Retained earnings
598,009
545,155
Accumulated other comprehensive loss
(5,870)
(5,528)
Total La-Z-Boy Incorporated shareholders' equity
1,003,064
941,836
Noncontrolling interests
10,296
10,261
Total equity
1,013,360
952,097
Total liabilities and equity
$ 1,913,442 $ 1,866,263
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
38
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Cash flows from operating activities
Net income
$
124,636
$
151,941
$
152,328
Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal and impairment of assets
1,101
6,365
(13,657)
(Gain)/loss on sale of investments
(1,199)
148
(478)
Provision for doubtful accounts
511
1,546
(617)
Depreciation and amortization
48,552
40,193
39,771
Amortization of right-of-use lease assets
76,133
76,511
72,942
Lease impairment/(settlement)
(1,175)
1,347
—
Equity-based compensation expense
14,426
12,458
11,858
Change in deferred taxes
(3,268)
3,895
1,022
Change in receivables
(16,811)
53,675
(41,829)
Change in inventories
19,877
32,311
(72,022)
Change in other assets
10,303
24,377
(16,232)
Change in payables
(8,606)
4,586
6,326
Change in lease liabilities
(76,766)
(77,811)
(73,805)
Change in other liabilities
(29,587)
(126,375)
13,397
Net cash provided by operating activities
158,127
205,167
79,004
Cash flows from investing activities
Proceeds from disposals of assets
4,972
136
22,588
Capital expenditures
(53,551)
(68,812)
(76,580)
Purchases of investments
(18,351)
(9,092)
(34,152)
Proceeds from sales of investments
24,816
24,483
36,096
Acquisitions
(39,440)
(16,835)
(26,323)
Net cash used for investing activities
(81,554)
(70,120)
(78,371)
Cash flows from financing activities
Payments on debt and finance lease liabilities
(489)
(123)
(121)
Holdback payments for acquisitions
(5,000)
(5,000)
(23,000)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes
10,872
2,857
(1,818)
Repurchases of common stock
(52,773)
(5,004)
(90,645)
Dividends paid to shareholders
(32,665)
(29,869)
(27,717)
Dividends paid to minority interest joint venture partners (1)
(1,172)
—
(1,260)
Net cash used for financing activities
(81,227)
(37,139)
(144,561)
Effect of exchange rate changes on cash and equivalents
(926)
(86)
(1,919)
Change in cash, cash equivalents and restricted cash
(5,580)
97,822
(145,847)
Cash, cash equivalents and restricted cash at beginning of period
346,678
248,856
394,703
Cash, cash equivalents and restricted cash at end of period
$
341,098
$
346,678
$
248,856
Supplemental disclosure of non-cash investing activities
Capital expenditures included in accounts payable
$
5,952
$
8,208
$
9,234
(1)
Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer
consider permanently reinvested.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
39
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Amounts in thousands, except per share amounts)
Common
Shares
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Non-
Controlling
Interests
Total
At April 24, 2021
$
45,361
$
330,648
$
399,010
$
(1,521) $
8,648
$
782,146
Net income
—
—
150,017
—
2,311
152,328
Other comprehensive income (loss)
—
—
—
(4,276)
(802)
(5,078)
Stock issued for stock and employee benefit
plans, net of cancellations and withholding tax
208
834
(2,860)
—
—
(1,818)
Purchases of 2,480 shares of common stock
(2,480)
(1,088)
(87,077)
—
—
(90,645)
Stock option and restricted stock expense
—
11,858
—
—
—
11,858
Dividends declared and paid ($0.63/share) (1)
—
—
(27,717)
—
(1,260)
(28,977)
Dividends declared not paid ($0.63/share)
—
—
(192)
—
—
(192)
At April 30, 2022
$
43,089
$
342,252
$
431,181
$
(5,797) $
8,897
$
819,622
Net income
—
—
150,664
—
1,277
151,941
Other comprehensive income (loss)
—
—
—
269
87
356
Stock issued for stock and employee benefit
plans, net of cancellations and withholding tax
433
4,181
(1,757)
—
—
2,857
Purchases of 204 shares of common stock
(204)
—
(4,800)
—
—
(5,004)
Stock option and restricted stock expense
—
12,458
—
—
—
12,458
Dividends declared and paid ($0.693/share)
—
—
(29,869)
—
—
(29,869)
Dividends declared not paid ($0.693/share)
—
—
(264)
—
—
(264)
At April 29, 2023
$
43,318
$
358,891
$
545,155
$
(5,528) $
10,261
$
952,097
Net income
—
—
122,626
—
2,010
124,636
Other comprehensive income (loss)
—
—
—
(342)
(803)
(1,145)
Stock issued for stock and employee benefit
plans, net of cancellations and withholding tax
718
12,194
(2,040)
—
—
10,872
Purchases of 1,596 shares of common stock
(1,596)
(17,026)
(34,592)
—
—
(53,214)
Stock option and restricted stock expense
—
14,426
—
—
—
14,426
Dividends declared and paid ($0.763/share) (1)
—
—
(32,665)
—
(1,172)
(33,837)
Dividends declared not paid ($0.763/share)
—
—
(475)
—
—
(475)
At April 27, 2024
$
42,440
$
368,485
$
598,009
$
(5,870) $
10,296
$
1,013,360
(1)
Non-controlling interests include dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign
earnings that we no longer consider permanently reinvested.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Accounting Policies
The following is a summary of significant accounting policies followed in the preparation of La-Z-Boy Incorporated and its
subsidiaries' (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") consolidated financial statements.
Our fiscal year ends on the last Saturday of April. Our 2024 and 2023 fiscal years included 52 weeks, whereas our 2022 fiscal
year included 53 weeks. The additional week in fiscal 2022 was included in the fourth quarter.
Principles of Consolidation
The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our
majority-owned subsidiaries. The portion of less than wholly-owned subsidiaries is included as non-controlling interest. All
intercompany transactions have been eliminated, including any related profit on intercompany sales.
At April 27, 2024, we owned investments in two privately-held companies consisting of non-marketable preferred shares,
warrants to purchase common shares, and convertible notes. Each of these companies is a variable interest entity and we have
not consolidated their results in our financial statements because we do not have the power to direct those activities that most
significantly impact their economic performance and, therefore, are not the primary beneficiary.
Use of Estimates
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United
States of America. These principles require management to make estimates and assumptions that affect the reported amounts or
disclosures of assets, liabilities (including contingent liabilities), sales, and expenses at the date of the financial statements.
Actual results could differ from those estimates.
Change in Accounting Policy - Distribution Center Costs
In the first quarter of fiscal 2024, we made a voluntary change to the presentation of costs directly attributable to our
distribution activities conducted through our distribution centers in the United States. Our policy has changed from presenting
these costs within selling, general and administrative ("SG&A") expense to presenting them as cost of sales. We believe this
presentation is preferable because it will enhance the comparability of our financial statements with those of our industry peers
and align with how we internally manage supply chain costs and margin.
In accordance with US GAAP, the periods presented below have been retrospectively adjusted to reflect the change to cost of
sales and SG&A expense. This change had no impact to sales, income from operations, net income, earnings per share, retained
earnings or other components of equity or net assets.
(Unaudited, amounts in thousands)
For the Year Ended April 29, 2023
For the Year Ended April 30, 2022
Previously
Reported
Effect of
Change
As Adjusted
Previously
Reported
Effect of
Change
As Adjusted
Cost of sales
$ 1,340,734 $
43,966 $ 1,384,700 $ 1,440,842 $
36,175 $ 1,477,017
Gross profit
1,008,699
(43,966)
964,733
915,969
(36,175)
879,794
Selling, general and administrative expense
797,260
(43,966)
753,294
709,213
(36,175)
673,038
Cash and Equivalents
For purposes of the consolidated balance sheet and statement of cash flows, we consider all highly liquid debt instruments
purchased with initial maturities of three months or less to be cash equivalents.
Restricted Cash
At April 29, 2023, we had restricted cash on deposit with a bank as collateral for certain letters of credit that matured within 12
months. During fiscal 2024, we renewed these letters of credit and as of April 27, 2024, we are no longer required to hold
restricted cash as collateral. All of our letters of credit have maturity dates within the next 12 months, and we expect to renew
some of these letters of credit when they mature.
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Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") basis for
approximately 61% and 59% of our inventories at April 27, 2024, and April 29, 2023, respectively. Cost is determined for all
other inventories on a first-in, first-out ("FIFO") basis. The majority of our La-Z-Boy Wholesale segment inventory uses the
LIFO method of accounting, while the FIFO method is used primarily in our Retail segment and Joybird business.
Property, Plant and Equipment
Items capitalized, including significant betterments to existing facilities, are recorded at cost. Capitalized computer software
costs include internal and external costs incurred during the software's development stage. Internal costs relate primarily to
employee activities for coding and testing the software under development. Computer software costs are depreciated over three
to five years. All maintenance and repair costs are expensed when incurred. Depreciation is computed principally using straight-
line methods over the estimated useful lives of the assets.
Disposal and Impairment of Long-Lived Assets
Retirement or dispositions of long-lived assets are recorded based on carrying value and proceeds received. Any resulting gains
or losses are recorded as a component of selling, general and administrative ("SG&A") expenses.
We review the carrying value of our long-lived assets, which includes our right-of-use lease assets, for impairment if events or
changes in circumstances indicate that their carrying amounts may not be recoverable. Our assessment of recoverability is based
on our best estimates using either quoted market prices or an analysis of the undiscounted projected future cash flows by asset
groups in order to determine if there is any indicator of impairment requiring us to further assess the fair value of our long-lived
assets. Our asset groups consist of our operating segments in our Wholesale reportable segment, each of our retail stores, our
Joybird operating segment, and other corporate assets, which are evaluated at the consolidated level.
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
Furniture Galleries® stores we have acquired. Prior to our retail acquisitions, we licensed the exclusive right to own and operate
La-Z-Boy Furniture Galleries® 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 Furniture Galleries® 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 Furniture Galleries® stores, the La-Z-Boy wholesale business in the United
Kingdom and Ireland, the La-Z-Boy manufacturing business in the United Kingdom, and Joybird®, an e-commerce retailer and
manufacturer of upholstered furniture. The reporting unit for goodwill arising from retail store acquisitions is our Retail
operating segment. Goodwill arising from the acquisition of our wholesale business in the United Kingdom and Ireland and the
acquisition of our manufacturing business in the United Kingdom is combined into the United Kingdom reporting unit. These
two businesses are considered components of the International operating segment and are aggregated into one reporting unit for
goodwill because they are economically similar and work in concert as they represent the manufacturing and selling entities
within the United Kingdom. The reporting unit for 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, we establish the fair value of our indefinite-lived trade names and reacquired rights based
upon the relief from royalty method. 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
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we utilize market multiples of comparable companies, or a combination of both approaches. In situations where the fair value is
less than the carrying value, an impairment charge would be recorded for the shortfall.
Amortizable Intangible Assets
We have an amortizable intangible asset for acquired customer relationships related to the acquisition of the La-Z-Boy
wholesale business in the United Kingdom and Ireland, which is amortized on a straight-line basis over its estimated useful life
of 15 years. We also have an amortizable intangible asset for the Joybird® trade name, which is amortized on a straight-line
basis over its estimated useful life of eight years. All intangible amortization expense is recorded as a component of SG&A
expense. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets
might be impaired. If we determine an assessment for impairment is necessary, we establish the fair value of these amortizable
intangible assets based on the multi-period excess earnings method, a variant of the income approach, and the relief from
royalty method, as applicable.
Investments
Available-for-sale debt securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be
temporary) reported as a component of other comprehensive income/(loss). Equity securities are recorded at fair value with
unrealized gains and losses recorded in other income (expense), net. We also hold investments in two privately-held companies
consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes. The fair value of
these equity investments (preferred shares and warrants) is not readily determinable and therefore, we estimate the fair value as
costs minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for
identical or similar investments with the same issuer. The convertible notes are recorded at fair value with the net unrealized
gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income, consistent with our
other available-for-sale debt securities.
