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What changed in LA-Z-BOY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LA-Z-BOY INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+223 added−237 removedSource: 10-K (2024-06-17) vs 10-K (2023-06-20)

Top changes in LA-Z-BOY INC's 2024 10-K

223 paragraphs added · 237 removed · 183 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+8 added−19 removed40 unchanged
Biggest changeOur 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, Working Parents & Caregivers and Women.
Biggest changeAligning 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. 9 Table of Contents 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 ERG’s 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.
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.
We consider this dedicated space to be "proprietary." For our Wholesale segment, our fiscal 2023 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.
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.
Although digital retailers operate with lower overhead costs than a brick-and-mortar retailer, customer acquisition costs and advertising spend is typically much higher. Department stores and big box retailers with an online presence also offer products that compete with some of our product lines.
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.
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 12 distribution centers as well as our manufacturing locations.
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.
We own 171 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.
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.
Throughout fiscal 2023, 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.
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.
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. 9 Table of Contents 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.
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.
When it comes to giving, our vision is to improve the lives of others by developing exceptional 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.
When it comes to giving, our vision is to improve the lives of others by developing exceptional 10 Table of Contents 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.
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 349 La-Z-Boy Furniture Galleries ® stores and 522 La-Z-Boy Comfort Studio ® locations, each dedicated to marketing our La-Z-Boy branded products.
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.
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. Our Company is committed to recruiting and retaining diverse talent so that our workforce better reflects the communities in which we operate our business globally.
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.
Our Retail segment primarily sells upholstered furniture, in addition to some casegoods and other accessories, to end consumers through our company-owned La-Z-Boy Furniture Galleries ® stores.
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.
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 the second largest manufacturer/distributor 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 .
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 .
If any of these suppliers experience financial or other difficulties, we could experience disruptions in our product flow until we obtain 5 Table of Contents alternate suppliers, which could be lengthy due to the longer lead time required for sourced wood furniture from Asian manufacturers.
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.
In addition, we license to our branded dealers the right to use our La-Z-Boy trademark in connection with the sale of 8 Table of Contents our products and related services, on their signs, and in other ways, which we consider to be a key part of our marketing strategies.
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.
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 businesses, our fiscal fourth quarter has historically had the highest volume of delivered sales relative to other quarters.
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 5 Table of Contents business, our fiscal fourth quarter has historically had the highest volume of delivered sales relative to other quarters.
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. 10 Table of Contents Additionally, the National Safety Council (NSC) has recognized La-Z-Boy with multiple awards for safety performance and leadership throughout the Company’s history.
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.
We purchase the remainder of our cut and sewn leather and fabric kits from five main suppliers primarily from China as well as Vietnam. We use these suppliers primarily for their product design capabilities and to balance our mix of in-sourced and out-sourced production.
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.
Sales in our Wholesale segment are primarily to third-party furniture retailers, but we also sell directly to end consumers through our company-owned La-Z-Boy Furniture Galleries ® stores that make up our Retail segment and through our websites, www.la-z-boy.com and www.joybird.com.
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.
We purchase most of our polyurethane foam from two suppliers, which have several facilities across the United States that deliver to our plants. We purchase cover from a variety of sources, but we rely on a limited number of major suppliers.
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.
All 522 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 2.6 million square feet of floor space outside of the United States and Canada dedicated to selling La-Z-Boy branded products. 4 Table of Contents • 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 614 outlets and approximately 1.9 million square feet of proprietary floor space. ◦ In total, our proprietary floor space includes approximately 12.1 million square feet worldwide. • Joybird sells product primarily online and has a limited amount of proprietary retail showroom floor space including ten small-format stores in key urban markets.
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 Table of Contents Principal Products and Industry Segments Our reportable operating segments include the Retail segment and the Wholesale segment.
As we begin fiscal 2024, we anticipate that prices will remain relatively consistent with those seen at the end of fiscal 2023, with potential increases due to economic volatility and price inflation in our core materials.
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.
We purchase more than half of our cover in a raw state (fabric rolls or leather hides) primarily from suppliers in China, then cut and sew it into cover in our cut and sew facilities in Mexico.
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.
Customers Our wholesale customers are furniture retailers. While primarily 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.
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.
Finished Goods Imports Imported finished goods represented 7% and 6% of our consolidated sales in fiscal 2023 and 2022, respectively. In fiscal 2023, we purchased 74% of this imported product from five suppliers based in Asia.
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.
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 $77.5 million as of fiscal year end 2023 compared with fiscal year end 2022, as we worked down our backlog toward pre-pandemic levels.
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.
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 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.
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 $223.1 million as of April 29, 2023, compared with $697.2 million as of April 30, 2022.
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.
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.
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.
As of April 29, 2023, our supply chain operations included the following: • Five major manufacturing locations and 12 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 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 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.
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.
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.
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.
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 Table of Contents 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.
