UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~October 28, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

COMMISSION FILE NUMBER 1-9656

LA-Z-BOY INCORPORATED

(Exact name of registrant as specified in its charter)


Michigan						38-0751137
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One La-Z-Boy Drive,

Monroe,

Michigan

48162-5138

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code (734) 242-1444

None

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value

LZB

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding at ~~February 14,~~November 22, 2023
Common Stock, $1.00 Par Value						~~43,140,416~~42,779,520

Table of Contents

LA-Z-BOY INCORPORATED

FORM 10-Q ~~THIRD~~SECOND QUARTER OF FISCAL ~~2023~~2024

TABLE OF CONTENTS


		Page Number
PART I Financial Information (Unaudited)		3
Item 1.	Financial Statements	3
	Consolidated Statement of Income	3
	Consolidated Statement of Comprehensive Income	4
	Consolidated Balance Sheet	5
	Consolidated Statement of Cash Flows	6
	Consolidated Statement of Changes in Equity	7
	Notes to Consolidated Financial Statements	98
	Note 1. Basis of Presentation	98
	Note 2. Acquisitions	98
	Note 3. Cash and Restricted Cash	1110
	Note 4. Inventories	1110
	Note 5. Goodwill and Other Intangible Assets	1210
	Note 6. Investments	1211
	Note 7. ~~Accrued Expenses~~Product Warranties	1412
	Note 8. ~~Product Warranties~~Stock-Based Compensation	1413
	Note 9. ~~Stock-Based Compensation~~Accumulated Other Comprehensive Loss	14
	Note 10. ~~Accumulated Other Comprehensive Loss~~Revenue Recognition	15
	Note 11. Segment Information	16
	Note ~~11. Revenue Recognition~~12. Income Taxes	1718
	Note ~~12. Segment Information~~13. Earnings per Share	19
	Note ~~13. Income Taxes~~	20
	~~Note~~ 14. ~~Earnings per Share~~	21
	~~Note 15.~~ Fair Value Measurements	2119

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
	Cautionary Note Regarding Forward-Looking Statements	2321
	Introduction	2321
	Results of Operations	2524
	Liquidity and Capital Resources	2927
	Critical Accounting Policies	3029
	Recent Accounting Pronouncements	3029

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3029
Item 4.	Controls and Procedures	3130

PART II Other Information		3231
Item 1A.	Risk Factors	3231
Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	3231
Item 5.	Other Information	31
Item 6.	Exhibits	32

Signature Page		33

Table of Contents

PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands, except per share data)	(Unaudited, amounts in thousands, except per share data)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands, except per share data)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Sales	Sales	$	572,723	$	571,573	$	1,788,146	$	1,672,245	Sales	$	511,435	$	611,332	$	993,086	$	1,215,423
Cost of sales	Cost of sales	326,296		352,208		1,039,523		1,027,503		Cost of sales	288,830		361,848		564,753		734,909
Gross profit	Gross profit	246,427		219,365		748,623		644,742		Gross profit	222,605		249,484		428,333		480,514
Selling, general and administrative expense	Selling, general and administrative expense	203,587		179,878		591,257		516,771		Selling, general and administrative expense	188,993		187,601		360,195		365,988
Operating income	Operating income	42,840		39,487		157,366		127,971		Operating income	33,612		61,883		68,138		114,526
Interest expense	Interest expense	(136)		(160)		(414)		(713)		Interest expense	(101)		(119)		(223)		(278)
Interest income	Interest income	2,012		806		3,624		1,029		Interest income	4,042		1,138		7,098		1,612

Other income (expense), net	Other income (expense), net	(1,062)		(1,460)		(834)		(522)		Other income (expense), net	104		183		660		228
Income before income taxes	Income before income taxes	43,654		38,673		159,742		127,765		Income before income taxes	37,657		63,085		75,673		116,088
Income tax expense	Income tax expense	12,077		9,591		42,446		33,059		Income tax expense	9,963		16,306		20,053		30,369
Net income	Net income	31,577		29,082		117,296		94,706		Net income	27,694		46,779		55,620		85,719
Net (income) loss attributable to noncontrolling interests		149		(615)		(1,005)		(2,157)
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests	(495)		(702)		(942)		(1,154)
Net income attributable to La-Z-Boy Incorporated	Net income attributable to La-Z-Boy Incorporated	$	31,726	$	28,467	$	116,291	$	92,549	Net income attributable to La-Z-Boy Incorporated	$	27,199	$	46,077	$	54,678	$	84,565

Basic weighted average common shares	Basic weighted average common shares	43,137		43,701		43,111		44,342		Basic weighted average common shares	43,008		43,104		43,123		43,098
Basic net income attributable to La-Z-Boy Incorporated per share	Basic net income attributable to La-Z-Boy Incorporated per share	$	0.74	$	0.65	$	2.70	$	2.09	Basic net income attributable to La-Z-Boy Incorporated per share	$	0.63	$	1.07	$	1.27	$	1.96

Diluted weighted average common shares	Diluted weighted average common shares	43,137		43,968		43,111		44,640		Diluted weighted average common shares	43,401		43,182		43,479		43,174
Diluted net income attributable to La-Z-Boy Incorporated per share	Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.74	$	0.65	$	2.70	$	2.07	Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.63	$	1.07	$	1.26	$	1.96

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Net income	Net income	$	31,577	$	29,082	$	117,296	$	94,706	Net income	$	27,694	$	46,779	$	55,620	$	85,719
Other comprehensive income (loss)	Other comprehensive income (loss)									Other comprehensive income (loss)
Currency translation adjustment	Currency translation adjustment	5,441		(651)		(72)		(1,902)		Currency translation adjustment	(3,615)		(3,353)		(2,568)		(5,513)

Net unrealized gain (loss) on marketable securities, net of tax	Net unrealized gain (loss) on marketable securities, net of tax	287		(140)		84		(190)		Net unrealized gain (loss) on marketable securities, net of tax	(87)		(289)		133		(203)
Net pension amortization, net of tax	Net pension amortization, net of tax	36		56		109		175		Net pension amortization, net of tax	24		37		47		73
Total other comprehensive income (loss)	Total other comprehensive income (loss)	5,764		(735)		121		(1,917)		Total other comprehensive income (loss)	(3,678)		(3,605)		(2,388)		(5,643)
Total comprehensive income before noncontrolling interests	Total comprehensive income before noncontrolling interests	37,341		28,347		117,417		92,789		Total comprehensive income before noncontrolling interests	24,016		43,174		53,232		80,076
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	(1,278)		(716)		(1,509)		(1,708)		Comprehensive (income) loss attributable to noncontrolling interests	(11)		(298)		(418)		(231)
Comprehensive income attributable to La-Z-Boy Incorporated	Comprehensive income attributable to La-Z-Boy Incorporated	$	36,063	$	27,631	$	115,908	$	91,081	Comprehensive income attributable to La-Z-Boy Incorporated	$	24,005	$	42,876	$	52,814	$	79,845