Realized gains and losses for all investments, charges for other-than-temporary impairments of debt securities, and charges for
impairment on our equity investments without readily determinable values are included in determining net income, with related
purchase costs based on the first-in, first-out method. We evaluate our available-for-sale debt investments for possible other-
than-temporary impairments by reviewing factors such as the extent to which an investment's fair value is below our cost basis,
the issuer's financial condition, and our ability and intent to hold the investment for sufficient time for its market value to
recover. For impairments that are other-than-temporary, an impairment loss is recognized in earnings equal to the difference
between the investment's cost and its fair value at the balance sheet date of the reporting period for which the assessment is
made. The fair value of the investment then becomes the new amortized cost basis of the investment and it is not adjusted for
subsequent recoveries in fair value.
There were no impairment charges recorded in fiscal 2024 or fiscal 2022. During fiscal 2023, we recognized a $10.3 million
impairment charge for one of our investments which was recorded as a component of other income (expense), net in the
consolidated statement of income.
Life Insurance
Life insurance policies are recorded at the amount that could be realized under the insurance contract as of the date of our
consolidated balance sheet. These assets are classified as other long-term assets on our consolidated balance sheet and are used
to fund our executive deferred compensation plan and performance compensation retirement plan. The change in cash surrender
or contract value is recorded as income or expense, in other income (expense), net, during each period.
Customer Deposits
We collect a deposit on a portion of the total merchandise price at the time a customer order is placed in one of our company-
owned retail stores, and through our website, www.la-z-boy.com. We record this as a customer deposit, which is included in
our accrued expenses and other current liabilities on our consolidated balance sheet. The balance of the order is paid in full
prior to delivery of the product. At the time the customer places an order through www.joybird.com, we collect the entire
amount owed and record this as a customer deposit.
Revenue Recognition and Related Allowances
Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that
reflects the consideration we expect to be entitled to receive in exchange for those goods or services. We generate revenues
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primarily by manufacturing/importing and delivering upholstery and casegoods (wood) furniture products to independent
furniture retailers, independently-owned La-Z-Boy Furniture Galleries® stores or the end consumer. Each unit of furniture is a
separate performance obligation, and we satisfy our performance obligation when control of our product is passed to our
customer, which is the point in time that our customers are able to direct the use of and obtain substantially all of the remaining
economic benefit of the goods or services.
The majority of our wholesale shipping agreements are freight-on-board shipping point and risk of loss transfers to our
customer once the product is out of our control. Accordingly, revenue is recognized for product shipments on third-party
carriers at the point in time that our product is loaded onto the third-party container or truck and that container or truck leaves
our facility. For our imported products, we recognize revenue at the point in time that legal ownership is transferred, which may
not occur until after the goods have passed through U.S. Customs. In all cases, this revenue includes amounts we bill to
customers for freight charges, because we have elected to treat shipping activities that occur after the customer has obtained
control of our product as a fulfillment cost rather than an additional promised service. Because of this election, we recognize
revenue for shipping when control of our product passes to our customer, and the shipping costs are accrued when the freight
revenue is recognized. Revenue for product shipments on company-owned trucks is recognized for the product and freight at
the point in time that our product is delivered to our customer's location.
We recognize revenue for retail sales and online sales to the end consumer through our company-owned retail stores, www.la-z-
boy.com or www.joybird.com, once the end consumer has taken control of the furniture, at which point legal title has passed to
them. This takes place when the product is delivered to the end consumer's home. Home delivery is not a promised service to
our customer, and is not a separate performance obligation, because home delivery is a fulfillment activity as the costs are
incurred as part of transferring our product to the end consumer. At the time the customer places an order through our company-
owned retail stores or www.la-z-boy.com, we collect a deposit on a portion of the total merchandise price. We record this as a
customer deposit, which is included in accrued expenses and other current liabilities on our consolidated balance sheet. The
balance of the order is paid in full prior to delivery of the product. Once the order is taken through our company-owned retail
stores or www.la-z-boy.com we recognize a contract asset and a corresponding deferred revenue liability for the difference
between the total order and the deposit collected. The contract asset is included in other current assets on our consolidated
balance sheet and the deferred revenue is included in accrued expenses and other current liabilities on our consolidated balance
sheet. At the time the customer places an order through www.joybird.com, we collect the entire amount owed and record this as
a customer deposit. Because the entire amount owed is collected at the time of the order, there is no contract asset recorded for
Joybird sales.
At the time we recognize revenue, we make provisions for estimated refunds, product returns, and warranties, as well as other
incentives that we may offer to customers. When estimating our incentives, we utilize either the expected value method or the
most likely amount to determine the amount of variable consideration. We use either method depending on which method will
provide the best estimate of the variable consideration, and we only include variable consideration when it is probable that there
will not be a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the
variable consideration is subsequently resolved. Incentives offered to customers include cash discounts, rebates, advertising
agreements and other sales incentive programs. Our sales incentives, including cash discounts and rebates, are recorded as a
reduction to revenues. Service allowances are for a distinct good or service with our customers and are recorded as a component
of SG&A expense in our consolidated statement of income, and are not recorded as a reduction of revenue and are not
considered variable consideration. We use substantial judgment based on the type of variable consideration or service
allowance, historical experience and expected sales volume when estimating these provisions. The expected costs associated
with our warranties and service allowances are recognized as expense when our products are sold. For sales tax, we elected to
exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing
transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes
(collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes.
All orders are fulfilled within one year of order date, therefore we do not have any unfulfilled performance obligations.
Additionally, we elected the practical expedient to not adjust the promised amount of consideration for the effects of a
significant financing component because at contract inception we expect the period between when we transfer our product to
our customer and when the customer pays for the product to be one year or less.
Allowance for Credit Losses
Trade accounts receivable arise from the sale of products on trade credit terms. On a quarterly basis, we review all significant
accounts as to their past due balances, as well as collectability of the outstanding trade accounts receivable for possible write
off. It is our policy to write off the accounts receivable against the allowance account when we deem the receivable to be
44
uncollectible. Additionally, we review orders from dealers that are significantly past due, and we ship product only when our
ability to collect payment from our customer for the new order is probable.
Our allowances for credit losses reflect our best estimate of losses inherent in the trade accounts receivable balance. We
determine the allowance based on known troubled accounts, weighing probabilities of future conditions and expected outcomes,
and other currently available evidence.
Cost of Sales
Our cost of sales consists primarily of the cost to manufacture or purchase our merchandise, inspection costs, internal transfer
costs, in-bound freight costs, outbound shipping costs, as well as warehousing costs, occupancy costs, and depreciation expense
related to our manufacturing facilities, distribution centers and equipment.
Selling, General and Administrative Expenses
SG&A expenses include the costs of selling our products and other general and administrative costs. Selling expenses are
primarily composed of commissions, advertising, warranty, bad debt expense, and compensation and benefits of employees
performing various sales functions. Additionally, the occupancy costs of our retail facilities are included as a component of
SG&A. Other general and administrative expenses included in SG&A are composed primarily of compensation and benefit
costs for administrative employees and other administrative costs.
Other Income (Expense), Net
Other income (expense), net is made up primarily of foreign currency exchange net gain/(loss), gain/(loss) on the sale of
investments, and unrealized gain/(loss) on equity securities. Other income (expense), net for fiscal 2023 also includes a $10.3
million impairment of our investments in a privately-held start-up company.
Research and Development Costs
Research and development costs are charged to expense in the periods incurred. Expenditures for research and development
costs were $9.6 million, $9.1 million, and $9.0 million for the fiscal years ended April 27, 2024, April 29, 2023, and April 30,
2022, respectively, and are included as a component of SG&A.
Advertising Expenses
Production costs of commercials, programming and costs of other advertising, promotion and marketing programs are charged
to expense in the period in which the commercial or advertisement is first aired or released. Gross advertising expenses were
$150.9 million, $159.0 million, and $126.8 million for the fiscal years ended April 27, 2024, April 29, 2023, and April 30,
2022, respectively.
A portion of our advertising program is a national advertising campaign. This campaign is a shared advertising program with
our dealers' La-Z-Boy Furniture Galleries® stores, which reimburse us for approximately 25% of the cost of the program
(excluding company-owned stores). Because of this shared cost arrangement, the advertising expense is reported as a
component of SG&A, while the dealers' reimbursement portion is reported as a component of sales.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be
recovered or settled.
In periods when deferred tax assets are recorded, we are required to estimate whether recoverability is more likely than not
(i.e. a likelihood of more than 50%), based on, among other things, forecasts of taxable earnings in the related tax jurisdiction.
We consider historical and projected future results of operations, the eligible carry-forward period, tax law changes, tax
planning opportunities, and other relevant considerations when making judgments about realizing the value of our deferred tax
assets.
45
We recognize in our consolidated financial statements the benefit of a position taken or expected to be taken in a tax return
when it is more likely than not that the position would be sustained upon examination by tax authorities. A recognized tax
position is then measured at the largest amount of benefit that is more likely than not to be realized upon settlement. Changes in
judgment that result in subsequent recognition, derecognition or change in a measurement date of a tax position taken in a prior
annual period (including any related interest and penalties) are recognized as a discrete item in the interim period in which the
change occurs.
Foreign Currency Translation
Foreign currency transaction gains and losses associated with translating assets and liabilities denominated in a currency that is
different than a subsidiaries' functional currency, are recorded in cost of sales and other income (expense), net in our
consolidated statement of income. Assets and liabilities of foreign subsidiaries whose functional currency is their local currency
are translated at the year-end exchange rates, and revenues and expenses are translated at average exchange rates for the period,
with the corresponding translation effect included as a component of other comprehensive income.
Accounting for Stock-Based Compensation
We estimate the fair value of equity-based awards, including option awards and stock-based awards that vest based on market
conditions, on the date of grant using option-pricing models. The value of the portion of the equity-based awards that are
ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statement of income
using a straight-line single-option method. We measure stock-based compensation cost for liability-based awards based on the
fair value of the award on the grant date, and recognize it as expense over the vesting period. The liability for these awards is
remeasured and adjusted to its fair value at the end of each reporting period until paid. We record compensation cost for stock-
based awards that vest based on performance conditions ratably over the vesting periods when the vesting of such awards
become probable.
Commitments and Contingencies
We establish an accrued liability for legal matters when those matters present loss contingencies that are both probable and
reasonably estimable. As a litigation matter develops and in conjunction with any outside legal counsel handling the matter, we
evaluate on an ongoing basis whether such matter presents a loss contingency that is probable and reasonably estimable. If, at
the time of evaluation, the loss contingency related to a litigation matter is not both probable and reasonably estimable, the
matter will continue to be monitored for further developments that would make such loss contingency both probable and
reasonably estimable. Once the loss contingency related to a litigation matter is deemed to be both probable and reasonably
estimable, we will establish an accrued liability with respect to such loss contingency and record a corresponding amount of
litigation-related expense. We continue to monitor the matter for further developments that could affect the amount of the
accrued liability that has been previously established.
Insurance/Self-Insurance
We use a combination of insurance and self-insurance for a number of risks, including workers' compensation, general liability,
vehicle liability and the company-funded portion of employee-related health care benefits. Liabilities associated with these risks
are estimated in part by considering historic claims experience, demographic factors, severity factors and other assumptions.
We have various excess loss coverages for employee-related health care benefits, vehicle liability, product liability, and
workers' compensation liabilities. Our deductibles generally do not exceed $2.5 million.
Recent Accounting Pronouncements
Accounting Pronouncement Adopted in Fiscal 2024
The following table summarizes Accounting Standards Updates ("ASUs") which were adopted in fiscal 2024, but did not have a
material impact on our accounting policies or our consolidated financial statements and related disclosures.
ASU
Description
Adoption Date
ASU 2021-08
Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers
Fiscal 2024
46
Accounting Pronouncements not yet Adopted
The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not
have a material impact on our accounting policies or our consolidated financial statements and related disclosures.