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 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.
To the extent that we again experience incremental costs in any of these areas, as we did in fiscal 2023, we may increase our selling prices or assess material surcharges to offset the impact. However, increases in selling prices, or surcharges, may not fully mitigate the impact of raw material cost increases, which could adversely impact operating profits.
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.
Additionally, inventory balances at the end of fiscal 2023 were lower as we have worked down our backlog toward pre-pandemic levels and aligned 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.
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.
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.
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.
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. Since launching in 2018, our employees have accumulated over 35,000 hours of caring as part of these programs.
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.
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. 6 Table of Contents Our company-owned La-Z-Boy Furniture Galleries ® stores have finished goods inventory at the stores for display purposes.
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.
As of the end of fiscal 2023, we believe that our backlog volume and lead times are returning to pre-pandemic levels and we anticipate that they will stabilize in fiscal 2024. Competitive Conditions We are the second largest manufacturer/distributor of residential (living and family room, bedroom, and dining room) furniture in the United States, as measured by annual sales volume.
We anticipate our backlog will remain relatively stable in fiscal 2025. 7 Table of Contents 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.
This proprietary distribution enables 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.
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.
The La-Z-Boy Furniture Galleries ® store network plans to open 7 to 9 stores and relocate or remodel 20 to 25 stores during fiscal 2024, all of which will feature our latest store designs.
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.
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.
Additionally, we have contracts with several suppliers in Asia to produce products that support our pure import model for casegoods.
Additionally, our allowance for receivable credit losses was $1.4 million higher at the end of fiscal 2023 compared with the end of fiscal 2022 reflecting uncertainty in the economic outlook. We monitor our customers' accounts, limit our credit exposure to certain independent dealers and strive to decrease our days' sales outstanding where possible.
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.
Human Capital Employees We employed approximately 10,500 full-time equivalent employees as of April 29, 2023, compared with approximately 12,800 employees at the end of fiscal 2022. The decrease in headcount was primarily due to the initiative to drive improved efficiencies through optimized staffing levels within our US, Mexico and Thailand plants.
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.
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 the last three fiscal years, our sales volume and production schedule did not follow typical trends due to the impact of COVID-19.
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 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. Community Giving Throughout our 96-year history, giving back to our communities has been woven through La-Z-Boy’s culture following the example set by our founders.
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.
The prices we paid for these imported products, including associated transportation costs, decreased throughout 2023 compared with fiscal 2022 when costs increased drastically due to the constrained supply chain along with the lack of shipping container availability. In fiscal 2024, we anticipate our product costs will stabilize.
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.
Accounts Payable: Our accounts payable increased $3.4 million as of year end fiscal 2023 compared with year end fiscal 2022, primarily due to higher marketing costs during the fourth quarter of fiscal 2023 compared with the fourth quarter of fiscal 2022.
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. 6 Table of Contents 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.
The decrease in fiscal 2023 was the result of delivering on the backlog built in prior periods, continued production and supply chain efficiencies, and a slow-down in demand relative to the peak experienced during the COVID-19 pandemic.
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.
Removed
Torreón was the last facility to begin operating as part of our broader Mexico manufacturing expansion in fiscal 2021 and 2022 to meet pandemic-related upholstery demand and accounted for approximately 3% of our La-Z-Boy branded production.
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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.
Removed
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 expense for the impairment of various assets, primarily long-lived assets, and $1.6 million in cost of sales, primarily related to severance.
Added
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.
Removed
Principal Products and Industry Segments Our reportable operating segments include the Wholesale segment and the Retail segment.
Added
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.
Removed
During fiscal 2022 and the first half of fiscal 2023, the prices of materials we use in our upholstery manufacturing process increased, driven by supply chain challenges due to COVID-19, higher demand for raw materials in manufacturing sectors and the home furnishings industry due to an economic sector rotation, and inflationary cost pressure.
Added
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.
Removed
During the second half of fiscal 2023, raw material prices began to decrease relative to the historic highs experienced in the prior year, but are still well above pre-pandemic levels.
Added
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.
Removed
As a result of the significant backlog built in prior years driven by heightened demand during the COVID-19 pandemic, in fiscal 2023, our wholesale and retail businesses both experienced their largest sales volume in the second quarter of fiscal 2023. We anticipate that typical seasonal trends in the furniture industry will return to normal in fiscal 2024.
Added
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.
Removed
During fiscal 2021 and the beginning of fiscal 2022, we experienced heightened demand as more discretionary spending was allocated to the home furnishings industry due to the impact of COVID-19.
Added
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.
Removed
However, during fiscal 2023, demand trends have returned to pre-pandemic patterns and therefore, in fiscal 2024, we anticipate furniture demand and purchasing cycles to respond to macroeconomic conditions as they historically have.
Added
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.
Removed
For our casegoods business within our Wholesale segment, we import wood furniture from Asian vendors, resulting in long lead times on these products.