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET


(Unaudited, amounts in thousands, except par value)	(Unaudited, amounts in thousands, except par value)	1/28/2023		4/30/2022		(Unaudited, amounts in thousands, except par value)	10/28/2023		4/29/2023
Current assets	Current assets					Current assets
Cash and equivalents	Cash and equivalents	$	280,763	$	245,589	Cash and equivalents	$	329,632	$	343,374
Restricted cash	Restricted cash	3,282		3,267		Restricted cash	3,835		3,304
Receivables, net of allowance of $4,228 at 1/28/2023 and $3,406 at 4/30/2022		137,593		183,747
Receivables, net of allowance of $4,714 at 10/28/2023 and $4,776 at 4/29/2023						Receivables, net of allowance of $4,714 at 10/28/2023 and $4,776 at 4/29/2023	134,394		125,536
Inventories, net	Inventories, net	303,553		303,191		Inventories, net	268,480		276,257
Other current assets	Other current assets	123,803		215,982		Other current assets	104,675		106,129
Total current assets	Total current assets	848,994		951,776		Total current assets	841,016		854,600
Property, plant and equipment, net	Property, plant and equipment, net	267,606		253,144		Property, plant and equipment, net	270,682		278,578
Goodwill	Goodwill	204,781		194,604		Goodwill	208,473		205,008
Other intangible assets, net	Other intangible assets, net	39,180		33,971		Other intangible assets, net	41,515		39,375
Deferred income taxes – long-term	Deferred income taxes – long-term	11,199		10,632		Deferred income taxes – long-term	8,477		8,918
Right of use lease assets	Right of use lease assets	399,807		405,755		Right of use lease assets	452,232		416,269
Other long-term assets, net	Other long-term assets, net	74,788		82,207		Other long-term assets, net	57,630		63,515
Total assets	Total assets	$	1,846,355	$	1,932,089	Total assets	$	1,880,025	$	1,866,263

Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	86,882	$	104,025	Accounts payable	$	98,088	$	107,460

Lease liabilities, short-term	Lease liabilities, short-term	77,142		75,271		Lease liabilities, short-term	77,401		77,751
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	345,360		496,393		Accrued expenses and other current liabilities	256,325		290,650
Total current liabilities	Total current liabilities	509,384		675,689		Total current liabilities	431,814		475,861

Lease liabilities, long-term	Lease liabilities, long-term	350,144		354,843		Lease liabilities, long-term	406,458		368,163
Other long-term liabilities	Other long-term liabilities	70,323		81,935		Other long-term liabilities	67,963		70,142
Shareholders' equity	Shareholders' equity					Shareholders' equity
Preferred shares – 5,000 authorized; none issued	Preferred shares – 5,000 authorized; none issued	—		—		Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 43,140 outstanding at 1/28/23 and 43,089 outstanding at 4/30/22		43,140		43,089
Common shares, $1.00 par value – 150,000 authorized; 42,875 outstanding at 10/28/2023 and 43,318 outstanding at 4/29/2023						Common shares, $1.00 par value – 150,000 authorized; 42,875 outstanding at 10/28/2023 and 43,318 outstanding at 4/29/2023	42,875		43,318
Capital in excess of par value	Capital in excess of par value	350,406		342,252		Capital in excess of par value	361,409		358,891
Retained earnings	Retained earnings	518,732		431,181		Retained earnings	567,391		545,155
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(6,180)		(5,797)		Accumulated other comprehensive loss	(7,392)		(5,528)
Total La-Z-Boy Incorporated shareholders' equity	Total La-Z-Boy Incorporated shareholders' equity	906,098		810,725		Total La-Z-Boy Incorporated shareholders' equity	964,283		941,836
Noncontrolling interests	Noncontrolling interests	10,406		8,897		Noncontrolling interests	9,507		10,261
Total equity	Total equity	916,504		819,622		Total equity	973,790		952,097
Total liabilities and equity	Total liabilities and equity	$	1,846,355	$	1,932,089	Total liabilities and equity	$	1,880,025	$	1,866,263

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS


		Nine Months Ended					Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	117,296	$	94,706	Net income	$	55,620	$	85,719
Adjustments to reconcile net income to cash provided by operating activities	Adjustments to reconcile net income to cash provided by operating activities					Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal and impairment of assets	(Gain)/loss on disposal and impairment of assets	6,161		(3,149)		(Gain)/loss on disposal and impairment of assets	559		1

(Gain)/loss on sale of investments	(Gain)/loss on sale of investments	155		(340)		(Gain)/loss on sale of investments	(1,136)		77
Provision for doubtful accounts	Provision for doubtful accounts	945		(1,070)		Provision for doubtful accounts	44		694
Depreciation and amortization	Depreciation and amortization	29,357		27,146		Depreciation and amortization	25,092		19,258
Amortization of right-of-use lease assets	Amortization of right-of-use lease assets	57,548		53,949		Amortization of right-of-use lease assets	37,285		38,580
Lease impairment		1,347		—
Lease impairment/(settlement)						Lease impairment/(settlement)	(1,175)		—
Equity-based compensation expense	Equity-based compensation expense	8,456		8,887		Equity-based compensation expense	7,337		5,079
Change in deferred taxes	Change in deferred taxes	(2,629)		214		Change in deferred taxes	(340)		27

Change in receivables	Change in receivables	42,474		(20,317)		Change in receivables	(9,843)		19,550
Change in inventories	Change in inventories	4,560		(83,109)		Change in inventories	9,757		(36,771)
Change in other assets	Change in other assets	16,478		(22,486)		Change in other assets	(1,361)		4,890
Change in payables	Change in payables	(10,624)		23,690		Change in payables	(4,040)		8,027
Change in lease liabilities	Change in lease liabilities	(58,651)		(54,400)		Change in lease liabilities	(38,121)		(39,380)
Change in other liabilities	Change in other liabilities	(85,821)		21,471		Change in other liabilities	(22,802)		(74,797)
Net cash provided by operating activities	Net cash provided by operating activities	127,052		45,192		Net cash provided by operating activities	56,876		30,954

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Proceeds from disposals of assets	Proceeds from disposals of assets	121		3,999		Proceeds from disposals of assets	4,037		63

Capital expenditures	Capital expenditures	(57,439)		(58,585)		Capital expenditures	(26,501)		(40,442)
Purchases of investments	Purchases of investments	(6,970)		(28,058)		Purchases of investments	(17,485)		(4,714)
Proceeds from sales of investments	Proceeds from sales of investments	18,178		30,457		Proceeds from sales of investments	21,956		12,660
Acquisitions	Acquisitions	(11,855)		(24,849)		Acquisitions	(7,311)		(11,705)
Net cash used for investing activities	Net cash used for investing activities	(57,965)		(77,036)		Net cash used for investing activities	(25,304)		(44,138)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities

Payments on debt and finance lease liabilities	Payments on debt and finance lease liabilities	(92)		(91)		Payments on debt and finance lease liabilities	(206)		(61)
Holdback payments for acquisition purchases		(5,000)		(23,000)

Holdback payments for acquisitions						Holdback payments for acquisitions	(5,000)		(5,000)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes	Stock issued for stock and employee benefit plans, net of shares withheld for taxes	(1,771)		(1,670)		Stock issued for stock and employee benefit plans, net of shares withheld for taxes	(1,859)		(1,711)
Repurchases of common stock	Repurchases of common stock	(5,004)		(75,646)		Repurchases of common stock	(20,014)		(5,004)
Dividends paid to shareholders	Dividends paid to shareholders	(22,027)		(20,621)		Dividends paid to shareholders	(15,632)		(14,161)
Dividends paid to minority interest joint venture partners (1)	Dividends paid to minority interest joint venture partners (1)	—		(1,260)		Dividends paid to minority interest joint venture partners (1)	(1,172)		—
Net cash used for financing activities	Net cash used for financing activities	(33,894)		(122,288)		Net cash used for financing activities	(43,883)		(25,937)

Effect of exchange rate changes on cash and equivalents	Effect of exchange rate changes on cash and equivalents	(4)		(593)		Effect of exchange rate changes on cash and equivalents	(900)		(1,841)
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	35,189		(154,725)		Change in cash, cash equivalents and restricted cash	(13,211)		(40,962)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	248,856		394,703		Cash, cash equivalents and restricted cash at beginning of period	346,678		248,856
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	284,045	$	239,978	Cash, cash equivalents and restricted cash at end of period	$	333,467	$	207,894