ASU
Description
Adoption Date
ASU 2023-09
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
Fiscal 2026
ASU 2023-07
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
Fiscal 2025
ASU 2023-05
Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition
and Initial Measurement
Fiscal 2025
ASU 2023-02
Investments - Equity Method and Joint Ventures (Topic 323): Accounting for
Investments in Tax Credit Structures Using the Proportional Amortization Method
Fiscal 2025
Note 2: Acquisitions
None of the below acquisitions were significant to our consolidated financial statements, and, therefore, pro-forma financial
information is not presented. All of our provisional purchase accounting estimates for the acquisitions completed in fiscal 2024
are based on the information and data available to us as of the time of the issuance of these financial statements, and in
accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within the first 12 months
following the acquisition as we gain additional data.
Each of the following Retail acquisitions completed in fiscal 2024, 2023, and 2022 reflect a core component of our strategic
priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a
combined profit on both the wholesale and retail sales) in suitable geographic markets, alongside the existing La-Z-Boy
Furniture Galleries® network.
Prior to each Retail acquisition completed in fiscal 2024, 2023, and 2022, we licensed to the counterparty the exclusive right to
own and the operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in each of
their respective markets, and we reacquired these rights when we consummated the transaction. These reacquired rights are
indefinite-lived because our retailer agreements are perpetual agreements that have no specific expiration date and no renewal
options. The effective settlement date of these arrangements resulted in no settlement gain or loss as the contractual terms were
at market. For federal income tax purposes, we amortize and deduct these indefinite-lived intangible assets and goodwill, if any,
over 15 years.
Bradenton and Sarasota, Florida Acquisition
On April 8, 2024, we completed our acquisition of the Bradenton and Sarasota, Florida businesses that operate two
independently owned La-Z-Boy Furniture Galleries® stores for $15.7 million, inclusive of and subject to further customary
adjustments. The acquisition also included the purchase of buildings and land for both stores. We paid total cash of
$14.3 million during the fourth quarter of fiscal 2024 and the remaining consideration included forgiveness of accounts
receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived
intangible asset of $1.9 million related to the reacquired rights described above. We also recognized $4.7 million of goodwill in
our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of
these synergies.
Illinois and Indiana Acquisition
On December 11, 2023, we completed our acquisition of the Illinois and Indiana businesses that operate six independently
owned La-Z-Boy Furniture Galleries® stores and one distribution center for $18.4 million, inclusive of and subject to further
customary adjustments. The acquisition also included the purchase of buildings and land for five of the stores. We paid total
cash of $17.0 million during the third and fourth quarters of fiscal 2024 and the remaining consideration included forgiveness of
accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-
lived intangible asset of $4.2 million related to the reacquired rights described above. We also recognized $0.6 million of
goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future
benefits of these synergies.
47
Lafayette, Louisiana Acquisition
On October 23, 2023, we completed our acquisition of the Lafayette, Louisiana business that operates one independently owned
La-Z-Boy Furniture Galleries® store and one distribution center for $2.8 million, inclusive of and subject to further customary
adjustments. We paid total cash of $2.6 million during the second and third quarters of fiscal 2024 and the remaining
consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the
acquisition, we recorded an indefinite-lived intangible asset of $0.7 million related to the reacquired rights described above. We
also recognized $2.1 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of
the acquired store and future benefits of these synergies.
Colorado Springs, Colorado Acquisition
On July 17, 2023, we completed our acquisition of the Colorado Springs, Colorado business that operates two independently
owned La-Z-Boy Furniture Galleries® stores and one distribution center for $6.0 million, inclusive of and subject to further to
customary adjustments. We paid total cash of $5.6 million during the first and second quarters of fiscal 2024 and the remaining
consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the
acquisition, we recorded an indefinite-lived intangible asset of $2.1 million related to the reacquired rights described above. We
also recognized $2.2 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of
the acquired stores and future benefits of these synergies.
Prior Year Acquisitions
We completed the following acquisitions in fiscal 2023.
Baton Rouge, Louisiana acquisition
On March 20, 2023, we completed our acquisition of the Baton Rouge, Louisiana business that operates one independently
owned La-Z-Boy Furniture Galleries® store and one distribution center for $5.0 million, inclusive of customary adjustments.
We paid total cash of $4.9 million during the fourth quarter of fiscal 2023 and the remaining consideration includes forgiveness
of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an
indefinite-lived intangible asset of $0.5 million related to the reacquired rights described above.
Barboursville, West Virginia acquisition
On December 12, 2022, we completed our acquisition of the Barboursville, West Virginia business that operates one
independently owned La-Z-Boy Furniture Galleries® store. This acquisition did not have a meaningful impact on our
consolidated financial statements.
Spokane, Washington acquisition
On September 26, 2022, we completed our acquisition of the Spokane, Washington business that operates one independently
owned La-Z-Boy Furniture Galleries® store and one distribution center for $4.7 million, inclusive of customary adjustments.
We paid total cash of $4.0 million during the second quarter of fiscal 2023 and the remaining consideration includes
forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded
an indefinite-lived intangible asset of $1.2 million related to the reacquired rights described above. We also recognized
$3.0 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired
store and future benefits of these synergies.
Denver, Colorado acquisition
On July 18, 2022, we completed our acquisition of the Denver, Colorado business that operates five independently owned La-
Z-Boy Furniture Galleries® stores and one distribution center for $10.1 million, inclusive of customary adjustments. We paid
total cash of $7.7 million in the first and second quarters of fiscal 2023 and the remaining consideration includes forgiveness of
accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-
lived intangible asset of $4.3 million related to the reacquired rights described above. We also recognized $7.6 million of
goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future
benefits of these synergies.
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We completed the following acquisitions in fiscal 2022.
Alabama and Chattanooga, Tennessee acquisition
On December 6, 2021, we completed our acquisition of the Alabama and Chattanooga, Tennessee businesses that operate four
independently owned La-Z-Boy Furniture Galleries® stores in Alabama and one in Chattanooga, Tennessee, for $8.3 million,
inclusive of customary adjustments. We paid total cash of $8.0 million in the third quarter of fiscal 2022 and the remaining
consideration includes forgiveness of accounts receivable and payments based on working capital adjustments. As part of the
acquisition, we recorded an indefinite-lived intangible asset of $4.1 million related to the reacquired rights described above. We
also recognized $7.4 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of
the acquired stores and future benefits of these synergies.
Furnico (La-Z-Boy United Kingdom Manufacturing) acquisition
On October 25, 2021, we completed the acquisition of Furnico Furniture Ltd ("Furnico"), an upholstery manufacturing business
in the U.K for approximately $13.3 million, inclusive of customary adjustments and in the third and fourth quarters of fiscal
2022, we paid $13.9 million of cash for the purchase of the Furnico business. Furnico produces La-Z-Boy branded product for
the La-Z-Boy U.K. business and also operates a wholesale business, selling white label products to key U.K. retailers. With this
acquisition, we expect to realize production synergies, cost savings through materials procurement, and increases in production
capacity to support growth in the La-Z-Boy U.K business.
As part of the acquisition, we recognized $9.2 million of goodwill in our Wholesale segment related primarily to synergies we
expect from the integration of the acquired business and future benefits of these synergies. The goodwill asset for Furnico is not
deductible for federal income tax purposes.
Long Island, New York acquisition
On August 16, 2021, we completed our acquisition of the Long Island, New York business that operates three independently
owned La-Z-Boy Furniture Galleries® stores for $4.5 million, inclusive of customary adjustments. We paid $4.4 million of cash
during the second quarter of fiscal 2022 and the remaining consideration includes forgiveness of accounts receivable and
payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of
$0.8 million related to the reacquired rights described above. We also recognized $4.4 million of goodwill in our Retail segment
related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies.
Note 3: Restricted Cash
(Amounts in thousands)
4/27/2024
4/29/2023
Cash and cash equivalents
$
341,098 $
343,374
Restricted cash
—
3,304
Total cash, cash equivalents and restricted cash
$
341,098 $
346,678
Note 4: Inventories
(Amounts in thousands)
4/27/2024
4/29/2023
Raw materials
$
125,932 $
116,440
Work in process
19,443
24,328
Finished goods
161,439
181,401
FIFO inventories
306,814
322,169
Excess of FIFO over LIFO
(43,577)
(45,912)
Total inventories
$
263,237 $
276,257
49
Note 5: Property, Plant and Equipment
(Amounts in thousands)
Estimated
Useful Lives
4/27/2024
4/29/2023
Buildings and building fixtures
3 - 30 years
$
337,755 $
301,546
Machinery and equipment
3 - 20 years
193,900
193,890
Information systems, hardware and software
3 - 10 years
102,971
99,703
Furniture and fixtures
3 - 10 years
29,089
27,049
Land improvements
3 - 30 years
28,182
24,617
Transportation equipment
3 - 6 years
18,336
16,800
Land
N/A
19,312
8,554
Construction in progress
N/A
14,343
32,427
743,888
704,586
Accumulated depreciation
(445,664)
(426,008)
Net property, plant and equipment
$
298,224 $
278,578
Depreciation expense for the fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022, was $47.4 million, $39.0
million, and $38.3 million, respectively.
Note 6: Leases
The Company leases real estate for retail stores, distribution centers, warehouses, manufacturing plants, showrooms and office
space. We also have equipment leases for tractors/trailers, IT and office equipment, and vehicles. We determine if a contract
contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all
the economic benefits from the use of that identified asset. Most of our real estate leases include options to renew or terminate
early. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant
economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.
Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our right of use
("ROU") lease asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S.
Treasury borrowing rates. If an interest rate is implicit in a lease, we will use that rate as the discount rate for that lease. Some
of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature
of these costs, they are not included in the measurement of the ROU lease asset and lease liability.
Supplemental balance sheet information pertaining to our leases is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Operating leases
ROU lease assets
$
444,711 $
415,925
Lease liabilities, short-term
76,436
77,626
Lease liabilities, long-term
403,513
367,938
Finance leases
ROU lease assets
$
1,755 $
344
Lease liabilities, short-term
591
125
Lease liabilities, long-term
1,211
225
The ROU lease assets by segment are as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Wholesale
$
125,286 $
92,195
Retail
290,457
299,536
Corporate and Other
30,723
24,538
Total ROU lease assets
$
446,466 $
416,269
50
The components of lease cost are as follows:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Operating lease cost
$
95,876 $
90,500 $
83,520
Finance lease cost
588
130
130
Short-term lease cost
1,899
2,459
2,097
Variable lease cost
271
187
159
Less: Sublease income
(291)
(276)
(550)
Total lease cost
$
98,343 $
93,000 $
85,356
The following tables present supplemental lease disclosures:
Fiscal Year Ended
(52 weeks)
(52 weeks)
4/27/2024
4/29/2023
(Amounts in thousands)
Operating Leases
Finance Leases
Operating Leases
Finance Leases
Cash paid for amounts included in the measurement of
lease liabilities
$
95,992 $
588 $
91,934 $
130
Lease liabilities arising from new ROU lease assets
112,484
1,941
92,787
—
4/27/2024
4/29/2023
(Amounts in thousands)
Operating Leases
Finance Leases
Operating Leases
Finance Leases
Weighted-average remaining lease term (years)
7.1
3.0
7.0
2.8
Weighted-average discount rate
4.2 %
6.0 %
3.5 %
1.7 %
The following table presents our maturity of lease liabilities:
4/27/2024
(Amounts in thousands)
Operating Leases (1)
Finance Leases
Within one year
$
94,628 $
680
After one year and within two years
86,529
647
After two years and within three years
76,397
550
After three years and within four years
68,304
92
After four years and within five years
61,914
—
After five years
170,008
—
Total lease payments
557,780
1,969
Less: Interest
77,831
167
Total lease obligations
$
479,949 $
1,802
(1)
Excludes approximately $17.2 million in future lease payments for various operating leases commencing in a future period
Note 7: Goodwill and Other Intangible Assets
We have goodwill on our consolidated balance sheet as follows:
Reportable Segment/Unit
Reporting Unit
Related Acquisition
Wholesale Segment
United Kingdom
Wholesale business in the United Kingdom and Ireland
Wholesale Segment
United Kingdom
La-Z-Boy United Kingdom Manufacturing (Furnico)
Retail Segment
Retail
La-Z-Boy Furniture Galleries® stores
Corporate and Other
Joybird
Joybird
51
We test goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or
changes in circumstances indicate that it may be impaired. Under US GAAP, 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 one of our reporting units is greater than its
carrying value ("Step 0"). If the qualitative assessment leads to a determination that the reporting unit’s fair value is less than its
carrying value, or if we elect to bypass the qualitative assessment altogether, we are required to perform a quantitative
impairment test ("Step 1") by calculating the fair value of the reporting unit and comparing the fair value with its associated
carrying value.