Removed
Our inventory decreased $26.9 million as of year end fiscal 2023 compared with year end fiscal 2022 primarily due to higher inventory levels at the end of fiscal 2022 to support increased sales demand and manufacturing capacity and to reduce the impact associated with volatility in raw material availability.
Removed
Accounts Receivable: Our accounts receivable decreased $58.2 million as of year end fiscal 2023 compared with year end fiscal 2022.
Removed
The decrease in accounts receivable was primarily due to lower fourth quarter sales in fiscal 2023 compared with the same period a year ago as the prior year benefited from sales generated from the backlog built up in prior periods combined with the realization of pricing and surcharge actions taken in response to rising manufacturing costs.
Removed
The 349-store La-Z-Boy Furniture Galleries ® network is central to this approach. In addition, we sell product through proprietary space within other retail furniture stores, primarily La-Z-Boy Comfort Studio ® locations, branded space locations, England Custom Comfort Center locations, Kincaid Shoppes, and other international locations.
Removed
Additionally, our Joybird business, which sells product primarily online to end consumers through its website, www.joybird.com, also has a limited amount of retail showroom floor space in small-format stores in key urban markets. Maintaining, updating, and, when appropriate, expanding our proprietary distribution network is a key part of our overall sales and marketing strategy.
Removed
Additionally, during fiscal 2024 we plan to open or update approximately 100 La-Z-Boy Comfort Studio ® locations as well as 40 branded space locations. 7 Table of Contents Independent dealers for our proprietary La-Z-Boy Furniture Galleries ® store network were selected based on factors such as their management and financial qualifications and the potential for distribution in specific geographical areas.
Removed
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.
Removed
As of April 29, 2023, we employed approximately 8,200 employees in our Wholesale segment, 1,600 in our Retail segment, 480 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.
Removed
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.
Removed
This includes our recognition as a six-time recipient of the Corporate Culture of Safety Award and our recognition as a recipient of the Green Cross for Safety Excellence Award, which recognizes only one corporation each year for outstanding achievement in safety. Training and Development We encourage employee growth, curiosity, and courage.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+7 added−6 removed58 unchanged
Biggest changeFinally, our business in the United Kingdom has been, and could further be, affected by the United Kingdom's exit from the European Union, and our sales and margins there and in other foreign countries could be adversely affected by the imposition in foreign countries of import bans, quotas, and increases in tariffs.
Biggest changeFinally, our business, 15 Table of Contents 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.
Economic downturns and prolonged negative economic conditions have in the past affected, and could continue to affect general consumer spending, resulting in a decrease in the overall demand for such discretionary items, including home furnishings.
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.
Because we manufacture components and finished goods in Mexico, 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.
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.
During fiscal 2023, 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.
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.
These suppliers have several facilities across the United States, but adverse weather, natural disasters, or public health crises (such as pandemics or epidemics) could result in delays in shipments of polyurethane foam to our plants.
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.
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 two suppliers.
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.
The risks discussed below should be carefully considered, together with the other information provided in this Annual Report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements, including the related notes. These risk factors do not identify all risks that we face.
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.
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. 15 Table of Contents Changes in the domestic or international regulatory environment or trade policies could adversely affect our business and results of operations.
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.
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 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.
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 12 Table of Contents 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.
Actual results could differ materially from our estimates, and such differences may impact our financial results. 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.
Actual results could differ materially from our estimates, and such differences may impact our financial results. 16 Table of Contents 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.
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 personal information required for those services.
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.
If we do not meet our sales or earnings expectations for these 14 Table of Contents 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.
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.
Cyber-attacks designed to gain access to and extract sensitive information or otherwise affect or compromise the confidentially, 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 12 Table of Contents things, the unauthorized release of confidential information, material business disruptions, and negative brand and reputational impacts.
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.
We cannot provide assurance that we will 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.
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.
It is possible that these laws may be interpreted or applied in a manner that is adverse to us, unforeseen, or otherwise inconsistent 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 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.
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.
There has been increased focus from our stakeholders, including consumers, employees, and investors, on our ESG practices. We plan to establish and announce goals and other objectives related to ESG matters. These goal statements will reflect our current plans and are not guarantees that we will be able to achieve them.
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.
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, that could make servicing our customers more difficult or result in the potential loss of sales and customers.
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.
We could also incur additional 17 Table of Contents 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, have not been formalized and continue to evolve.
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.
To the best of our knowledge, attempts to breach our systems have not been successful to date. 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.
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.
We have a higher concentration in upholstery sales, including motion furniture, than many of our competitors, and the effects of steel, polyurethane foam, wood, electrical components for power units, leather and fabric price increases or quantity shortages could have a significant negative impact to our business.
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.
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 and contingent consideration liability, resulting from certain acquisitions, are based on the expected future performance of the operations acquired.