Supplemental disclosure of non-cash investing activities	Supplemental disclosure of non-cash investing activities					Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables	Capital expenditures included in payables	$	2,828	$	4,564	Capital expenditures included in payables	$	3,079	$	4,251

(1)Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently ~~reinvested.~~reinvested

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited, amounts in thousands) Common
Shares Capital in Excess of
Par Value Retained
Earnings Accumulated Other
Comprehensive
Loss Non-Controlling
Interests Total
At April 30, 2022 $ 43,089 $ 342,252 $ 431,181 $ (5,797) $ 8,897 $ 819,622
Net income — — 38,488 — 452 38,940
Other comprehensive loss — — — (1,519) (519) (2,038)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 151 (194) (1,660) — — (1,703)
Repurchases of 204 shares of common stock (204) — (4,800) — — (5,004)
Stock option and restricted stock expense — 1,417 — — — 1,417
Dividends declared and paid ($0.165/share) — — (7,097) — — (7,097)
Dividends declared not paid ($0.165/share) — — (45) — — (45)
At July 30, 2022 $ 43,036 $ 343,475 $ 456,067 $ (7,316) $ 8,830 $ 844,092
Net income — — 46,077 — 702 46,779
Other comprehensive loss — — — (3,201) (404) (3,605)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 100 (101) (7) — — (8)
Stock option and restricted stock expense — 3,662 — — — 3,662
Dividends declared and paid ($0.165/share) — — (7,064) — — (7,064)
Dividends declared not paid ($0.165/share) — — (70) — — (70)
At October 29, 2022 $ 43,136 $ 347,036 $ 495,003 $ (10,517) $ 9,128 $ 883,786
Net income — — 31,726 — (149) 31,577
Other comprehensive income (loss) — — — 4,337 1,427 5,764
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 4 (7) (57) — — (60)
Stock option and restricted stock expense — 3,377 — — — 3,377
Dividends declared and paid ($0.1815/share) — — (7,866) — — (7,866)
Dividends declared not paid ($0.1815/share) — — (74) — — (74)
At January 28, 2023 $ 43,140 $ 350,406 $ 518,732 $ (6,180) $ 10,406 $ 916,504

~~Table of Contents~~

(Unaudited, amounts in thousands) Common
Shares Capital in Excess of
Par Value Retained
Earnings Accumulated Other
Comprehensive
Income (Loss) Non-Controlling
Interests Total
At April 24, 2021 $ 45,361 $ 330,648 $ 399,010 $ (1,521) $ 8,648 $ 782,146
Net income — — 24,566 — 700 25,266
Other comprehensive loss — — — (302) (430) (732)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 181 291 (2,700) — — (2,228)
Repurchases of 919 shares of common stock (919) (530) (34,191) — — (35,640)
Stock option and restricted stock expense — 2,460 — — — 2,460
Dividends declared and paid ($0.15/share) — — (6,777) — — (6,777)
Dividends declared not paid ($0.15/share) — — (46) — — (46)
At July 24, 2021 $ 44,623 $ 332,869 $ 379,862 $ (1,823) $ 8,918 $ 764,449
Net income — — 39,516 — 842 40,358
Other comprehensive income — — — (330) (120) (450)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 11 353 (6) — — 358
Repurchases of 434 shares of common stock (434) (196) (14,370) — — (15,000)
Stock option and restricted stock expense — 3,894 — — — 3,894
Dividends declared and paid ($0.15/share) (1) — — (6,621) — (1,260) (7,881)
Dividends declared not paid ($0.15/share) — — (46) — — (46)
At October 23, 2021 $ 44,200 $ 336,920 $ 398,335 $ (2,153) $ 8,380 $ 785,682
Net income — — 28,467 — 615 29,082
Other comprehensive income (loss) — — — (836) 101 (735)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax 8 204 (12) — — 200
Repurchases of 703 shares of common stock (703) (363) (23,940) — — (25,006)
Stock option and restricted stock expense — 2,533 — — 2,533
Dividends declared and paid ($0.165/share) — — (7,223) — — (7,223)
Dividends declared not paid ($0.165/share) — — (50) — — (50)
At January 22, 2022 $ 43,505 $ 339,294 $ 395,577 $ (2,989) $ 9,096 $ 784,483


(Unaudited, amounts in thousands)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests		Total
At April 29, 2023	$	43,318	$	358,891	$	545,155	$	(5,528)	$	10,261	$	952,097
Net income	—		—		27,479		—		447		27,926
Other comprehensive income (loss)	—		—		—		1,330		(40)		1,290
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	149		(221)		(1,906)		—		—		(1,978)
Repurchases of 357 shares of common stock	(357)		(4,512)		(5,138)		—		—		(10,007)
Stock option and restricted stock expense	—		2,526		—		—		—		2,526
Dividends declared and paid ($0.1815/share)	—		—		(7,852)		—		—		(7,852)
Dividends declared not paid ($0.1815/share)	—		—		(72)		—		—		(72)
At July 29, 2023	$	43,110	$	356,684	$	557,666	$	(4,198)	$	10,668	$	963,930
Net income	—		—		27,199		—		495		27,694
Other comprehensive income (loss)	—		—		—		(3,194)		(484)		(3,678)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	91		32		(4)		—		—		119
Repurchases of 326 shares of common stock	(326)		(118)		(9,561)		—		—		(10,005)
Stock option and restricted stock expense	—		4,811		—		—		—		4,811


Dividends declared and paid ($0.1815/share) (1)	—		—		(7,780)		—		(1,172)		(8,952)
Dividends declared not paid ($0.1815/share)					(129)		—		—		(129)
At October 28, 2023	$	42,875	$	361,409	$	567,391	$	(7,392)	$	9,507	$	973,790

(1)Non-controlling interests include dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.


(Unaudited, amounts in thousands)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interests		Total
At April 30, 2022	$	43,089	$	342,252	$	431,181	$	(5,797)	$	8,897	$	819,622
Net income	—		—		38,488		—		452		38,940
Other comprehensive loss	—		—		—		(1,519)		(519)		(2,038)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	151		(194)		(1,660)		—		—		(1,703)
Repurchases of 204 shares of common stock	(204)		—		(4,800)		—		—		(5,004)
Stock option and restricted stock expense	—		1,417		—		—		—		1,417
Dividends declared and paid ($0.165/share)	—		—		(7,097)		—		—		(7,097)
Dividends declared not paid ($0.165/share)	—		—		(45)		—		—		(45)
At July 30, 2022	$	43,036	$	343,475	$	456,067	$	(7,316)	$	8,830	$	844,092
Net income	—		—		46,077		—		702		46,779
Other comprehensive loss	—		—		—		(3,201)		(404)		(3,605)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	100		(101)		(7)		—		—		(8)

Stock option and restricted stock expense	—		3,662		—		—		—		3,662

Dividends declared and paid ($0.165/share)	—		—		(7,064)		—		—		(7,064)
Dividends declared not paid ($0.165/share)	—		—		(70)		—		—		(70)
At October 29, 2022	$	43,136	$	347,036	$	495,003	$	(10,517)	$	9,128	$	883,786

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries (collectively, the "Company"). We derived the April ~~30, 2022~~29, 2023 balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles ("US GAAP"), which we applied on a basis consistent with those reflected in our fiscal ~~2022~~2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), but the information does not include all of the disclosures required by ~~generally accepted accounting principles.~~US GAAP. In management’s opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April ~~29, 2023.~~27, 2024.

At ~~January~~October 28, 2023, we owned investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes. Each of these companies is a variable interest entity and we have not consolidated their results in our financial statements because we do not have the power to direct those activities that most significantly impact their economic performance and, therefore, are not the primary beneficiary.