Step 0 Assessment
During our fiscal 2024 annual impairment test, we first assessed goodwill recoverability qualitatively using the Step 0 approach
for each of our reporting units. For our qualitative assessment, we considered the most recent quantitative analysis, which was
performed during the fourth quarter of fiscal 2023 for the United Kingdom and Joybird reporting units and during the fourth
quarter of fiscal 2020 for the Retail reporting unit, including assumptions used, such as discount rates and tax rates, indicated
fair values, and the amounts by which those fair values exceeded their carrying amounts. Further, we compared actual
performance in fiscal 2024, along with future financial projections to the internal financial projections used in the prior
quantitative analyses. Additionally, we considered various other factors including macroeconomic conditions, relevant industry
and market trends, and factors specific to the Company that could indicate a potential change in the fair value of our reporting
units. Lastly, we evaluated whether any events have occurred or any circumstances have changed since that time that would
indicate that our goodwill may have become impaired since our last quantitative tests.
Based on these qualitative assessments, we determined that it is more likely than not that the fair value of our Retail reporting
unit exceeded its carrying value and as such, our goodwill for the Retail reporting unit was not considered impaired as of
April 27, 2024 and the Step 1 quantitative goodwill impairment analysis was not necessary. However, for our United Kingdom
and Joybird reporting units, we determined that the quantitative Step 1 goodwill impairment test was necessary as noted below.
Step 1 Assessment
United Kingdom Reporting Unit
Due to a decline in the United Kingdom's financial performance in fiscal 2024, we deemed it necessary to perform the
quantitative Step 1 goodwill impairment test for the United Kingdom reporting unit. To estimate the fair value of this reporting
unit, we applied the income approach using discounted future cash flows. Sales and operating income projections were based on
assumptions driven by the current economic conditions and assumed a 2.0% terminal growth rate. Other key assumptions used
in the quantitative assessment of the reporting unit's goodwill were a discount rate of 10.0%, reflecting a market participant
weighted average cost of capital, and a tax rate of 25.0%, which was specific to the United Kingdom reporting unit. Based on
our testing, the fair value of the United Kingdom reporting unit exceeded its carrying value as of April 27, 2024 by
approximately 28% and no impairment was recorded.
Joybird Reporting Unit
Due to a decline in Joybird's financial performance in fiscal 2024, we deemed it necessary to perform the quantitative Step 1
goodwill impairment test for the Joybird reporting unit. To estimate the fair value of this reporting unit, we applied a
combination of the income approach and the market approach, weighted 75% and 25%, respectively. The income approach
used discounted future cash flows in which sales and operating income projections were based on assumptions driven by
current economic conditions and assumed a 2.0% terminal growth rate. Other key assumptions used in the discounted future
cash flow model were a discount rate of 18.0%, reflecting a market participant weighted average cost of capital assuming
Joybird would be sold as a stand-alone business, and a tax rate of 24.2%, which was specific to the Joybird reporting unit.
The market approach used the guideline public company method, which derives a valuation from market multiples based on
revenue for comparable public companies and was adjusted for a control premium based on recent merger and acquisition
transaction data of target companies similar to the Joybird reporting unit. Based on our testing, the fair value of the Joybird
reporting unit exceeded its carrying value as of April 27, 2024 by approximately 6% and no impairment was recorded.
Further, a sensitivity analysis was performed on key assumptions used in the valuation, primarily the discount rate and terminal
growth rate, and using a range of reasonable inputs, the fair value of the Joybird reporting unit either exceeded its carrying
value or did not exceed its carrying value by an immaterial amount, for each of the various scenarios analyzed. However,
changes to other valuation inputs or failure to meet our forecasts, in particular our sales and operating income projections, could
52
reduce the fair value of the Joybird reporting unit and thus increase the possibility that our goodwill may be impaired in the
future.
The following table summarizes changes in the carrying amount of our goodwill by reportable segment:
(Amounts in thousands)
Wholesale
Segment
Retail
Segment
Corporate
and Other
Total
Goodwill
Balance at April 30, 2022 (1)
$
20,207 $
118,951 $
55,446 $
194,604
Acquisitions
—
10,598
—
10,598
Translation adjustment
(5)
(189)
—
(194)
Balance at April 29, 2023 (1)
20,202
129,360
55,446
205,008
Acquisitions
—
9,593
—
9,593
Translation adjustment
(117)
(31)
—
(148)
Balance at April 27, 2024 (1)
$
20,085 $
138,922 $
55,446 $
214,453
(1)
Includes $26.9 million of accumulated impairment losses in Corporate and Other.
We have intangible assets on our consolidated balance sheet as follows:
Reportable Segment
Intangible Asset
Useful Life
Wholesale Segment
Customer relationships from our acquisition of the
wholesale business in the United Kingdom and Ireland
Amortizable over 15 year useful life
Wholesale Segment
American Drew® trade name
Indefinite-lived
Retail Segment
Reacquired rights to own and operate La-Z-Boy
Furniture Galleries® stores
Indefinite-lived
Corporate and Other
Joybird® trade name
Amortizable over eight-year useful life
We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be
impaired. We test indefinite-lived intangible assets 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 assets might be impaired. Similar to our goodwill
testing, we used the qualitative Step 0 approach to assess if it was more likely than not that the fair values of our indefinite-lived
intangible assets were greater than their carrying values. Based on the same qualitative factors outlined above, we determined
that it is more likely than not that the fair value of each of our indefinite-lived intangible assets exceeded their respective
carrying value and as such, our indefinite-lived intangible assets were not considered impaired as of April 27, 2024, and the
Step 1 quantitative impairment analysis was not necessary.
The following summarizes changes in our intangible assets:
(Amounts in thousands)
Indefinite-
Lived Trade
Names
Finite-Lived
Trade Name
Indefinite-
Lived
Reacquired
Rights
Other
Intangible
Assets
Total
Intangible
Assets
Balance at April 30, 2022
$
1,155 $
3,392 $
27,319 $
2,105 $
33,971
Acquisitions
—
—
6,562
—
6,562
Amortization
—
(798)
—
(208)
(1,006)
Translation adjustment
—
—
(142)
(10)
(152)
Balance at April 29, 2023
$
1,155 $
2,594 $
33,739 $
1,887 $
39,375
Acquisitions
—
—
8,924
—
8,924
Amortization
—
(798)
—
(218)
(1,016)
Translation adjustment
—
—
(23)
(9)
(32)
Balance at April 27, 2024
$
1,155 $
1,796 $
42,640 $
1,660 $
47,251
For our intangible assets recorded as of April 27, 2024, we estimate annual amortization expense to be $1.0 million for each of
the two succeeding fiscal years, $0.4 million in the third succeeding fiscal year, and $0.2 million in the fourth and fifth
succeeding fiscal years.
53
Note 8: Investments
We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our
non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation
retirement plan. We also hold investments of two privately-held companies consisting of non-marketable preferred shares,
warrants to purchase common shares, and convertible notes. In the fourth quarter of fiscal 2023, we recognized an impairment
of $10.3 million, consisting of $7.6 million in cost-basis investments and $2.7 million in convertible notes, which in total
represented the full cost-basis value of the investment in one of these privately held start-up companies. The impairment loss is
recognized in other income (expense), net, on the consolidated statement of income.
Our short-term investments are included in other current assets and our long-term investments are included in other long-term
assets on our consolidated balance sheet.
The following summarizes our investments:
(Amounts in thousands)
4/27/2024
4/29/2023
Short-term investments:
Marketable securities
$
5,553 $
5,043
Held-to-maturity investments
1,259
1,351
Total short-term investments
6,812
6,394
Long-term investments:
Marketable securities
12,690
18,509
Total investments
$
19,502 $
24,903
Investments to enhance returns on cash
$
6,754 $
11,617
Investments to fund compensation/retirement plans
12,748
13,286
Total investments
$
19,502 $
24,903
The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type:
4/27/2024
4/29/2023
(Amounts in thousands)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Equity securities
$
476 $
— $
3,728 $
1,338 $
(103) $
6,853
Fixed income
15
(72)
12,015
42
(620)
14,039
Other
707
(14)
3,759
1,171
—
4,011
Total securities
$
1,198 $
(86) $
19,502 $
2,551 $
(723) $
24,903
The following table summarizes sales of marketable securities:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Proceeds from sales
$
23,328 $
24,483 $
35,116
Gross realized gains
1,967
94
879
Gross realized losses
(768)
(242)
(402)
54
The following is a summary of the fair value of fixed income marketable securities, classified as available-for-sale securities, by
contractual maturity:
(Amounts in thousands)
4/27/2024
Within one year
$
5,495
Securities not due at a single maturity date
6,520
Total
$
12,015
Note 9: Accrued Expenses and Other Current Liabilities
(Amounts in thousands)
4/27/2024
4/29/2023
Payroll and other compensation
$
59,123 $
63,342
Accrued product warranty, current portion
22,362
19,893
Customer deposits
88,798
105,766
Deferred revenue
35,518
44,939
Other current liabilities
57,967
56,710
Accrued expenses and other current liabilities
$
263,768 $
290,650
Note 10: Debt
On October 15, 2021, we entered into a five-year $200 million unsecured revolving credit facility (as amended, the “Credit
Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes. We may increase
the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of
each lender to participate in such increase, up to an additional amount of $100 million. The Credit Facility will mature on
October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the
satisfaction of customary conditions. As of April 27, 2024, we have no borrowings outstanding under the Credit Facility.
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 27, 2024, we were in compliance with our financial covenants under the Credit Facility.
Cash paid for interest during fiscal years 2024, 2023, and 2022 was $0.4 million, $0.3 million and $0.5 million, respectively.
Note 11: Employee Benefits
The table below summarizes the total costs associated with our employee retirement and welfare plans.
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
401(k) Retirement Plan
$
14,698 $
12,877 $
11,763
Performance Compensation Retirement Plan (1)
(133)
160
1,654
Deferred Compensation Plan (2)
(86)
202
242
Non-Qualified Defined Benefit Retirement Plan (3)
737
748
763
(1)
Performance Compensation Retirement Plan includes forfeitures.
(2)
Includes (gain)/loss on investments held to fund compensation/retirement plans and administrative fees.
(3)
Primarily related to interest cost.
401(k) Retirement Plan. Voluntary 401(k) retirement plans are offered to eligible employees within certain U.S. operating units.
For most operating units, we make matching contributions based on specific formulas.
Performance Compensation Retirement Plan. A performance compensation retirement plan ("PCRP") is maintained for eligible
highly compensated employees. Beginning in fiscal 2023, contributions into the plan are no longer being made. Prior year
contributions were based on achievement of performance targets. Employees vest in these prior period contributions if they
achieve certain age and years of service with the Company and can elect to receive benefit payments over a period ranging
55
between five to twenty years after they leave the Company. While the Company no longer makes contributions, the outstanding
liability balance related to the plan is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Short-term obligation included in other current liabilities
$
2,341 $
2,103
Long-term obligation included in other long-term liabilities
9,021
11,895
Executive Deferred Compensation Plan. We maintain an executive deferred compensation plan for eligible highly compensated
employees, an element of which may include Company contributions. Further information related to the plan is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Plan obligation included in other long-term liabilities
$
21,157 $
21,689
Cash surrender value on life insurance contracts included in other long-term assets (1)
43,398
40,723
(1)
Life insurance contracts are related to the Executive Deferred Compensation Plan and the PCRP.