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.
From time to time we may acquire retail locations or other retail businesses, such as our acquisition of Joybird in fiscal 2019. We may also remodel and relocate existing stores, experiment with new store formats, and close underperforming stores. Our assets include goodwill and other intangible assets acquired in connection with these acquisitions.
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.
As a result, product liability and other claims could have a material adverse effect on our business, results of operations and financial condition. 16 Table of Contents 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.
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.
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, contingent consideration and income taxes.
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.
Similarly, adverse weather, natural disasters, public health crises (such as pandemics or epidemics), labor disputes, possible acts of terrorism, port and canal blockages and congestion, and availability of shipping containers could result in delays in shipments or the absence of required raw materials from any of our suppliers.
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 Table of Contents 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.
Legal and Regulatory Risk Factors Our business and our reputation could be adversely affected by the failure to comply 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, some of which contains personal information.
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.
Furniture product is fashion-oriented so changes in consumers' tastes and trends and the 13 Table of Contents 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.
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 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 the third quarter of fiscal 2022.
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.
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.
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.
At least annually, we reassess the goodwill for impairment and quarterly, we reassess the fair value of any contingent consideration. 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 and contingent consideration.
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.
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.
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.
In manufacturing furniture, we use various types of wood, fabrics, leathers, upholstered filling material, including polyurethane foam, steel, and other raw materials. Additionally, our manufacturing processes and plant operations use various electrical equipment and components.
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.
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.
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.
Joybird sells product almost exclusively 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.
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.
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 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.
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.
Investors should carefully consider all risks, including those disclosed, before making an investment decision. 11 Table of Contents 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.
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.
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 and store certain personal information about our employees, wholesale customers, consumers, and vendors.
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.
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.
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 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.
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.
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. These laws and regulations are regularly changing, subject to uncertain and differing interpretations and may be inconsistent among countries or conflict with other rules.
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.
The California Consumer Privacy Act (“CCPA”), among other things, imposes additional requirements with respect to disclosure and deletion of personal information of California residents. The CCPA provides civil penalties for violations, as well as a private right of action for data breaches.
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.
The GDPR, the CCPA, the California Privacy Rights Act, and other 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 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.
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.
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.
There may be additional risks that are presently unknown to us or that we currently believe to be immaterial that could affect us.
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.
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.
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 Table of Contents 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.
While we have seen a slow-down in demand relative to the COVID-19 era due to the negative impact of various cited factors and the return to more normal seasonality, 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.
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.
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.
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.
While the pandemic-era disruptions have diminished, further significant supply chain shocks, more significant disruption of the furniture industry, disruption 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.
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. 11 Table of Contents 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.
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.
Credit evaluations involve significant management diligence and judgment, especially in the current environment.
A breach that results in the unauthorized release of sensitive information could adversely affect our reputation resulting in a loss of our existing customers and potential future customers, lead to financial losses due to remedial actions or potential liability, possibly including punitive damages, or we could incur regulatory fines or penalties.
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.
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.
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.
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.
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.
Removed
Also during the COVID-19 pandemic, we experienced an increase in demand, as more discretionary consumer spending was allocated to home furnishings.
Added
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.
Removed
Over the past several years, the furniture industry in general has experienced a shift to more online purchasing and during the COVID-19 pandemic, this shift accelerated as customer shopping patterns and behaviors changed.
Added
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.
Removed
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 and have increased, and could continue to increase, our costs, either of which could decrease our earnings.
Added
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.
Removed
Although we have implemented policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate our policies and procedures or otherwise comply with these laws and regulations.
Added
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.
Removed
In addition, we may incur costs in repairing any damage beyond our applicable insurance coverage. The COVID-19 pandemic negatively impacted the world economy, significantly impacted global supply chains, and increased volatility within financial markets, all of which negatively affected the home furnishings manufacturing and retail industry and our business.
Added
Millions of our products, sold over many years, are currently used by consumers.
Removed
The impact of any resurgence of COVID-19 or any other pandemic on our operational and financial performance will depend on future developments, including the availability and adoption of effective vaccines, governmental orders and mitigation measures, recovery of the business environment, global supply chain conditions, economic conditions, inflationary pressures, consumer confidence, and consumer demand for our products.
Added
As a result, product liability and other claims could have a material adverse effect on our business, results of operations and financial condition.
Added
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.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties owned or leased at April 29, 2023 by segment: (Amounts in millions) Square Feet Wholesale 8.9 Retail 3.6 Corporate & Other 0.4 Active manufacturing, warehousing and distribution centers, office, showroom and retail facilities 12.9 Idle facilities 0.6 Total property 13.5 Our active facilities and retail locations are located across the United States and in Mexico, Thailand, Canada, China, Hong Kong, and the United Kingdom.