Accounting ~~pronouncements adopted~~Pronouncements Adopted in ~~fiscal 2023~~Fiscal 2024

~~We did not adopt any~~The following table summarizes Accounting Standards Updates ("ASUs") which were adopted in ~~the first nine months of~~ fiscal ~~2023.~~2024, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASU

Description

Adoption Date

ASU 2021-08

Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

Fiscal 2024

Accounting ~~pronouncements~~Pronouncements not yet ~~adopted~~Adopted

The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASU

Description

Adoption Date

ASU ~~2021-08~~2023-05

Business Combinations ~~(Topic 805)~~- Joint Venture Formations (Subtopic 805-60): ~~Accounting for Contract Assets~~Recognition and ~~Contract Liabilities From Contracts With Customers~~Initial Measurement

Fiscal ~~2024~~2025

ASU 2023-02

Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Fiscal 2025

~~Torreón Closure~~Change in Accounting Policy - Distribution Center Costs

~~During~~In the ~~third~~first quarter of fiscal ~~2023,~~2024, we made a voluntary change to the ~~decision~~presentation of costs directly attributable to ~~close~~ our ~~manufacturing facility in Torreón, Mexico as part of~~distribution activities conducted through our initiative to drive improved efficiencies through optimized staffing levels within our plants. Torreón was the last facility to begin operating as part of our broader Mexico manufacturing expansion in fiscal 2021 and 2022 and accounted for approximately 3% of our La-Z-Boy branded production. As a result of this action, charges were recorded within the Wholesale segmentdistribution centers in the ~~third quarter of fiscal 2023 of $9.2 million in~~United States. Our policy has changed from presenting these costs within selling, general and administrative ("SG&A") expense ~~for~~to presenting them as cost of sales. We believe this presentation is preferable because it will enhance the ~~impairment~~comparability of ~~various assets, primarily long-lived assets,~~our financial statements with those of our industry peers and ~~$0.9 million in~~align with how we internally manage supply chain costs and margin.

In accordance with US GAAP, the period presented below has been retrospectively adjusted to reflect the change to cost of sales ~~primarily related~~and SG&A expense. This change had no impact to ~~severance.~~sales, income from operations, net income, earnings per share, retained earnings or other components of equity or net assets.

~~To determine the impairment~~

Table of our long-lived assets, which included fixed assets utilized by the facility and the right-of-use-lease asset, we calculated the fair value of the Torreón asset group using the income approach based on the expected future cash flows associated with the facility, primarily those associated with an assumed sublease. Based on this evaluation, we recorded an impairment charge as the difference between the asset group's fair value and its carrying value.Contents


(Unaudited, amounts in thousands)	For the Quarter Ended October 29, 2022						For the Six Months Ended October 29, 2022
	Previously Reported		Effect of Change		As Adjusted		Previously Reported		Effect of Change		As Adjusted
Cost of sales	$	350,596	$	11,252	$	361,848	$	713,227	$	21,682	$	734,909
Gross profit	260,736		(11,252)		249,484		502,196		(21,682)		480,514
Selling, general and administrative expense	198,853		(11,252)		187,601		387,670		(21,682)		365,988

Note 2: Acquisitions

None of the below acquisitions were significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented. All of our provisional purchase accounting estimates for the acquisitions completed in fiscal ~~2023~~2024 are based on the information and data available to us as of the time of the issuance of these financial statements, and in accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within the first 12 months following the acquisition as we gain additional data.

Each of the following Retail acquisitions completed in fiscal ~~2023~~2024 and ~~2022~~2023 reflect a core component of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) in suitable geographic markets, alongside the existing La-Z-Boy Furniture Galleries® network.

~~Table~~Prior to each Retail acquisition completed in fiscal 2024 and 2023, we licensed to the counterparty the exclusive right to own and operate the La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in each of ~~Contents~~their respective markets, and we reacquired these rights when we consummated the transaction. These required rights are indefinite-lived because our retailer agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement date of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. For federal income tax purposes, we amortize and deduct these indefinite-lived intangible assets and goodwill, if any, over 15 years.

~~Barboursville, West Virginia acquisition~~Lafayette, Louisiana Acquisition

On ~~December 12, 2022,~~October 23, 2023, we completed our acquisition of the ~~Barboursville, West Virginia~~Lafayette Louisiana business that operates one independently owned La-Z-Boy Furniture Galleries® ~~store. This~~store and one distribution center for $2.8 million, inclusive of and subject to further customary adjustments. We paid total cash of $1.8 million during the second quarter of fiscal 2024 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, ~~did not have a meaningful impact~~we recorded an indefinite-lived intangible asset of $0.7 million related to the reacquired rights described above. We also recognized $2.1 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies.

Colorado Springs, Colorado Acquisition

On July 17, 2023, we completed our acquisition of the Colorado Springs, Colorado business that operates two independently owned La-Z-Boy Furniture Galleries® stores and one distribution center for $6.0 million, inclusive of and subject to further to customary adjustments. We paid total cash of $5.6 million during the first and second quarters of fiscal 2024 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $2.1 million related to the reacquired rights described above. We also recognized $2.2 million of goodwill in our ~~consolidated financial statements.~~Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies.

Prior Year Acquisitions

Spokane, Washington ~~acquisition~~Acquisition

On September 26, 2022, we completed our acquisition of the Spokane, Washington business that operates one independently owned La-Z-Boy Furniture Galleries® store and one distribution center for $4.7 million, ~~subject to~~inclusive of customary adjustments. We paid total cash of $4.0 million during the second quarter of fiscal 2023 and the remaining consideration ~~includes~~included forgiveness of accounts receivable and payments based on working capital adjustments.

~~Prior to this~~ As part of the acquisition, we ~~licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries~~® stores (and to use the associated trademarks and trade name) in the Spokane, Washington market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $1.2 million related to ~~these~~the reacquired ~~rights.~~rights described above. We also recognized ~~$3.0~~

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$3.0 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies. ~~For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.~~

Denver, Colorado ~~acquisition~~Acquisition

On July 18, 2022, we completed our acquisition of the Denver, Colorado business that operates five independently owned La-Z-Boy Furniture Galleries® stores and one distribution center for $10.1 million, ~~subject to~~inclusive of customary adjustments. We paid total cash of $7.7 million induring the first and second quarters of fiscal 2023 and the remaining consideration ~~includes~~included forgiveness of accounts receivable and payments based on working capital adjustments.

~~Prior to this~~ As part of the acquisition, we ~~licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries~~® stores (and to use the associated trademarks and trade name) in the Denver, Colorado market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $4.3 million related to ~~these~~the reacquired ~~rights.~~rights described above. We also recognized $7.6 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. ~~For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.~~

~~Prior Year Acquisitions~~

~~Alabama and Chattanooga, Tennessee acquisition~~

~~On December 6, 2021, we completed our acquisition of the Alabama and Chattanooga, Tennessee businesses that operate four independently owned La-Z-Boy Furniture Galleries~~® stores in Alabama and one in Chattanooga, Tennessee, for $8.3 million, subject to customary adjustments. We paid total cash of $8.0 million in the third quarter of fiscal 2022 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

~~Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries~~® stores (and to use the associated trademarks and trade name) in the Alabama and Chattanooga, Tennessee markets, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $4.1 million related to these reacquired rights. We also recognized $7.4 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

~~Table of Contents~~

~~Furnico (La-Z-Boy United Kingdom Manufacturing) acquisition~~

On October 25, 2021, we completed the acquisition of Furnico Furniture Ltd ("Furnico"), an upholstery manufacturing business in the U.K for approximately $13.3 million, subject to customary adjustments and in the third and fourth quarters of fiscal 2022, we paid $13.9 million of cash for the purchase of the Furnico business. Furnico produces La-Z-Boy branded product for the La-Z-Boy U.K. business and also operates a wholesale business, selling white label products to key U.K. retailers. With this acquisition, we expect to realize production synergies, cost savings through materials procurement, and increases in production capacity to support growth in the La-Z-Boy U.K business.