Non-Qualified Defined Benefit Retirement Plan. We maintain a non-qualified defined benefit retirement plan for certain former
salaried employees. We hold available-for-sale marketable securities to fund future obligations of this plan in a Rabbi trust
(refer to Note 8, Investments, and Note 20, Fair Value Measurements, for additional information on these investments). We are
not required to fund the non-qualified defined benefit retirement plan in fiscal 2025; however, we have the discretion to make
contributions to the Rabbi trust. Further information related to the plan is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Short-term plan obligation included in other current liabilities
$
996 $
1,053
Long-term plan obligation included in other long-term liabilities
10,246
11,053
Discount rate used to determine obligation
5.5%
5.3%
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Actuarial loss recognized in AOCI
$
124 $
193 $
306
Benefit payments (1)
1,041
1,091
1,182
(1)
Benefit payments are scheduled to be between $0.9 million and $1.0 million annually for the next 10 years.
Note 12: Product Warranties
We accrue an estimated liability for product warranties when we recognize revenue on the sale of warrantied products. We
estimate future warranty claims on product sales based on sales volume and our historical claims experience and periodically
adjust the provision to reflect changes in actual experience. We incorporate repair costs into our liability estimates, including
materials, labor and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product
to our customers. Over 90% of our warranty liability relates to our Wholesale reportable segment as we generally warrant our
products against defects for one to three years on fabric and leather, from one to five years on cushions and padding, and
provide a limited lifetime warranty on certain mechanisms and frames, unless otherwise noted in the warranty. Additionally,
our Wholesale segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty
against defects on a majority of the Joybird products, which are a part of our Corporate and Other results. For all our
manufacturer warranties, the warranty period begins when the consumer receives our product. We use considerable judgment in
making our estimates, and we record differences between our actual and estimated costs when the differences are known.
56
A reconciliation of the changes in our product warranty liability is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023 (1)
Balance as of the beginning of the year
$
30,984 $
27,036
Accruals during the year
33,227
43,067
Settlements during the year
(35,302)
(39,119)
Balance as of the end of the year (2)
$
28,909 $
30,984
(1)
Accruals and settlements for fiscal 2023 have been revised. The adjustments were offsetting and had no impact on the liability balance at the end of
fiscal 2023 or the amount recognized in the consolidated statement of income for fiscal 2023.
(2)
$22.4 million and $19.9 million is recorded in accrued expenses and other current liabilities as of April 27, 2024, and April 29, 2023, respectively,
while the remainder is included in other long-term liabilities.
We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties
issued during the respective periods.
Note 13: Commitments and Contingencies
We have been named as a defendant in various lawsuits arising in the ordinary course of business and as a potentially
responsible party at certain environmental clean-up sites, the effect of which are not considered significant. Based on a review
of all currently known facts and our experience with previous legal and environmental matters, we have recorded expense in
respect of probable and reasonably estimable losses arising from legal matters, and we currently do not believe it is probable
that we will have any additional loss for legal or environmental matters that would be material to our consolidated financial
statements.
In view of the inherent difficulty of predicting the outcome of litigation, particularly where the claimants seek very large or
indeterminate damages or where the matters present novel legal theories, we generally cannot predict the eventual outcome,
timing, or related loss, if any, of pending matters.
Note 14: Stock-Based Compensation
In fiscal 2023, our shareholders approved the La-Z-Boy Incorporated 2022 Omnibus Incentive Plan which provides for the
grant of stock options, stock appreciation rights, restricted stock and restricted stock units, unrestricted stock, performance
awards, dividend equivalent rights, and short-term cash incentive awards. Under this plan, the aggregate number of common
shares that may be issued through awards of any form is 2.8 million shares, reduced by the number of shares subject to awards
granted under the La-Z-Boy Incorporated 2017 Omnibus Incentive Plan after April 30, 2022 and prior to the Annual Meeting of
Shareholders of La-Z-Boy Incorporated held on August 30, 2022.
The table below summarizes the total stock-based compensation expense we recognized for all outstanding grants. Stock-based
compensation expense is recorded in SG&A in the consolidated statement of income:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Equity-based awards expense
Restricted stock
$
6,959 $
5,069 $
3,720
Performance-based shares
5,109
4,293
4,971
Stock options
1,257
2,076
1,973
Restricted stock units issued to Directors
1,101
1,020
1,194
Total equity-based awards expense
14,426
12,458
11,858
Liability-based awards expense (1)
152
162
(1,131)
Total stock-based compensation expense
$
14,578 $
12,620 $
10,727
(1)
Includes stock appreciation rights, deferred stock units issued to Directors, restricted stock units, and performance-based units. Compensation
expense for these awards is based on the market price of our common stock on the grant date and is remeasured each reporting period based on the
market value of our common shares on the last day of the reported period.
57
Restricted Stock. We granted 331,140 shares of restricted stock units to employees during fiscal 2024 and we also have
restricted stock awards outstanding from previous grants. We issue restricted stock at no cost to the employees and account for
restricted stock awards as equity-based awards because when they vest, they will be settled in common shares. We recognize
compensation expense for restricted stock over the vesting period equal to the fair value on the date our Compensation and
Talent Oversight Committee of our board of directors approved the awards. Restricted stock awards vest at 25% per year,
beginning one year from the grant date for a term of four years, with continued vesting upon retirement with respect to the
fiscal 2023 and 2024 grants. We accelerate the expense for restricted stock granted to retirement-eligible employees over the
vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months
following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation
expense in the same period as the forfeitures occur. The weighted average fair value of the restricted stock that was awarded in
fiscal 2024, fiscal 2023 and fiscal 2022 was $27.68, $24.58 and $38.27 per share, respectively, the market value of our common
shares on the date of grant.
The following table summarizes information about non-vested awards as of and for the year ended April 27, 2024:
Shares or Units
(In Thousands)
Weighted
Average Grant
Date Fair Value
Non-vested awards at April 29, 2023
393 $
28.10
Granted
331
27.68
Vested
(131)
29.00
Canceled
(32)
29.16
Non-vested awards at April 27, 2024
561
27.58
Unrecognized compensation cost related to non-vested restricted shares was $7.9 million and is expected to be recognized over
a weighted-average remaining contractual term of all unvested awards of 1.6 years.
Performance Shares. Under the La-Z-Boy Incorporated 2022 Omnibus Incentive Plan, the Compensation and Talent Oversight
Committee of our board of directors is authorized to award common shares to certain employees based on the attainment of
certain financial goals over a given performance period. The awards are offered at no cost to the employees. In the event of an
employee's termination during the vesting period, the potential right to earn shares under this program is generally forfeited.
During the first quarter of fiscal 2024, we granted 219,154 performance-based shares, and we also have performance-based
share awards outstanding from grants in fiscal 2023 and fiscal 2022. Payout of these grants depend on our financial
performance (50%) and a market-based condition based on the total return our shareholders receive on their investment in our
stock relative to returns earned through investments in other public companies (50%). The performance share opportunity
ranges from 50% of the employee's target award if minimum performance requirements are met to a maximum of 200% of the
target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which
is generally three fiscal years.
The number of awards that will vest, as well as unearned and canceled awards, depend on the achievement of certain financial
and shareholder-return goals over the three-year performance periods, and will be settled in shares if service conditions are met,
requiring employees to remain employed with the Company through the end of the three-year performance periods.
The following table summarizes the performance-based shares outstanding at the maximum award amounts based upon the
respective performance share agreements:
Shares
(In Thousands)
Weighted
Average Grant
Date Fair Value
Outstanding shares at April 29, 2023
763 $
28.47
Granted
438
25.48
Vested
(100)
30.75
Unearned or canceled
(569)
26.20
Outstanding shares at April 27, 2024
532
26.39
58
We account for performance-based shares as equity-based awards because when they vest, they will be settled in common
shares. In the event of an employee's termination during the vesting period, the potential right to earn shares under this program
is generally forfeited and we have elected to recognize forfeitures as an adjustment to compensation expense in the same period
in which the forfeitures occur. For shares that vest based on our results relative to the performance goals, we expense as
compensation cost the fair value of the shares as of the day we granted the awards recognized over the performance period,
taking into account the probability that we will satisfy the performance goals. For shares that vest based on market conditions,
we use a Monte Carlo valuation model to estimate each share's fair value as of the date of grant. The Monte Carlo valuation
model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine our expected
performance ranking relative to our peer group. We expense compensation cost over the vesting period regardless of whether
the market condition is ultimately satisfied.
The fair value of each performance-based share that we granted during fiscal 2024, 2023, and 2022 was as follows:
Grant Year
Vesting based on:
Fiscal 2024
Fiscal 2023
Fiscal 2022
Performance goals (1)
$
25.48 $
22.43 $
36.13
Market conditions (2)
$
34.15 $
36.63 $
51.85
(1)
Represents the market value of our common shares on the date we granted the awards less the dividends we expect to pay before the shares vest
(2)
Based on Monte Carlo valuation model
Our unrecognized compensation cost at April 27, 2024, related to performance-based shares was $6.5 million based on the
current estimates of the number of awards that will vest, and is expected to be recognized over a weighted-average remaining
contractual term of all unvested awards of 1.3 years.
Equity-based compensation expenses related to performance-based shares recognized in our consolidated statement of income
were as follows (for the fiscal years ended):
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Fiscal 2020 grant
$
— $
— $
1,066
Fiscal 2021 grant
—
548
2,195
Fiscal 2022 grant
1,379
1,649
1,710
Fiscal 2023 grant
1,867
2,096
—
Fiscal 2024 grant
1,863
—
—
Total expense
$
5,109 $
4,293 $
4,971
Stock Options. We did not grant stock options to employees during fiscal 2024, but we have stock options outstanding from
grants from prior years. We account for stock options as equity-based awards because when they are exercised, they will be
settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value
on the date our Compensation and Talent Oversight Committee of our board of directors approved the awards. The vesting
period for our stock options ranges from one to four years, with accelerated vesting upon retirement. The vesting date for
retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date. We
accelerate the expense for options granted to retirement eligible employees over the vesting period, with expense recognized
from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is
longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures
occur. Granted options outstanding under the former long-term equity award plan remain in effect and have a term of 10 years.
We estimated the fair value of the employee stock options granted in prior years at their respective grant date using the Black-
Scholes option-pricing model, which requires management to make certain assumptions.
59
The fair value of stock options granted during fiscal years 2023 and 2022 were calculated using the following assumptions:
Grant Year
Fiscal 2023
Fiscal 2022
Assumption
Risk-free interest rate
2.87%
0.82%
U.S. Treasury issues with term equal to expected life at grant date
Dividend rate
2.70%
1.58%
Estimated future dividend rate and common share price at grant date
Expected life
5.0 years
5.0 years
Contractual term of stock option and expected employee exercise trends
Stock price volatility
42.78%
42.16%
Historical volatility of our common shares
Fair value per option
$
7.90
$
12.29
Plan activity for stock options under the above plans was as follows:
Number of Shares
(In Thousands)
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(Years)
Aggregate Intrinsic
Value
(In Thousands)
Outstanding at April 29, 2023
1,621 $
29.73
6.7
$
2,175
Granted
—
—
N/A
N/A
Canceled
(18)
31.11
N/A
N/A
Exercised
(474)
27.39
N/A
4,242
Outstanding at April 27, 2024
1,129
30.69
6.0
3,951
Exercisable at April 27, 2024
822 $
31.46
5.4
$
2,087
The aggregate intrinsic value of options exercised was $1.0 million and $0.3 million in fiscal 2023 and fiscal 2022,
respectively. As of April 27, 2024, our total unrecognized compensation cost related to non-vested stock option awards was
$1.3 million, which we expect to recognize over a weighted-average remaining vesting term of all unvested awards of 1.2 years.