Biggest changeProperties 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeLeggett, age 50 • 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 • Vice President Global Supply Chain and Sourcing of Masonite International Corporation, an interior and exterior doors manufacturer and distributor, from April 2017 to February 2019 Raphael Z.
Biggest changeLeggett, 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.
Lee, age 51 • 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.
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.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 18 Table of Contents 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.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 19 Table of Contents 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 56 • President and Chief Executive Officer since April 2021 • Senior Vice President and Chief Financial Officer from June 2018 to April 2021 Robert G.
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.
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.
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.
Lucian, age 60 • Senior Vice President and Chief Financial Officer since April 2021 • Vice President, Finance from January 2019 to April 2021 • Chief Financial Officer – North America Professional Beauty of Coty Inc., a global beauty company, from October 2016 to June 2018 Robert Sundy, age 47 • 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.
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.
Richmond, age 53 • 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 • Global Director of Compliance of Ford Motor Company, an automotive manufacturer, from May 2013 to January 2019 Katherine E.
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 Table of Contents PART II
Removed
(TJ) Linz, age 41 • President, Portfolio Brands since April 2023 • President, La-Z-Boy Retail Division from April 2019 to April 2023 • Director of Retail Operations and Strategy from August 2017 to April 2019 Carol Y.
Removed
Vanderjagt, age 41 • Vice President and Chief Human Resources Officer since December 2018 • Director Corporate Human Resources and Talent from July 2017 to November 2018 19 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed3 unchanged
Biggest changeWith the operating cash flows we anticipate generating in fiscal 2024, we expect to continue repurchasing Company stock. 20 Table of Contents The following table summarizes our repurchases of Company stock during the quarter ended April 29, 2023 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 29 - March 4, 2023) — $ — — 7,262 Fiscal March (March 5 - April 1, 2023) — $ — — 7,262 Fiscal April (April 2 - April 29, 2023) 1 $ — — 7,262 Fiscal Fourth Quarter of 2023 1 — 7,262 (1) There were no shares repurchased during the quarter as part of our publicly announced, board-authorized plan described above.
Biggest changeWith 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 Table of Contents 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.
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 28, 2018, in our shares of common stock, in the S&P 500 Composite Index, and in the Dow Jones U.S. Furnishings Index.
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.
Shareholders Our common stock trades on the New York Stock Exchange under the trading symbol "LZB". We had approximately 1,633 registered holders of record of La-Z-Boy's common stock as of June 13, 2023.
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.
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 2023. ITEM 6. RESERVED.
(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.
Company/Index/Market 4/28/2018 4/27/2019 4/25/2020 4/24/2021 4/30/2022 4/29/2023 La-Z-Boy Incorporated $ 100.00 $ 112.57 $ 74.40 $ 154.07 $ 95.43 $ 107.09 S&P 500 Composite Index $ 100.00 $ 112.33 $ 110.58 $ 165.68 $ 166.10 $ 170.53 Dow Jones U.S.
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.
During fiscal 2023, we spent $5.0 million to purchase 0.2 million shares and there were no share repurchases under the authorized plan during the fourth quarter of fiscal 2023. As of April 29, 2023, 7.3 million shares remained available for repurchase pursuant to the board authorization.
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.
Furnishings Index $ 100.00 $ 83.98 $ 55.24 $ 138.39 $ 96.51 $ 95.43 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Our board of directors has authorized the repurchase of Company stock.
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.
Removed
During the quarter ended April 29, 2023, 1,192 shares were repurchased from employees to satisfy their withholding tax obligations upon vesting of restricted shares with an average share price of $27.81. (2) On October 28, 1987, our board of directors announced the authorization of the plan to repurchase Company stock.
Added
Recent Sales of Unregistered Securities There were no sales of unregistered securities during fiscal year 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Margin The Wholesale segment's operating margin decreased 80 basis points in fiscal 2023 compared with fiscal 2022. • Gross margin increased 270 basis points during fiscal 2023 compared with fiscal 2022. ◦ Gross margin increased 430 basis points in fiscal 2023 from the combination of pricing and surcharge actions taken in prior periods along with favorable channel and product mix ◦ While raw materials and freight costs have decreased sequentially throughout fiscal 2023, gross margin in fiscal 2023 decreased 160 basis points compared with fiscal 2022 due to higher raw materials and freight costs resulting from global supply challenges, predominately experienced in the first half of fiscal 2023. • SG&A expense as a percentage of sales increased 350 basis points during fiscal 2023 compared with fiscal 2022. ◦ Reduced fixed cost leverage and an increase in marketing expense to pre-pandemic levels, as a percentage of sales, contributed to higher SG&A expense as a percentage of sales in fiscal 2023 compared with fiscal 2022. ◦ Additionally, charges related to the closure of our Torreón, Mexico manufacturing facility in the third quarter of fiscal 2023 resulted in a 50 basis point increase in SG&A expense as a percentage of sales.
Biggest changeOperating 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.