We recognized $9.2 million of goodwill in our Wholesale segment related primarily to synergies we expect from the integration of the acquired business and future benefits of these synergies. The goodwill asset for Furnico is not deductible for federal income tax purposes.

~~Long Island, New York acquisition~~

~~On August 16, 2021, we completed our acquisition of the Long Island, New York business that operates three independently owned La-Z-Boy Furniture Galleries~~® stores for $4.5 million, subject to customary adjustments. We paid $4.4 million of cash during the second quarter of fiscal 2022 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

~~Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries~~® stores (and to use the associated trademarks and trade name) in the Long Island, New York market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $0.8 million related to these reacquired rights. We also recognized $4.4 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

Note 3: Cash and Restricted Cash

We have restricted cash on deposit with a bank as collateral for certain letters of credit. All our letters of credit have maturity dates within the next twelve months, but we expect to renew some of these letters of credit when they mature.


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022
Cash and cash equivalents	Cash and cash equivalents	$	280,763	$	236,712	Cash and cash equivalents	$	329,632	$	204,626
Restricted cash	Restricted cash	3,282		3,266		Restricted cash	3,835		3,268
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	284,045	$	239,978	Total cash, cash equivalents and restricted cash	$	333,467	$	207,894

Note 4: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		4/30/2022		(Unaudited, amounts in thousands)	10/28/2023		4/29/2023
Raw materials	Raw materials	$	137,042	$	146,896	Raw materials	$	125,211	$	116,440
Work in process	Work in process	25,119		36,834		Work in process	20,607		24,328
Finished goods	Finished goods	198,680		185,870		Finished goods	168,574		181,401
FIFO inventories	FIFO inventories	360,841		369,600		FIFO inventories	314,392		322,169
Excess of FIFO over LIFO	Excess of FIFO over LIFO	(57,288)		(66,409)		Excess of FIFO over LIFO	(45,912)		(45,912)
Total inventories	Total inventories	$	303,553	$	303,191	Total inventories	$	268,480	$	276,257

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Note 5: Goodwill and Other Intangible Assets

We have goodwill on our consolidated balance sheet as follows:

Reportable Segment/Unit

Reporting Unit

Related Acquisition

Wholesale Segment

~~La-Z-Boy~~ United Kingdom

Wholesale business in the United Kingdom and Ireland

Wholesale Segment

~~La-Z-Boy~~ United Kingdom ~~Manufacturing~~

La-Z-Boy United Kingdom Manufacturing (Furnico)

Retail Segment

Retail

La-Z-Boy Furniture Galleries® stores

Corporate &and Other

Joybird

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The following table summarizes changes in the carrying amount of our goodwill by reportable segment:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill		(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill
Balance at April 30, 2022 (1)		$	20,207	$	118,951	$	55,446	$	194,604
Balance at April 29, 2023 (1)										Balance at April 29, 2023 (1)	$	20,202	$	129,360	$	55,446	$	205,008
Acquisitions	Acquisitions	—		10,598		—		10,598		Acquisitions	—		4,273		—		4,273
Translation adjustment	Translation adjustment	(295)		(126)		—		(421)		Translation adjustment	(725)		(83)		—		(808)
Balance at January 28, 2023 (1)		$	19,912	$	129,423	$	55,446	$	204,781
Balance at October 28, 2023 (1)										Balance at October 28, 2023 (1)	$	19,477	$	133,550	$	55,446	$	208,473

(1)Includes $26.9 million of accumulated impairment losses in Corporate and Other.

We have intangible assets on our consolidated balance sheet as follows:

Reportable ~~Segment/Unit~~Segment

Intangible Asset

Useful Life

Wholesale Segment

Primarily acquired customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland

Amortizable over useful lives that do not exceed 15 years

Wholesale Segment

American Drew® trade name

Indefinite-lived

Retail Segment

Reacquired rights to own and operate La-Z-Boy Furniture Galleries® stores

Indefinite-lived

Corporate &and Other

Joybird® trade name

Amortizable over eight-year useful life

The following summarizes changes in our intangible assets:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Indefinite- Lived Trade Names		Finite-Lived Trade Name		Indefinite- Lived Reacquired Rights		Other Intangible Assets		Total Intangible Assets		(Unaudited, amounts in thousands)	Indefinite- Lived Trade Names		Finite-Lived Trade Name		Indefinite- Lived Reacquired Rights		Other Intangible Assets		Total Intangible Assets
Balance at April 30, 2022		$	1,155	$	3,392	$	27,319	$	2,105	$	33,971
Balance at April 29, 2023												Balance at April 29, 2023	$	1,155	$	2,594	$	33,739	$	1,887	$	39,375
Acquisitions	Acquisitions	—		—		6,093		—		6,093		Acquisitions	—		—		2,773		—		2,773
Amortization	Amortization	—		(599)		—		(155)		(754)		Amortization	—		(399)				(109)		(508)
Translation adjustment	Translation adjustment	—		—		(95)		(35)		(130)		Translation adjustment	—		—		(61)		(64)		(125)
Balance at January 28, 2023		$	1,155	$	2,793	$	33,317	$	1,915	$	39,180
Balance at October 28, 2023												Balance at October 28, 2023	$	1,155	$	2,195	$	36,451	$	1,714	$	41,515

We test indefinite-lived intangibles and goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that an asset might be impaired. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired.

Note 6: Investments

We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan. We also hold investments of two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes (refer to Note 15, Fair Value Measurements).

Our short-term investments are included in other current assets and our long-term investments are included in other long-term assets on our consolidated balance sheet.

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The following summarizes our investments:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		4/30/2022		(Unaudited, amounts in thousands)	10/28/2023		4/29/2023
Short-term investments:	Short-term investments:					Short-term investments:
Marketable securities	Marketable securities	$	10,911	$	16,022	Marketable securities	$	6,500	$	5,043
Held-to-maturity investments	Held-to-maturity investments	1,404		1,337		Held-to-maturity investments	1,285		1,351
Total short-term investments	Total short-term investments	12,315		17,359		Total short-term investments	7,785		6,394
Long-term investments:	Long-term investments:					Long-term investments:
Marketable securities	Marketable securities	19,756		26,599		Marketable securities	13,556		18,509
Cost basis investments		7,579		7,579
Total long-term investments		27,335		34,178

Total investments	Total investments	$	39,650	$	51,537	Total investments	$	21,341	$	24,903

Investments to enhance returns on cash	Investments to enhance returns on cash	$	15,793	$	27,239	Investments to enhance returns on cash	$	8,652	$	11,617
Investments to fund compensation/retirement plans	Investments to fund compensation/retirement plans	13,542		14,219		Investments to fund compensation/retirement plans	12,689		13,286
Other investments		10,315		10,079

Total investments	Total investments	$	39,650	$	51,537	Total investments	$	21,341	$	24,903

The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type:


		1/28/2023						4/30/2022							10/28/2023						4/29/2023
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	Equity securities	$	1,316	$	(94)	$	14,213	$	1,448	$	(86)	$	13,905	Equity securities	$	—	$	(138)	$	3,805	$	1,338	$	(103)	$	6,853
Fixed income	Fixed income	45		(715)		21,201		28		(809)		33,521		Fixed income	—		(400)		13,714		42		(620)		14,039
Other	Other	1,210		—		4,236		1,250		—		4,111		Other	1,165		—		3,822		1,171		—		4,011
Total securities	Total securities	$	2,571	$	(809)	$	39,650	$	2,726	$	(895)	$	51,537	Total securities	$	1,165	$	(538)	$	21,341	$	2,551	$	(723)	$	24,903