During the year ended April 27, 2024, stock options with respect to 0.3 million shares vested.
We received $13.0 million, $4.7 million, and $1.1 million in cash during fiscal 2024, 2023, and 2022, respectively, for exercises
of stock options.
Restricted Stock Units Issued to Directors. Restricted stock units granted to our non-employee directors are offered at no cost to
the directors and restricted stock units granted following August 2022 vest on the earlier of the date a director ceases to be a
member of the board (for any reason other than the termination of service for cause) or the one-year anniversary of the grant
date. During fiscal 2024, we granted less than 0.1 million restricted stock units to our non-employee directors. We account for
these restricted stock units as equity-based awards because when they vest, they will be settled in shares of our common stock.
We measure and recognize compensation expense for these awards based on the market price of our common shares on the date
of grant. The weighted-average fair value of the restricted stock units that were granted during fiscal 2024, fiscal 2023, and
fiscal 2022 was $30.80, $26.49, and $35.34, respectively.
60
Note 15: Accumulated Other Comprehensive Loss
Activity in accumulated other comprehensive loss was as follows:
(Amounts in thousands)
Translation
adjustment
Unrealized gain
(loss) on
marketable
securities
Net pension
amortization
and net
actuarial loss
Accumulated
other
comprehensive
income (loss)
Balance at April 24, 2021
$
3,041
$
370
$
(4,932) $
(1,521)
Changes before reclassifications
(5,002)
(947)
1,539
(4,410)
Amounts reclassified to net income
—
59
306
365
Tax effect
—
220
(451)
(231)
Other comprehensive income (loss) attributable to La-Z-Boy
Incorporated
(5,002)
(668)
1,394
(4,276)
Balance at April 30, 2022
$
(1,961) $
(298) $
(3,538) $
(5,797)
Changes before reclassifications
(691)
(27)
879
161
Amounts reclassified to net income
—
231
193
424
Tax effect
—
(51)
(265)
(316)
Other comprehensive income (loss) attributable to La-Z-Boy
Incorporated
(691)
153
807
269
Balance at April 29, 2023
$
(2,652) $
(145) $
(2,731) $
(5,528)
Changes before reclassifications
(1,152)
189
432
(531)
Amounts reclassified to net income
—
331
124
455
Tax effect
—
(129)
(137)
(266)
Other comprehensive income (loss) attributable to La-Z-Boy
Incorporated
(1,152)
391
419
(342)
Balance at April 27, 2024
$
(3,804) $
246
$
(2,312) $
(5,870)
We reclassified both the unrealized gain (loss) on marketable securities and the net pension amortization from accumulated
other comprehensive loss to net income through other income (expense), net.
The components of noncontrolling interest were as follows:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Balance as of the beginning of the year
$
10,261 $
8,897 $
8,648
Net income
2,010
1,277
2,311
Other comprehensive income (loss)
(803)
87
(802)
Dividends distributed to joint venture minority partners
(1,172)
—
(1,260)
Balance as of the end of the year
$
10,296 $
10,261 $
8,897
61
Note 16: Revenue Recognition
The following table presents our revenue disaggregated by product category and by segment or unit:
Year Ended April 27, 2024
(Amounts in thousands)
Wholesale
Retail
Corporate
and Other
Total
Upholstered Furniture
$ 1,143,354 $
698,782 $
113,059 $ 1,955,195
Casegoods Furniture
73,960
47,651
9,777
131,388
Delivery
166,243
32,076
7,291
205,610
Other (1)
63,721
76,617
23,642
163,980
Total
$ 1,447,278 $
855,126 $
153,769 $ 2,456,173
Eliminations
(409,146)
Consolidated Net Sales
$ 2,047,027
Year Ended April 29, 2023
(Amounts in thousands)
Wholesale
Retail
Corporate
and Other
Total
Upholstered Furniture
$ 1,251,762 $
811,956 $
110,938 $ 2,174,656
Casegoods Furniture
106,001
58,455
15,223
179,679
Delivery
210,963
29,403
7,651
248,017
Other (1)
121,522
82,229
32,378
236,129
Total
$ 1,690,248 $
982,043 $
166,190 $ 2,838,481
Eliminations
(489,048)
Consolidated Net Sales
$ 2,349,433
(1)
Primarily includes revenue for advertising, royalties, parts, accessories, after-treatment products, surcharges, rebates and other sales incentives. In
fiscal 2024, certain amounts that were previously charged as surcharges in fiscal 2023 are now included in the base product pricing and reflected in
the amounts by product category.
Upholstered Furniture - Includes revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals,
modulars, and ottomans. This revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned
stores), operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, other major dealers,
independent retailers, and the end consumer.
Casegoods Furniture - Includes revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers,
nightstands and benches; furniture typically found in the dining room, such as dining tables, storage units, and stools; and
furniture typically found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment
centers. This revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent
retailers, and the end consumer.
Contract Assets and Liabilities. We receive customer deposits from end consumers before we recognize revenue and in some
cases we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance
obligation, resulting in a contract asset and a corresponding deferred revenue liability. In our consolidated balance sheet,
customer deposits and deferred revenue (collectively, the "contract liabilities") are reported in accrued expenses and other
current liabilities while contract assets are reported as other current assets.
62
The following table presents our contract assets and liabilities:
(Unaudited, amounts in thousands)
4/27/2024
4/29/2023
Contract assets
$
35,518 $
44,939
Customer deposits
$
88,798 $
105,766
Deferred revenue
35,518
44,939
Total contract liabilities (1)
$
124,316 $
150,705
(1)
During the year ended April 27, 2024, we recognized revenue of $139.0 million related to our contract liability balance at April 29, 2023.
Contract assets, customer deposits, and deferred revenue decreased during fiscal 2024 primarily due to a reduction in backlog.
Note 17: Segment Information
Our reportable operating segments include the Wholesale segment and the Retail segment.
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 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, operators of La-Z-Boy
Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other
independent retailers.
Retail Segment. Our Retail segment consists of one operating segment comprised of our 187 company-owned La-Z-Boy
Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other
home furnishing accessories, to end consumers through these stores.
Corporate and Other. Corporate and Other includes the shared costs for corporate functions, including human resources,
information technology, finance and legal, in addition to revenue generated through royalty agreements with companies
licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business
activities and have aggregated them with our other insignificant operating segments, including our global trading company in
Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture such as sofas, loveseats, chairs,
ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture such as occasional tables and other accessories.
Joybird sells to the end consumer primarily online through its website, www.joybird.com and through small-format stores in
key urban markets. None of the operating segments included in Corporate and Other meet the requirements of reportable
segments.
The accounting policies of the operating segments are the same as those described in Note 1, Accounting Policies. We account
for intersegment revenue transactions between our segments consistent with independent third-party transactions, that is, at
current market prices. As a result, the manufacturing profit related to sales to our Retail segment is included within the
Wholesale segment. Operating income realized on intersegment revenue transactions is therefore generally consistent with the
operating income realized on our revenue from independent third-party transactions. Segment operating income is based on
profit or loss from operations before interest expense, interest income, other income (expense), net and income taxes.
Identifiable assets are cash and equivalents, notes and accounts receivable, net inventories, net property, plant and equipment,
right-of-use lease assets, goodwill and other intangible assets. Our unallocated assets include deferred income taxes, corporate
assets (including a portion of cash and equivalents), and various other assets. Sales are attributed to countries on the basis of the
customer's location.
63
The following table presents sales and operating income (loss) by segment:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Sales
Wholesale segment:
Sales to external customers
$ 1,048,431 $ 1,215,429 $ 1,371,602
Intersegment sales
398,847
474,819
397,236
Wholesale segment sales
1,447,278 1,690,248 1,768,838
Retail segment sales
855,126
982,043
804,394
Corporate and Other:
Sales to external customers
143,470
151,961
180,815
Intersegment sales
10,299
14,229
15,144
Corporate and Other sales
153,769
166,190
195,959
Eliminations
(409,146)
(489,048)
(412,380)
Consolidated sales
$ 2,047,027 $ 2,349,433 $ 2,356,811
Operating Income (Loss)
Wholesale segment
$
99,373 $
115,215 $
134,013
Retail segment
111,682
161,571
109,546
Corporate and Other
(60,259)
(65,347)
(36,803)
Consolidated operating income
150,796
211,439
206,756
Interest expense
(455)
(536)
(895)
Interest income
15,482
6,670
1,338
Other income (expense), net
(71)
(11,784)
(1,708)
Income before income taxes
$
165,752 $
205,789 $
205,491
64
The following tables present additional financial information by segment and location.
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Depreciation and Amortization
Wholesale segment
$
28,189 $
23,327 $
24,520
Retail segment
9,632
7,922
6,320
Corporate and Other
10,731
8,944
8,931
Consolidated depreciation and amortization
$
48,552 $
40,193 $
39,771
Capital Expenditures
Wholesale segment
$
30,854 $
38,491 $
49,373
Retail segment
18,502
22,285
19,426
Corporate and Other
4,195
8,036
7,781
Consolidated capital expenditures
$
53,551 $
68,812 $
76,580
Sales by Country
United States
90 %
89 %
89 %
Canada
6 %
6 %
6 %
Other
4 %
5 %
5 %
Total
100 %
100 %
100 %
(Amounts in thousands)
4/27/2024
4/29/2023
Assets
Wholesale segment
$
722,044 $
688,238
Retail segment
650,586
615,752
Unallocated assets
540,812
562,273
Consolidated assets
$ 1,913,442 $ 1,866,263
Long-Lived Assets by Geographic Location
Domestic
$
911,616 $
865,556
International
94,778
73,674
Consolidated long-lived assets
$ 1,006,394 $
939,230
Note 18: Income Taxes
Income before income taxes consists of the following:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
United States
$
145,854 $
177,940 $
164,432
Foreign
19,898
27,849
41,059
Total
$
165,752 $
205,789 $
205,491
65
Income tax expense (benefit) consists of the following components:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Federal
Current
$
29,637 $
31,945 $
30,793
Deferred
(1,529)
4,960
2,303
State
Current
9,823
10,345
9,191
Deferred
(318)
1,537
1,060
Foreign
Current
4,534
7,237
11,632
Deferred
(1,031)
(2,176)
(1,816)
Total income tax expense
$
41,116 $
53,848 $
53,163
Our effective tax rate differs from the U.S. federal income tax rate for the following reasons:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(% of income before income taxes)
4/27/2024
4/29/2023
4/30/2022
Statutory tax rate
21.0 %
21.0 %
21.0 %
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit
4.3 %
4.5 %
3.9 %
Losses/(gains) on corporate owned life insurance
(0.6) %
0.2 %
— %
Fair value adjustment of contingent consideration liability
— %
(0.1) %
(0.3) %
Miscellaneous items
0.1 %
0.6 %
1.3 %
Effective tax rate
24.8 %
26.2 %
25.9 %
For our Canada and Mexico foreign operating units, we permanently reinvest the earnings and consequently do not record a
deferred tax liability relative to the undistributed earnings. We have reinvested approximately $63.0 million of the earnings.
After enactment of the Tax Cuts and Jobs Act in 2017, the potential deferred tax attributable to these earnings would be
approximately $2.9 million, primarily related to foreign withholding taxes and state income taxes. The Company is not
permanently reinvested on undistributed earnings for its Thailand and United Kingdom foreign operating units and has provided
for deferred tax attributable to those earnings of approximately $1.4 million as of the end of fiscal 2024.