Corporate & 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.
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 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.
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.
As a result, if we revise our assumptions and estimates, our stock-based compensation expense could be materially different in the future. We estimate the fair value of each option grant using a Black-Scholes option-pricing model. We estimate expected volatility based on the historic volatility of our common shares.
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.
The reacquired right 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.
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.
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 30 Table of Contents U.S. Treasury issues with a term equal to the expected life assumed at the date of grant.
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.
Determining the probability of award vesting requires judgment, including assumptions about future operating performance. While the assumptions we use to calculate and account for stock-based compensation awards represent management's best estimates, these estimates involve inherent uncertainties and the application of our management's best judgment.
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 Table of Contents judgment.
Financing Activities On October 15, 2021, we entered into a new five-year $200 million unsecured revolving credit facility (the “Credit Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes.
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.
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 21 Table of Contents selling, general, and administrative expense for the impairment of various assets, primarily long-lived assets, and $1.6 million in cost of sales, primarily related to severance.
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.
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 22 Table of Contents Furniture Galleries ® store, or La-Z-Boy Comfort Studio ® , experience and provide design services.
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.
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 29, 2023, we have no borrowings outstanding under the Credit Facility.
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.
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 2022 Annual Report on Form 10-K, filed with the SEC on June 21, 2022, for an analysis of the fiscal year 2022 results as compared to fiscal year 2021.
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.
Our Wholesale segment consists primarily of three operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, and our casegoods operating segment that sells furniture under three brands: American Drew ® , Hammary ® and Kincaid ® . The Wholesale segment also includes our international wholesale and manufacturing businesses.
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.
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.
Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion 23 Table of Contents 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.
Cash used for investing activities in fiscal 2023 included the following: • Cash used for capital expenditures in the period was $68.8 million, which is primarily related to La-Z-Boy Furniture Galleries ® (new stores and remodels) and Joybird store projects and upgrades at our manufacturing and distribution facilities.
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.
With the operating cash flows we anticipate generating in fiscal 2024, we expect to continue repurchasing Company stock. • Cash paid to our shareholders in quarterly dividends was $29.9 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms.
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 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 2024 contractual obligations. We had cash, cash equivalents and restricted cash of $346.7 million at April 29, 2023, compared with $248.9 million at April 30, 2022.
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.
Note that our 2023 and 2021 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 the second largest manufacturer/distributor of residential furniture in the United States .
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 Retail segment sells primarily upholstered furniture, in addition to some casegoods and other accessories, to end consumers through these stores. • Corporate & Other .
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 .
We expect capital expenditures to be in the range of $55 to $60 million for fiscal 2024, primarily related to improvements and expansion of our Retail and Joybird stores, replacement of machinery and equipment for various manufacturing and distribution facilities, and technology upgrades.
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.
Written sales for Joybird were down 16% in fiscal 2023 compared with fiscal 2022, reflecting the industry-wide demand challenges noted above. 26 Table of Contents Intercompany eliminations increased in fiscal 2023 compared with fiscal 2022 due to higher sales from our Wholesale segment to our Retail segment, driven by increased sales in the Retail segment.
Written sales for Joybird were down 8% in fiscal 2024 compared with fiscal 2023, reflecting the industry-wide demand challenges noted above. 26 Table of Contents 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.
Our goal is to deliver value to our shareholders over the long term by executing our Century Vision strategic plan, in which we aim to grow sales and market share and strengthen our operating margins.
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.
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. • Expanding the reach of our wholesale distribution channels.
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 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, primarily in markets that can be serviced through our distribution centers, where we see opportunity for growth, or where we believe we have opportunities for further market penetration.
We are prioritizing growth of our company-owned Retail business by opportunistically acquiring existing La-Z-Boy Furniture Galleries ® stores and opening new La-Z-Boy Furniture Galleries ® stores where we see opportunity for growth, or where we believe we have opportunities for further market penetration.
Cash used for financing activities in fiscal 2023 included the following: • Our board of directors has authorized the repurchase of Company stock and we spent $5.0 million during fiscal 2023 to repurchase 0.2 million shares. As of April 29, 2023, 7.3 million shares remained available for repurchase pursuant to this authorization.
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.
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 171 company-owned La-Z-Boy Furniture Galleries ® stores.
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 .
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.
The reporting unit for goodwill arising from the acquisition of Joybird is the Joybird operating segment. 29 Table of Contents 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.
Goodwill arising from the acquisition of our wholesale business in the United Kingdom and Ireland along with goodwill arising from the acquisition of our manufacturing business in the United Kingdom are combined into the United Kingdom reporting. The reporting unit for goodwill arising from the acquisition of Joybird is the Joybird 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.
Through our Century Vision plan, we have several initiatives focused on enhancing these capabilities with a consumer-first focus. Our reportable operating segments include the Wholesale segment and the Retail segment. • Wholesale Segment .