The following table summarizes sales of marketable securities:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Proceeds from sales	Proceeds from sales	$	5,514	$	7,784	$	18,178	$	29,437	Proceeds from sales	$	8,064	$	8,418	$	20,468	$	12,664
Gross realized gains	Gross realized gains	3		142		52		696		Gross realized gains	1,715		22		1,876		49
Gross realized losses	Gross realized losses	(81)		(20)		(207)		(356)		Gross realized losses	(272)		(70)		(740)		(126)

The following is a summary of the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity:


(Unaudited, amounts in thousands)	1/10/28/2023
Within one year	$	~~10,907~~6,405
Within two to five years	~~7,836~~961
~~Within six to ten years~~	~~572~~

~~Thereafter~~Securities not due at a single maturity date	~~1,886~~6,348
Total	$	~~21,201~~13,714

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~~Note 7: Accrued Expenses and Other Current Liabilities~~

(Unaudited, amounts in thousands) 1/28/2023 4/30/2022
Payroll and other compensation $ 59,534 $ 62,373
Accrued product warranty, current portion 18,517 16,436
Customer deposits 129,019 183,233
Deferred revenue 60,986 139,006
Other current liabilities 77,304 95,345
Accrued expenses and other current liabilities $ 345,360 $ 496,393

~~Customer deposits and deferred revenue decreased during the first nine months of fiscal 2023 as we continue to work down the backlog built up in prior periods back to pre-pandemic levels.~~

Note 8:7: Product Warranties

We accrue an estimated liability for product warranties when we recognize revenue on the sale of warrantied products. We estimate future warranty claims on product sales based on our historical claims experience and periodically adjust the provision to reflect changes in actual experience. We incorporate repair costs into our liability estimates, including materials, labor and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product to our customers. Over 90% of our warranty liability relates to our Wholesale reportable segment, as we generally warrant our products against defects for one to three years on fabric and leather, from one to ten years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames, unless otherwise noted in the warranty. Additionally, our Wholesale segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty against defects on a majority of Joybird products, which are a part of our Corporate and Other results. For all our manufacturer warranties, the

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warranty period begins when the consumer receives our product. We use considerable judgment in making our estimates, and we record differences between our actual and estimated costs when the differences are known.

A reconciliation of the changes in our product warranty liability is as follows:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023 (1)		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023 (1)		10/29/2022
Balance as of the beginning of the period	Balance as of the beginning of the period	$	28,357	$	25,068	$	27,036	$	23,636	Balance as of the beginning of the period	$	30,794	$	27,516	$	30,984	$	27,036
Acquisitions		—		634		—		634

Accruals during the period	Accruals during the period	8,663		7,271		24,942		21,158		Accruals during the period	6,957		8,453		13,622		16,279
Settlements during the period	Settlements during the period	(7,722)		(6,612)		(22,680)		(19,067)		Settlements during the period	(6,624)		(7,612)		(13,479)		(14,958)
Balance as of the end of the period	Balance as of the end of the period	$	29,298	$	26,361	$	29,298	$	26,361	Balance as of the end of the period	$	31,127	$	28,357	$	31,127	$	28,357

(1)$~~18.5~~20.1 million and ~~$16.4~~$19.9 million is recorded in accrued expenses and other current liabilities as of ~~January~~October 28, 2023, and April ~~30, 2022,~~29, 2023, respectively, while the remainder is included in other long-term liabilities.

We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties issued during the respective periods.

Note 9:8: Stock-Based Compensation

The table below summarizes the total stock-based compensation expense we recognized for all outstanding grants in our consolidated statement of income:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Equity-based awards expense	Equity-based awards expense	$	3,377	$	2,533	$	8,456	$	8,887	Equity-based awards expense	$	4,811	$	3,662	$	7,337	$	5,079
Liability-based awards expense (1)	Liability-based awards expense (1)	(54)		(73)		92		(696)		Liability-based awards expense (1)	(35)		18		53		146
Total stock-based compensation expense	Total stock-based compensation expense	$	3,323	$	2,460	$	8,548	$	8,191	Total stock-based compensation expense	$	4,776	$	3,680	$	7,390	$	5,225

(1)~~Liability-based awards are comprised primarily of~~Includes stock appreciation rights, deferred stock units ~~granted~~issued to ~~non-employee directors.~~Directors, restricted stock units, and performance-based units. Compensation expense for these awards is based on the market price of our common stock on the grant date and is remeasured each reporting period based on the market value of our common shares on the last day of the reported period.

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Restricted Stock ~~Options.~~ ~~We granted 318,411 stock options to employees during~~. During the first quarter of fiscal ~~2023 and~~2024, we have stock options outstanding from previous grants. We account for stock options as equity-based awards because when they are exercised, they will be settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value on the date the Compensation and Talent Oversight Committee of our board of directors approved the awards. The vesting period for our stock options ranges from ~~one~~ to four years, with accelerated vesting upon retirement. The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date. We accelerate the expense for options granted to retirement-eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur.

We estimate the fair value of the employee stock options at the grant date using the Black-Scholes option-pricing model, which requires management to make certain assumptions. The fair value of stock options granted during the first quarter of fiscal 2023 was calculated using the following assumptions:

(Unaudited) Fiscal 2023 grant Assumption
Risk-free interest rate 2.87% U.S. Treasury issues with term equal to expected life at grant date
Dividend rate 2.70% Estimated future dividend rate and common share price at grant date
Expected life 5.0 years Contractual term of stock option and expected employee exercise trends
Stock price volatility 42.78% Historical volatility of our common shares
Fair value per option $ 7.90

~~Restricted Stock. We granted 256,128~~330,140 shares of restricted stock units to employees ~~during the first nine months of fiscal 2023~~ and we also have restricted stock awards outstanding from previous grants. We issue restricted stock at no cost to the employees and account for restricted stock awards as equity-based awards because when they vest, they will be settled in common shares. We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the date ~~the~~our Compensation and Talent Oversight Committee of our board of directors approved the awards. Restricted stock awards ~~generally~~ vest at 25% per year, beginning one year from the grant date ~~over~~for a term of four years, with continued vesting upon retirement with respect to the fiscal 2023 and fiscal 2024 grants. ~~The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date.~~ We accelerate the expense for restricted stock granted to retirement-eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. The weighted-average fair value of the restricted stock that was awarded in the first ~~nine~~six months of fiscal ~~2023~~2024 was ~~$24.58~~$27.66 per share, the market value of our common shares on the ~~dates~~date of grant.

Restricted Stock Units Issued to Directors. During the first six months of fiscal 2024, we granted 35,736 restricted stock units to our non-employee directors. Restricted stock units granted to our non-employee directors are offered at no cost to the directors and restricted stock units granted following August 2022 vest on the earlier of the date a director ceases to be a member of the board (for any reason other than the termination of service for cause) or the-one year anniversary of the grant date. ~~During the second quarter of fiscal 2023, we granted 36,656 restricted stock units to our non-employee directors.~~ We account for these restricted stock units as equity-based awards because when they vest, they will be settled in shares of our common stock. We measure and recognize compensation expense for these awards based on the market price of our common shares on the date of ~~grant, which~~grant. The weighted-average fair value of the restricted stock units granted to our non-employee directors in the first six months of fiscal 2024 was ~~$26.19.~~$30.80 per share.