66
The primary components of our deferred tax assets and (liabilities) were as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Assets
Leases
$
121,696 $
110,993
Deferred and other compensation
15,541
19,475
State income tax—net operating losses, credits and other
4,787
5,126
Warranty
6,985
7,213
Workers' compensation
1,823
1,817
Bad debt
1,587
1,475
Employee benefits
3,153
2,159
Federal net operating losses, credits
152
530
Other
1,822
2,198
Valuation allowance
(1,460)
(3,468)
Total deferred tax assets
156,086
147,518
Liabilities
Right of use lease assets
(113,628)
(104,067)
Property, plant and equipment
(13,995)
(19,936)
Inventory
(954)
(1,802)
Goodwill and other intangibles
(16,709)
(14,128)
Tax on undistributed foreign earnings
(1,365)
(1,152)
Net deferred tax assets
$
9,435 $
6,433
The deferred tax assets associated with loss carry forwards and the related expiration dates are as follows:
(Amounts in thousands)
Amount
Expiration
Federal net operating losses
$
152
Fiscal 2039
Various U.S. state net operating losses (excluding federal tax effect)
1,556
Fiscal 2025-2039
Foreign capital losses
146
Indefinite
Foreign net operating losses
184
Indefinite
We evaluate our deferred taxes to determine if a valuation allowance is required. Accounting standards require that we assess
whether a valuation allowance should be established based on the consideration of all available evidence using a "more likely
than not" standard with significant weight being given to evidence that can be objectively verified.
The evaluation of the amount of net deferred tax assets expected to be realized necessarily involves forecasting the amount of
taxable income that will be generated in future years. We have forecasted future results using estimates management believes to
be reasonable. We based these estimates on objective evidence such as expected trends resulting from certain leading economic
indicators. Based upon our net deferred tax asset position at April 27, 2024, we estimate that approximately $26.6 million of
future taxable income would need to be generated to fully recover our net deferred tax assets. The realization of deferred
income tax assets is dependent on future events and actual results may vary from management's forecasts due to economic
volatility and uncertainty along with unpredictable complexities in the global supply chain. Such variances could result in
adjustments to the valuation allowance on deferred tax assets in future periods, and such adjustments could be material to the
financial statements.
67
A summary of the valuation allowance by jurisdiction is as follows:
(Amounts in thousands)
4/27/2024
4/29/2023
Change
U.S. Federal
$
— $
1,822 $
(1,822)
U.S. State
1,310
1,496
(186)
Foreign
150
150
—
Total
$
1,460 $
3,468 $
(2,008)
The remaining valuation allowance of $1.5 million is primarily related to certain U.S. state and foreign deferred tax assets. The
U.S. state deferred taxes are primarily related to state net operating losses and state tax credits. The foreign deferred taxes are
primarily related to capital losses.
As of April 27, 2024, we had a gross unrecognized tax benefit of $1.2 million related to uncertain tax positions in various
jurisdictions. A reconciliation of the beginning and ending balance of these unrecognized tax benefits is as follows:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Balance at the beginning of the period
$
1,084 $
1,037 $
1,069
Additions:
Positions taken during the current year
168
109
121
Positions taken during the prior year
50
83
10
Reductions:
Positions taken during the prior year
—
—
(23)
Reductions resulting from the lapse of the statute of limitations
(127)
(145)
(140)
Balance at the end of the period
$
1,175 $
1,084 $
1,037
We recognize interest and penalties associated with uncertain tax positions in income tax expense. We had approximately $0.5
million and $0.4 million accrued for interest and penalties as of April 27, 2024 and April 29, 2023, respectively.
If recognized, $1.0 million of the total $1.2 million of unrecognized tax benefits would decrease our effective tax rate. 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.
Our U.S. federal income tax returns for fiscal years 2021 and subsequent years are still subject to audit. In addition, we conduct
business in various states. The major states in which we conduct business are subject to audit for fiscal years 2020 and
subsequent years. Our foreign operations are subject to audit for fiscal years 2014 and subsequent years.
Cash paid for taxes (net of refunds received) during the fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022,
was $34.2 million, $69.9 million, and $38.6 million, respectively.
68
Note 19: Earnings per Share
The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings
per share:
Fiscal Year Ended
(52 weeks)
(52 weeks)
(53 weeks)
(Amounts in thousands)
4/27/2024
4/29/2023
4/30/2022
Numerator (basic and diluted):
Net income attributable to La-Z-Boy Incorporated
$
122,626 $
150,664 $
150,017
Income allocated to participating securities (1)
—
—
(7)
Net income available to common Shareholders
$
122,626 $
150,664 $
150,010
Denominator:
Basic weighted average common shares outstanding
42,878
43,148
44,023
Contingent common shares
279
91
79
Stock option dilution
123
1
192
Diluted weighted average common shares outstanding
43,280
43,240
44,294
Earnings per Share:
Basic
$
2.86 $
3.49 $
3.41
Diluted (2)
$
2.83 $
3.48 $
3.39
(1)
Prior to fiscal 2019, we granted restricted stock awards that contained non-forfeitable rights to dividends on unvested shares, and we are required to
include these participating securities in calculating our basic earnings per common share, using the two-class method.
(2)
Diluted earnings per share was computed using the treasury stock method.
The values for contingent common shares set forth above reflect the dilutive effect of common shares that we would have
issued to employees under the terms of performance-based share awards if the relevant performance period for the award had
been the reporting period.
We exclude the effect of options from our diluted share calculation when the weighted average exercise price of the options is
higher than the average market price, since including the options' effect would be anti-dilutive. We excluded options to
purchase 0.5 million, 1.4 million and 0.2 million shares from the diluted share calculation for the years ended April 27, 2024,
April 29, 2023 and April 30, 2022, respectively.
Note 20: Fair Value Measurements
Accounting standards require that we put financial assets and liabilities into one of three categories based on the inputs we use
to value them:
•
Level 1 — Financial assets and liabilities, the values of which are based on unadjusted quoted market prices for
identical assets and liabilities in an active market that we have the ability to access.
•
Level 2 — Financial assets and liabilities, the values of which are based on quoted prices in markets that are not active
or on model inputs that are observable for substantially the full term of the asset or liability.
•
Level 3 — Financial assets and liabilities, the values of which are based on prices or valuation techniques that require
inputs that are both unobservable and significant to the overall fair value measurement.
Accounting standards require that in making fair value measurements, we use observable market data when available. When
inputs used to measure fair value fall within different levels of the hierarchy, we categorize the fair value measurement as being
in the lowest level that is significant to the measurement. We recognize transfers between levels of the fair value hierarchy at
the end of the reporting period in which they occur.
In addition to assets and liabilities that we record at fair value on a recurring basis, we are required to record assets and
liabilities at fair value on a non-recurring basis. We measure non-financial assets such as other intangible assets, goodwill, and
69
other long-lived assets at fair value when there is an indicator of impairment, and we record them at fair value only when we
recognize an impairment loss.
The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring
basis at April 27, 2024 and April 29, 2023. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the
periods presented.
At April 27, 2024
Fair Value Measurements
(Amounts in thousands)
Level 1
Level 2
Level 3
NAV (1)
Total
Assets
Marketable securities
$
— $
7,996 $
— $
10,247 $
18,243
Held-to-maturity investments
1,259
—
—
—
1,259
Total assets
$
1,259 $
7,996 $
— $
10,247 $
19,502
At April 29, 2023
Fair Value Measurements
(Amounts in thousands)
Level 1
Level 2
Level 3
NAV (1)
Total
Assets
Marketable securities
$
— $
16,557 $
— $
6,995 $
23,552
Held-to-maturity investments
1,351
—
—
—
1,351
Total assets
$
1,351 $
16,557 $
— $
6,995 $
24,903
(1)
Certain marketable securities investments are measured at fair value using net asset value per share under the practical expedient methodology.
At April 27, 2024 and April 29, 2023, we held marketable securities intended to enhance returns on our cash and to fund future
obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan and our performance
compensation retirement plan.
The fair value measurements for our Level 1 and Level 2 securities are based on quoted prices in active markets, as well as
through broker quotes and independent valuation providers, multiplied by the number of shares owned exclusive of any
transaction costs.
At April 27, 2024 and April 29, 2023, we held no Level 3 assets or liabilities with a carrying value. During fiscal 2023, we
recorded a $10.3 million impairment charge for one of our Level 3 investments to other income (expense), net in the
consolidated statement of income, reducing its carrying value to zero as it was determined the value of the investment was not
recoverable. The following is a reconciliation of our Level 3 assets and liabilities recorded at fair value using significant
unobservable inputs for the fiscal year ended April 29, 2023.
(Amounts in thousands)
Assets
Liabilities
Balance at April 30, 2022
$
10,079 $
800
Purchases
237
—
Settlements
—
—
Fair value adjustment
(10,316)
(800)
Balance at April 29, 2023
$
— $
—
70
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e)
of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such
disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and
Exchange Commission's rules and forms and is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control over Financial Reporting. Our management's report on internal control
over financial reporting is included in Item 8, Financial Statements and Supplementary Data, of this report.
Attestation Report of the Registered Public Accounting Firm. Our registered public accounting firm's attestation report on our
internal control over financial reporting is included in Item 8, Financial Statements and Supplementary Data, of this report.
Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting
that occurred during the fourth quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION.
Securities Trading Plans of Directors and Officers
On March 22, 2024, Ms. Janet Kerr, a member of the Company’s Board of Directors, adopted a trading arrangement for the sale
of securities of the Company’s common stock (a the “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative
defense conditions of Securities Exchange Act Rule 10b5-1(c). Ms. Kerr’s Rule 10b5-1 Trading Plan, which has a term duration
of six months, provides for the sale of up to 3,890 shares of common stock pursuant to the terms of the plan.
Other than as described above, during the quarter ended April 27, 2024, none of our directors or officers adopted or terminated a
Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a)
of Regulation S-K).
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
71
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
The information required by this item appearing under the section captioned “Information About Our Executive Officers” in
Part I of this Annual Report and the information that will be in our proxy statement for our 2024 Annual Meeting of
Shareholders (“Proxy Statement”) under the caption “Board and Corporate Governance Matters” is incorporated herein by
reference.
We have adopted a Code of Business Conduct, which applies to all of our officers, directors, and employees. A current copy of
the code is posted at our website www.la-z-boy.com. We will disclose any amendments to, or waivers from, the code applicable
to an executive officer or director at our website www.la-z-boy.com.
We have also adopted an Insider Trading Policy that governs the purchase, sale, and/or other dispositions of the Company’s
securities by directors, officers and employees that we believe is reasonably designed to promote compliance with insider
trading laws, rules and regulations and listing standards applicable to the Company. A copy of the Company’s Insider Trading
Policy is filed as Exhibit 19 to this Annual Report.
ITEM 11.
EXECUTIVE COMPENSATION.
The information required by this item, which will be in our Proxy Statement under the captions “Board and Corporate
Governance Matters – Director Compensation,” “Compensation Matters – Compensation Discussion and Analysis,”
“Compensation Matters – Executive Compensation Tables,” “Compensation Matters – CEO Pay Ratio,” “Compensation
Matters – Pay versus Performance,” and “Compensation Matters – Compensation and Talent Oversight Committee Report,” is
incorporated herein by reference. The information contained in “Compensation Matters – Compensation and Talent Oversight
Committee Report” shall not be deemed to be “filed” with the SEC or subject to the liabilities of the Exchange Act, except to
the extent that the Company specifically incorporates such information into a document filed under the Securities Act or the
Exchange Act.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The information required by this item, which will be in our Proxy Statement under the captions “Securities Ownership” and
“Compensation Matters – Proposal 4: Approve the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan,” is incorporated
herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The information required to be reported under this item, which will be included in our Proxy Statement under the captions
“Board and Corporate Governance Matters – Corporate Governance – Director Independence” and “Board and Corporate
Governance Matters – Corporate Governance – Related Person Transactions,” is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required to be reported under this item, which will be included in our Proxy Statement under the captions
“Audit Matters – Audit and Other Fees” and “Audit Matters – Pre-Approval Policy and Procedures,” is incorporated herein by
reference.
72
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
The following documents are filed as part of this report:
(1)
Financial Statements:
Management's Report to Our Shareholders
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Statement of Income for each of the three fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022
Consolidated Statement of Comprehensive Income for each of the three fiscal years ended April 27, 2024, April 29, 2023, and
April 30, 2022
Consolidated Balance Sheet at April 27, 2024, and April 29, 2023
Consolidated Statement of Cash Flows for the fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022
Consolidated Statement of Changes in Equity for the fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022
Notes to Consolidated Financial Statements
(2)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the fiscal years ended April 27, 2024, April 29, 2023, and April 30, 2022
Schedule II immediately follows Item 16.