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.
Refer to Note 6, Leases, for additional information. Purchase Obligations. We had purchase obligations of $156.3 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. Acquisition Payment 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.
Fiscal Year 2023 and Fiscal Year 2022 La-Z-Boy Incorporated (52 weeks) (53 weeks) (FY23 vs FY22) (Amounts in thousands, except percentages) 4/29/2023 4/30/2022 % Change Sales $ 2,349,433 $ 2,356,811 (0.3) % Operating income 211,439 206,756 2.3 % Operating margin 9.0% 8.8% Sales Consolidated sales in fiscal 2023 decreased $7.4 million, or 0.3%, compared with the prior year.
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.
Included in our cash, cash equivalents and restricted cash at April 29, 2023, is $63.1 million held by foreign subsidiaries, the majority of which we have determined to be permanently reinvested.
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.
Corporate and Other (52 weeks) (53 weeks) (FY23 vs FY22) (Amounts in thousands, except percentages) 4/29/2023 4/30/2022 % Change Sales $ 166,190 $ 195,959 (15.2) % Intercompany eliminations (489,048) (412,380) 18.6 % Operating loss (65,347) (36,803) 77.6 % Sales Corporate and Other sales decreased $29.8 million in fiscal 2023 compared with fiscal 2022, primarily due to a $30.0 million, or 17% decrease from Joybird, which contributed $146.4 million in sales in fiscal 2023.
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.
None of the operating segments included in Corporate & Other meet the requirements of reportable segments. 23 Table of Contents Results of Operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for fiscal year 2023 as compared with fiscal year 2022.
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.
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 are launching a new marketing platform in fiscal 2024, with compelling messaging to increase recognition and consideration of the brand.
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 Table of Contents on-trend upholstered furniture, particularly in the motion and reclining categories.
Other Income (Expense), Net Other income (expense), net was $11.8 million of expense in fiscal 2023 compared with $1.7 million of expense in fiscal 2022. 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.
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.
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. 29 Table of Contents 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.
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.
Stock-Based Compensation We measure stock-based compensation cost for equity-based awards on the grant date based on the awards' fair value and recognize expense over the vesting period. We measure stock-based compensation cost for liability-based awards on the grant date based on the awards' fair value and recognize expense over the vesting period.
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.
In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid ® , American Drew ® , Hammary ® , 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.
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.
Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person.
Additionally, we are testing potential store formats to expand our reach to value-seeking consumers and during fiscal 2023, we opened two Outlet by La-Z-Boy stores. 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.
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 have no material contractual commitments outstanding for future capital expenditures. • Cash used for acquisitions was $16.8 million, related to the acquisition of the Baton Rouge, Louisiana, Barboursville, West Virginia, Spokane, Washington and Denver, Colorado retail businesses. Refer to Note 2, Acquisitions, for additional information. • Proceeds from the sale of investments, net of investment purchases was $15.4 million.
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.
In addition to our branded distribution channels, approximately 2,200 other dealers sell La-Z-Boy products, providing us the benefit of multi-channel distribution. These outlets include some of the best-known names in the industry, including Slumberland, Nebraska Furniture Mart, Mathis Brothers and Raymour & Flanagan.
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.
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 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.
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.
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.
In addition, we had investments to enhance our returns on cash of $11.6 million at April 29, 2023, compared with $27.2 million at April 30, 2022. 27 Table of Contents The following table illustrates the main components of our cash flows: Fiscal Year Ended (52 weeks) (53 weeks) (Amounts in thousands) 4/29/2023 4/30/2022 Cash Flows Provided By (Used For) Net cash provided by operating activities $ 205,167 $ 79,004 Net cash used for investing activities (70,120) (78,371) Net cash used for financing activities (37,139) (144,561) Exchange rate changes (86) (1,919) Change in cash, cash equivalents and restricted cash $ 97,822 $ (145,847) Operating Activities During fiscal 2023, net cash provided by operating activities was $205.2 million, an increase of $126.2 million compared with the prior year mainly due to favorable changes in working capital.
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 Table of Contents offset by smaller reduction in customer deposits, reflecting a reduced backlog.
Despite these challenging industry trends, strong in-store execution led to positive written same-store sales in the back half of fiscal 2023 compared with the same period last year. Same-store sales include the sales of all currently active stores which have been open and company-owned for each comparable period.
Same-store sales include the sales of all currently active stores which have been open and company-owned for each comparable period.
We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time. • Cash paid for holdback payments made on prior-period acquisitions was $5.0 million for a guaranteed payment related to the acquisition of Joybird.
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 Table of Contents 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.
Our cash provided by operating activities in fiscal 2023 was primarily attributable to net income, adjusted for non-cash items, a $53.7 million decrease in receivables and a $32.3 million decrease in inventory as we work down our backlog to pre-pandemic levels and align production with incoming order trends.