Performance Shares. During the first quarter of fiscal ~~2023,~~2024, we granted ~~240,833~~219,154 performance-based shares, and we also have performance-based share awards outstanding from previous grants. Payouts of these grants depend on our financial performance (50%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other public companies (50%). The performance share opportunity ranges from 50% of the employee’s target award if minimum performance requirements are met to a maximum of 200% of the

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target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which is generally three fiscal years.

We account for performance-based shares as equity-based awards because when they vest, they will be settled in common shares. In the event of an employee's termination during the vesting period, the potential right to earn shares under this program is generally forfeited and we have elected to recognize forfeitures as an adjustment to compensation expense in the same period in which the forfeitures occur. For shares that vest based on our results relative to the performance goals, we expense as compensation cost the fair value of the shares as of the day we granted the awards recognized over the performance period,

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taking into account the probability that we will satisfy the performance goals. The fair value of each share of the awards we granted in fiscal ~~2023~~2024 that vest based on attaining performance goals was ~~$22.43,~~$25.48, the market value of our common shares on the date we granted the awards less the ~~value of the~~ dividends we expect to pay ~~shareholders~~ before the shares vest. For shares that vest based on market conditions, we use a Monte Carlo valuation model to estimate each share’s fair value as of the date of grant. The Monte Carlo valuation model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine our expected performance ranking relative to our peer group. For shares that vest based on market conditions, we expense compensation cost over the vesting period regardless of whether the market condition is ultimately satisfied. Based on the Monte Carlo model, the fair value as of the grant date of the fiscal ~~2023~~2024 grant of shares that vest based on market conditions was ~~$36.63.~~$34.15.

Stock Options. We did not grant stock options to employees during fiscal 2024, but we have stock options outstanding from grants from prior years. We account for stock options as equity-based awards because when they are exercised, they will be settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value on the date our Compensation and Talent Oversight Committee of our board of directors approved the awards. The vesting period for our stock options ranges from one to four years, with accelerated vesting upon retirement. The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date. We accelerate the expense for options granted to retirement eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. Granted options outstanding under the former long-term equity award plan remain in effect and have a term of 10 years. We estimated the fair value of the employee stock options granted in prior years at their respective grant date using the Black-Scholes option-pricing model, which requires management to make certain assumptions.

Note ~~10:~~9: Accumulated Other Comprehensive Income (Loss)

~~The activity~~Activity in accumulated other comprehensive income (loss) for the quarters ended ~~January~~October 28, 2023, and ~~January 22,~~October 29, 2022, is as follows:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)		(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)
Balance at October 29, 2022		$	(6,551)	$	(501)	$	(3,465)	$	(10,517)
Balance at July 29, 2023										Balance at July 29, 2023	$	(1,565)	$	75	$	(2,708)	$	(4,198)
Changes before reclassifications	Changes before reclassifications	4,014		303		—		4,317		Changes before reclassifications	(3,131)		(139)		—		(3,270)

Amounts reclassified to net income	Amounts reclassified to net income	—		78		49		127		Amounts reclassified to net income	—		24		31		55
Tax effect	Tax effect	—		(94)		(13)		(107)		Tax effect	—		28		(7)		21
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	4,014		287		36		4,337		Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(3,131)		(87)		24		(3,194)
Balance at January 28, 2023		$	(2,537)	$	(214)	$	(3,429)	$	(6,180)
Balance at October 28, 2023										Balance at October 28, 2023	$	(4,696)	$	(12)	$	(2,684)	$	(7,392)

Balance at October 23, 2021		$	2,340	$	320	$	(4,813)	$	(2,153)
Balance at July 30, 2022										Balance at July 30, 2022	$	(3,602)	$	(212)	$	(3,502)	$	(7,316)
Changes before reclassifications	Changes before reclassifications	(752)		(201)		—		(953)		Changes before reclassifications	(2,949)		(445)		—		(3,394)

Amounts reclassified to net income	Amounts reclassified to net income	—		16		75		91		Amounts reclassified to net income	—		62		48		110
Tax effect	Tax effect	—		45		(19)		26		Tax effect	—		94		(11)		83
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(752)		(140)		56		(836)		Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(2,949)		(289)		37		(3,201)
Balance at January 22, 2022		$	1,588	$	180	$	(4,757)	$	(2,989)
Balance at October 29, 2022										Balance at October 29, 2022	$	(6,551)	$	(501)	$	(3,465)	$	(10,517)

~~The activity~~

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Activity in accumulated other comprehensive income (loss) for the ~~nine~~six months ended ~~January~~October 28, 2023 and ~~January 22,~~October 29, 2022, is as follows:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)		(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)
Balance at April 29, 2023										Balance at April 29, 2023	$	(2,652)	$	(145)	$	(2,731)	$	(5,528)
Changes before reclassifications										Changes before reclassifications	(2,044)		(154)		—		(2,198)

Amounts reclassified to net income										Amounts reclassified to net income	—		331		62		393
Tax effect										Tax effect	—		(44)		(15)		(59)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated										Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(2,044)		133		47		(1,864)
Balance at October 28, 2023										Balance at October 28, 2023	$	(4,696)	$	(12)	$	(2,684)	$	(7,392)

Balance at April 30, 2022	Balance at April 30, 2022	$	(1,961)	$	(298)	$	(3,538)	$	(5,797)	Balance at April 30, 2022	$	(1,961)	$	(298)	$	(3,538)	$	(5,797)
Changes before reclassifications	Changes before reclassifications	(576)		(87)		—		(663)		Changes before reclassifications	(4,590)		(390)		—		(4,980)

Amounts reclassified to net income	Amounts reclassified to net income	—		199		145		344		Amounts reclassified to net income	—		121		96		217
Tax effect	Tax effect	—		(28)		(36)		(64)		Tax effect	—		66		(23)		43
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(576)		84		109		(383)		Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(4,590)		(203)		73		(4,720)
Balance at January 28, 2023		$	(2,537)	$	(214)	$	(3,429)	$	(6,180)

Balance at April 24, 2021		$	3,041	$	370	$	(4,932)	$	(1,521)
Changes before reclassifications		(1,453)		(270)		—		(1,723)

Amounts reclassified to net income		—		18		225		243
Tax effect		—		62		(50)		12
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated		(1,453)		(190)		175		(1,468)
Balance at January 22, 2022		$	1,588	$	180	$	(4,757)	$	(2,989)
Balance at October 29, 2022										Balance at October 29, 2022	$	(6,551)	$	(501)	$	(3,465)	$	(10,517)

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We reclassified both the unrealized gain (loss) on marketable securities and the net pension amortization from accumulated other comprehensive loss to net income through other income (expense), net.

The components of ~~non-controlling~~noncontrolling interest were as follows:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Balance as of the beginning of the period	Balance as of the beginning of the period	$	9,128	$	8,380	$	8,897	$	8,648	Balance as of the beginning of the period	$	10,668	$	8,830	$	10,261	$	8,897
Net income (loss)		(149)		615		1,005		2,157
Net income										Net income	495		702		942		1,154
Other comprehensive loss	Other comprehensive loss	1,427		101		504		(449)		Other comprehensive loss	(484)		(404)		(524)		(923)
Dividends distributed to joint venture minority partners	Dividends distributed to joint venture minority partners	—		—		—		(1,260)		Dividends distributed to joint venture minority partners	(1,172)		—		(1,172)		—
Balance as of the end of the period	Balance as of the end of the period	$	10,406	$	9,096	$	10,406	$	9,096	Balance as of the end of the period	$	9,507	$	9,128	$	9,507	$	9,128

Note ~~11:~~10: Revenue Recognition

Our revenue is primarily derived from product sales. We report product sales net of discounts and recognize them when control (rights and obligations associated with the product) passes to the customer. For sales to furniture retailers or distributors, control typically transfers when we ship the product. In cases where we sell directly to the end consumer, control of the product is generally transferred upon delivery.