All other schedules are omitted because they are not applicable or not required because the required information is included in
the financial statements or notes thereto.
(3)
Exhibits:
The following exhibits are filed or furnished as part of this report:
(3.1)
La-Z-Boy Incorporated Restated Articles of Incorporation (Incorporated by reference to Exhibit 3i to Form
10-Q for the quarter ended October 26, 1996)
(3.2)
La-Z-Boy Incorporated Amendment to Restated Articles of Incorporation effective August 21, 1998
(Incorporated by reference to Exhibit 3.2 to Form 10-Q for the quarter ended October 27, 2012)
(3.3)
La-Z-Boy Incorporated Amendment to Restated Articles of Incorporation effective August 22, 2008
(Incorporated by reference to Exhibit 3.3 to Form 10-Q for the quarter ended October 27, 2012)
(3.4)
La-Z-Boy Incorporated Amendment to Restated Articles of Incorporation effective August 24, 2012
(Incorporated by reference to Exhibit 3.4 to Form 10-Q for the quarter ended October 27, 2012)
(3.5)
La-Z-Boy Incorporated Amended and Restated Bylaws effective August 30, 2022 (Incorporated by reference
to Exhibit 3.1 Form 8-K filed August 31, 2022)
(4.1)
Credit Agreement dated as of October 15, 2021, among La-Z-Boy Incorporated, the lenders party thereto,
and Wells Fargo Bank, National Association, as administrative agent (Incorporated by reference to Exhibit
4.1 to Form 8-K filed October 15, 2021)
(4.2)
First Amendment to Credit Agreement dated as of December 20, 2022, among La-Z-Boy Incorporated, the
lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (Incorporated by
reference to Exhibit 4.1 to Form 10-Q for the quarter ended January 28, 2023)
(4.3)
Description of Securities (Incorporated by reference to Exhibit 4.2 to Form 10-K for the year ended April 27,
2019)
(10.1)
* La-Z-Boy Incorporated Restricted Stock Plan for Non-Employee Directors, amended and restated through
August 12, 2003 (Incorporated by reference to Exhibit B to Definitive Proxy Statement filed July 8, 2003)
(10.2)
* La-Z-Boy Incorporated Deferred Stock Unit Plan for Non-Employee Directors (Incorporated by reference to
Exhibit 10.1 to Form 10-Q for the quarter ended October 25, 2008)
(10.3)
* Form of Change in Control Agreement in effect for: Melinda D. Whittington. Similar agreements are in
effect for each of our other executive officers except the severance period in those agreements is 24 months
rather than 36 months (Incorporated by reference to Exhibit 10.3 for Form 10-K for the fiscal year ended
April 29, 2023)
(10.4)
* Form of Indemnification Agreement (covering all directors, including employee-directors) (Incorporated by
reference to Exhibit 10.1 to Form 8-K, filed January 22, 2009)
Exhibit Number
Description
73
(10.5)
* 2005 La-Z-Boy Incorporated Executive Deferred Compensation Plan, amended and restated as of November
18, 2008 (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended October 24, 2009)
(10.6)
* Amended and Restated La-Z-Boy Incorporated 2010 Omnibus Incentive Plan (Incorporated by reference to
Annex A to Definitive Proxy Statement filed July 9, 2013)
(10.7)
* La-Z-Boy Incorporated 2010 Omnibus Incentive Plan Sample Award Agreement (Incorporated by reference
to Exhibit 10.2 to Form 10-Q for the quarter ended October 23, 2010)
(10.8)
* La-Z-Boy Incorporated 2010 Omnibus Incentive Plan Revised Sample Award Agreement effective July 9,
2012 (Incorporated by reference to Exhibit 10.1 to Form 8-K filed July 9, 2012)
(10.9)
* La-Z-Boy Incorporated Severance Plan for Executive Officers (Incorporated by reference to Exhibit 10.9 to
Form 10-K for the fiscal year ended April 29, 2023)
(10.10)
* La-Z-Boy Incorporated Performance Compensation Retirement Plan effective April 27, 2013 (Incorporated
by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended April 27, 2013)
(10.11)
* 2014 Amendment to La-Z-Boy Incorporated Performance Compensation Retirement Plan (Incorporated by
reference to Exhibit 10.16 to Form 10-K for the fiscal year ended April 26, 2014)
(10.12)
* La-Z-Boy Incorporated 2017 Omnibus Incentive Plan (Incorporated by reference to Annex A to Definitive
Proxy Statement filed July 18, 2017)
(10.13)
* La-Z-Boy Incorporated 2017 Omnibus Incentive Plan Sample Award Agreement (Incorporated by reference
to Exhibit 10.14 to Form 10-K for the fiscal year ended April 27, 2019)
(10.14)
* La-Z-Boy Incorporated 2017 Omnibus Incentive Plan Revised Sample Award Agreement effective June 22,
2020 (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the fiscal quarter ended July 25, 2020)
(10.15)
* La-Z-Boy Incorporated 2017 Omnibus Incentive Plan Revised Sample Award Agreement effective June 21,
2021 (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended April 30, 2022)
(10.16)
* La-Z-Boy Incorporated 2017 Omnibus Incentive Plan Revised Sample Award Agreement effective June 28,
2022 (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended July 30, 2022)
(10.17)
* La-Z-Boy Incorporated 2022 Omnibus Incentive Plan (Incorporated by reference to Appendix A to
Definitive Proxy Statement filed July 20, 2022)
(10.18)
* La-Z-Boy Incorporated 2022 Omnibus Incentive Plan Sample Award Agreement effective June 26, 2023
(Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended July 29, 2023)
(19)
Insider Trading Policy
(21)
List of subsidiaries of La-Z-Boy Incorporated
(23)
Consent of PricewaterhouseCoopers LLP (EDGAR filing only)
(31.1)
Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)
(31.2)
Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)
(32)
Certifications pursuant to 18 U.S.C. Section 1350
(97)
Policy on Recoupment of Incentive Compensation
(101.INS)
XBRL Instance Document
(101.SCH)
XBRL Taxonomy Extension Schema Document
(101.CAL)
XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)
XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)
XBRL Taxonomy Extension Presentation Linkbase Document
(101.DEF)
XBRL Taxonomy Extension Definition Linkbase Document
(104)
The cover page from the Company's Annual Report on Form 10-K for the year ended April 27, 2024,
formatted in Inline XBRL (included in Exhibit 101)
Exhibit Number
Description
*
Indicates a management contract or compensatory plan or arrangement under which a director or executive officer may
receive benefits.
ITEM 16.
FORM 10-K SUMMARY.
None.
74
LA-Z-BOY INCORPORATED
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
Additions
Description
Balance at
Beginning
of Year
Acquisitions
Charged/
(Credited)
to Costs and
Expenses
Charged/
(Credited)
to Other
Accounts
Deductions
Balance at
End of
Year
Allowance for doubtful accounts,
deducted from accounts receivable:
April 27, 2024
$
4,776
$
—
$
391 (1)
$
—
$
(91) (2)
$
5,076
April 29, 2023
3,406
—
1,489 (1)
—
(119) (2)
4,776
April 30, 2022
4,011
51
(629) (1)
—
(27) (2)
3,406
Allowance for deferred tax assets:
April 27, 2024
$
3,468
$
—
$
79
$
(2,087) (3) $
—
$
1,460
April 29, 2023
3,517
—
370
(419) (3)
—
3,468
April 30, 2022
3,495
133
851
(962) (3)
—
3,517
(1)
Additions charged (credited) to costs and expenses includes the impact of foreign currency exchange gains (losses).
(2)
Deductions represent uncollectible accounts written off less recoveries of accounts receivable written off in prior years.
(3)
Represents impact of adjusting gross deferred tax assets.
75
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: June 17, 2024
LA-Z-BOY INCORPORATED
BY
/s/ MELINDA D. WHITTINGTON
Melinda D. Whittington
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, as of June 17, 2024, by
the following persons on behalf of the registrant and in the capacities indicated.
/s/ M.T. LAWTON
/s/ E.L. ALEXANDER
M.T. Lawton
Chairman of the Board
E.L. Alexander
Director
/s/ S.M. GALLAGHER
/s/ J.P. HACKETT
S.M. Gallagher
Director
J.P. Hackett
Director
/s/ R.S. HAIDER
/s/ J.E. KERR
R.S. Haider
Director
J.E. Kerr
Director
/s/ M.S. LAVIGNE
/s/ R.G. LUCIAN
M.S. LaVigne
Director
R.G. Lucian
Senior Vice President and Chief Financial Officer
/s/ J.L. MCCURRY
/s/ R.L. O'GRADY
J.L. McCurry
Vice President, Corporate Controller and Chief
Accounting Officer
R.L. O'Grady
Director
/s/ L.B. PETERS
/s/ M.D. WHITTINGTON
L.B. Peters
Director
M.D. Whittington
President and Chief Executive Officer, Director
76
©2024 La-Z-Boy Incorporated
Except as noted, all designated trademarks and service marks utilized in this
report are owned by La-Z-Boy Incorporated or its subsidiary companies.
Board of Directors
Michael T. Lawton
Chair of the Board,
Former Executive Vice President
and Chief Financial Officer,
Domino’s Pizza, Inc.
Melinda D. Whittington
President and
Chief Executive Officer,
La-Z-Boy Incorporated
Erika L. Alexander
Chief Global Officer,
Global Operations,
Marriott International, Inc.
Sarah M. Gallagher
Former President,
Ralph Lauren North America
e-Commerce
James P. Hackett
Former President and
Chief Executive Officer,
Ford Motor Company
Raza S. Haider
Chief Product and Supply Chain
Officer, Bose Corporation
Janet E. Kerr
Professor Emeritus,
Pepperdine Caruso School of Law
Mark S. LaVigne
President and Chief Executive
Officer, Energizer Holdings, Inc.
Rebecca L. O’Grady
Former CMO International
Marketing, e-Commerce &
Consumer Insights, General Mills
Lauren B. Peters
Former Executive Vice President
and Chief Financial Officer,
Foot Locker, Inc.
Executive Officers
Melinda D. Whittington
President and
Chief Executive Officer
Robert G. Lucian
Senior Vice President and
Chief Financial Officer
Robert Sundy
President, La-Z-Boy Brand and
Chief Commercial Officer
Rebecca M. Reeder
President, Retail La-Z-Boy
Furniture Galleries®
Terrence J. Linz
President, Portfolio Brands
Michael A. Leggett
Senior Vice President and
Chief Supply Chain Officer
Carol Y. Lee
Vice President and
Chief Information Officer
Raphael Z. Richmond
Vice President, General Counsel
and Chief Compliance Officer
Katherine E. Vanderjagt
Vice President and
Chief Human Resources Officer
Investor Information
Shareholder Services
Inquiries regarding the Dividend
Reinvestment Plan, dividend payments,
stock transfer requirements, address
changes and account consolidations
should be addressed to the company’s
stock transfer agent and registrar:
Equiniti Trust Company, LLC (EQ)
55 Challenger Road, Floor 2
Ridgefield Park, NJ 07660
877-573-3955
www.astfinancial.com
Stock Exchange
La-Z-Boy Incorporated common
shares are traded on the New York
Stock Exchange under the
symbol LZB.
World Headquarters
La-Z-Boy Incorporated
One La-Z-Boy Drive
Monroe, MI 48162
734-242-1444
www.la-z-boy.com
Investor Relations and
Financial Reports
We will provide the Form 10-K to any
shareholder who requests it. Analysts,
shareholders and investors may request
information from:
Investor Relations La-Z-Boy
Incorporated
One La-Z-Boy Drive
Monroe, MI 48162
investorrelations@la-z-boy.com
734-241-2438
One La-Z-Boy Drive
Monroe, Michigan 48162
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