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.
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.
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 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").
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.
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. Refer to Note 7, Goodwill and Other Intangible Assets, for further information regarding our fiscal 2023 impairment testing.
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.
Retail Segment (52 weeks) (53 weeks) (FY23 vs FY22) (Amounts in thousands, except percentages) 4/29/2023 4/30/2022 % Change Sales $ 982,043 $ 804,394 22.1 % Operating income 161,571 109,546 47.5 % Operating margin 16.5% 13.6% Sales The Retail segment's sales increased $177.6 million, or 22%, in fiscal 2023 compared with fiscal 2022.
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.
We are not only focused on growing the number of locations, but also on upgrading existing store locations to our new concept designs.
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.
These actions resulted in a comparative $2.5 million increase in operating loss in fiscal 2023. Non-Operating Income (Expense) Interest Expense and Interest Income Interest expense was $0.4 million lower and interest income was $5.3 million higher in fiscal 2023 compared with fiscal 2022. The increase in interest income was primarily driven by higher interest rates.
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.
Investing Activities During fiscal 2023, net cash used for investing activities was $70.1 million, a decrease of $8.3 million compared with the prior year due to lower capital expenditures and acquisition payments and higher proceeds from investment sales, net of purchases, partially offset by less proceeds received from the sale of assets.
Investing Activities During fiscal 2024, net cash used for investing activities was $81.6 million, an increase of $11.4 million c ompared 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.
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.
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.
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. 28 Table of Contents During fiscal 2023, net cash used for financing activities was $37.1 million, a decrease of $107.4 million compared with prior year, primarily due to fewer share repurchases and holdback payments on prior-period acquisitions.
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.
The absence of this gain in fiscal 2023 resulted in a 130 basis point comparative increase in SG&A expense as a percentage of sales compared with fiscal 2022. 25 Table of Contents Wholesale Segment (52 weeks) (53 weeks) (FY23 vs FY22) (Amounts in thousands, except percentages) 4/29/2023 4/30/2022 % Change Sales $ 1,215,429 $ 1,371,602 Intersegment sales 474,819 397,236 Total sales 1,690,248 1,768,838 (4.4) % Operating income 115,215 134,013 (14.0) % Operating margin 6.8% 7.6% Sales The Wholesale segment's sales decreased 4%, or $78.6 million, in fiscal 2023 compared with fiscal 2022.
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 Table of Contents 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.
Joybird sells to the end consumer primarily online through its website, www.joybird.com.
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 increase in the Retail segment's sales was led by a 17% increase in delivered same-stores sales, along with a $56.6 million increase in sales related to our fiscal 2023 retail store acquisitions and the full-year impact of our fiscal 2022 retail store acquisitions (refer to Note 2, Acquisitions for further information).
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.
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 29, 2023, we had operating and finance lease payment obligations of $505.0 million and $0.4 million, respectively, with $91.7 million and $0.1 million, payable within 12 months, respectively.
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.
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 claim experience and periodically make adjustments to reflect changes in actual experience.
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.
This was partially offset by a $84.7 million decrease in customer deposits, reflecting the reduced backlog.
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.
As of April 29, 2023, our supply chain operations included the following: • Five major manufacturing locations and 12 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 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.
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.
Removed
Torreón was the last facility to begin operating as part of our broader Mexico manufacturing expansion in fiscal 2021 and 2022 to meet pandemic-related upholstery demand and accounted for approximately 3% of our La-Z-Boy branded production.
Added
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.
Removed
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.
Added
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.
Removed
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 349 La-Z-Boy Furniture Galleries ® stores and 522 La-Z-Boy Comfort Studio ® locations, each dedicated to marketing our La-Z-Boy branded products.
Added
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.
Removed
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.
Added
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.
Removed
We own 171 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.
Added
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.
Removed
All 522 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 2.6 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 614 outlets and approximately 1.9 million square feet of proprietary floor space. ◦ In total, our proprietary floor space includes approximately 12.1 million square feet worldwide. • Joybird sells product primarily online and has a limited amount of proprietary retail showroom floor space including ten small-format stores in key urban markets.
Added
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.
Removed
We believe there is significant growth potential for our consumer brands through these retail channels. • 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.
Added
Sales in fiscal 2023 were fueled by the delivery of a significant backlog resulting from heightened demand in prior periods.
Removed
Impact of COVID-19 Beginning in the fourth quarter of fiscal 2020, we experienced significant changes in our business resulting from the COVID-19 pandemic. After temporarily closing due to state and local restrictions, when our retail and manufacturing locations reopened early in fiscal 2021, we experienced a significant surge in demand as consumers allocated more discretionary spending to home furnishings.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. While we had no variable rate borrowings at April 29, 2023, we could be exposed to market risk from changes in risk-free interest rates if we incur variable rate debt in the future.
Biggest changeITEM 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 2023.
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.

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