For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time we recognize revenue in accordance with this election.

For sales tax, we have elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes.

We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration.

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The following table presents our revenue disaggregated by product category and by segment or unit:


		Quarter Ended January 28, 2023								Quarter Ended January 22, 2022									Quarter Ended October 28, 2023								Quarter Ended October 29, 2022
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total		(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture		$	224,726	$	153,194	$	5	$	377,925	$	238,119	$	113,767	$	288	$	352,174
Stationary Upholstery Furniture		97,736		52,497		35,248		185,481		94,216		46,938		55,971		197,125
Bedroom Furniture		9,853		2,189		3,121		15,163		6,723		1,598		3,674		11,995
Dining Room Furniture		6,926		3,300		1,025		11,251		5,562		2,802		1,063		9,427
Occasional Furniture		11,550		9,567		875		21,992		7,396		6,672		1,153		15,221
Upholstered Furniture																		Upholstered Furniture	$	314,771	$	172,989	$	42,996	$	530,756	$	337,997	$	207,228	$	46,438	$	591,663
Casegoods Furniture																		Casegoods Furniture	20,352		12,942		4,248		37,542		30,545		15,419		6,541		52,505
Delivery	Delivery	50,008		6,881		1,654		58,543		45,168		6,342		2,097		53,607		Delivery	43,655		8,869		1,755		54,279		56,538		8,172		2,100		66,810
Other (1)	Other (1)	6,804		23,529		(8,418)		21,915		26,097		18,933		(14,267)		30,763		Other (1)	(13,811)		19,509		(12,767)		(7,069)		21,151		21,333		(11,442)		31,042
Total	Total	$	407,603	$	251,157	$	33,510	$	692,270	$	423,281	$	197,052	$	49,979	$	670,312	Total	$	364,967	$	214,309	$	36,232	$	615,508	$	446,231	$	252,152	$	43,637	$	742,020

Eliminations	Eliminations							(119,547)								(98,739)		Eliminations							(104,073)								(130,688)
Consolidated Net Sales	Consolidated Net Sales							$	572,723							$	571,573	Consolidated Net Sales							$	511,435							$	611,332

		Nine Months Ended January 28, 2023								Nine Months Ended January 22, 2022									Six Months Ended October 28, 2023								Six Months Ended October 29, 2022
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total		(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Motion Upholstery Furniture		$	683,809	$	444,110	$	64	$	1,127,983	$	699,433	$	326,251	$	538	$	1,026,222
Stationary Upholstery Furniture		307,128		162,452		132,869		602,449		284,318		133,449		153,590		571,357
Bedroom Furniture		30,145		6,590		12,361		49,096		30,030		5,386		10,524		45,940
Dining Room Furniture		21,778		9,343		3,864		34,985		20,941		9,462		3,270		33,673
Occasional Furniture		34,957		25,300		3,065		63,322		31,746		19,659		2,966		54,371
Upholstered Furniture																		Upholstered Furniture	$	598,189	$	343,703	$	89,430	$	1,031,322	$	668,475	$	404,030	$	97,680	$	1,170,185
Casegoods Furniture																		Casegoods Furniture	40,728		24,775		8,956		74,459		58,551		27,873		14,269		100,693
Delivery	Delivery	162,783		20,727		5,657		189,167		128,318		20,007		5,629		153,954		Delivery	83,698		17,112		3,657		104,467		112,775		16,188		4,003		132,966
Other (1)	Other (1)	55,052		70,808		(32,003)		93,857		61,086		57,105		(37,891)		80,300		Other (1)	(24,173)		36,962		(25,750)		(12,961)		48,248		40,082		(23,585)		64,745
Total	Total	$	1,295,652	$	739,330	$	125,877	$	2,160,859	$	1,255,872	$	571,319	$	138,626	$	1,965,817	Total	$	698,442	$	422,552	$	76,293	$	1,197,287	$	888,049	$	488,173	$	92,367	$	1,468,589

Eliminations	Eliminations							(372,713)								(293,572)		Eliminations							(204,201)								(253,166)
Consolidated Net Sales	Consolidated Net Sales							$	1,788,146							$	1,672,245	Consolidated Net Sales							$	993,086							$	1,215,423

(1)Primarily includes discounts and allowances, revenue for advertising, royalties, parts, accessories, after-treatment products, surcharges, ~~discounts and allowances,~~ rebates and other sales incentives. In fiscal 2024, certain amounts that were previously charged as surcharges in fiscal 2023 are now included in the base product pricing and reflected in the amounts by product category.

~~Motion Upholstery~~Upholstered Furniture - Includes gross revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals, modulars, and ~~modulars that have a mechanism that allows the back of the product to recline or the product's footrest to extend.~~ottomans. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer.

~~Stationary Upholstery Furniture~~ - Includes gross revenue for upholstered furniture, such as sofas, loveseats, chairs, sectionals, modulars, and ottomans that do not have a mechanism for reclining or extension. This gross revenue includes sales to La-Z-Boy Furniture Galleries® ~~stores (including company-owned stores), operators of La-Z-Boy Comfort Studio~~® ~~locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer.~~

~~Bedroom~~Casegoods Furniture - Includes gross revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers, nightstands and ~~benches. This gross revenue includes sales to La-Z-Boy Furniture Galleries~~® ~~stores (including company-owned stores), independent retailers, and the end consumer.~~

~~Dining Room Furniture~~ ~~- Includes gross revenue for casegoods~~benches; furniture typically found in athe dining room, such as dining tables, ~~dining chairs,~~ storage units, and ~~stools. This gross revenue includes sales to La-Z-Boy Furniture Galleries~~® ~~stores (including company-owned stores), independent retailers,~~stools; and ~~the end consumer.~~

~~Occasional Furniture~~ ~~- Includes gross revenue for casegoods~~ furniture typically found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment centers. This gross revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent retailers, and the end consumer.

~~Table of Contents~~

Contract Assets and Liabilities. We receive customer deposits from end consumers before we recognize revenue and in some cases, we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance obligation, resulting in a contract asset and a corresponding deferred revenue liability. In our consolidated balance sheet, customer deposits and deferred revenue (collectively, the "contract liabilities") are reported in accrued expenses and other current liabilities while contract assets are reported as other current assets.

The following table presents our contract assets and liabilities:


(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		4/30/2022		(Unaudited, amounts in thousands)	10/28/2023		4/29/2023
Contract assets	Contract assets	$	60,986	$	139,006	Contract assets	$	35,206	$	44,939

Customer deposits	Customer deposits	$	129,019	$	183,233	Customer deposits	$	93,221	$	105,766
Deferred revenue	Deferred revenue	60,986		139,006		Deferred revenue	35,206		44,939
Total contract liabilities (1)	Total contract liabilities (1)	$	190,005	$	322,239	Total contract liabilities (1)	$	128,427	$	150,705

(1)During the ~~nine~~six months ended ~~January~~October 28, 2023, we recognized revenue of ~~$292.7~~$137.4 million related to our contract liability balance at April ~~30, 2022.~~29, 2023.

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Note ~~12:~~11: Segment Information

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

Wholesale Segment. 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. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood) furniture, such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

Retail Segment. Our Retail segment consists of one operating segment comprised of our ~~167~~177 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other accessories, to end consumers through these stores.

Corporate &and Other. Corporate &and Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website, www.joybird.com. None of the operating segments included in Corporate &and Other meet the requirements of reportable segments.

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The following table presents sales and operating income (loss) by segment:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Sales	Sales									Sales
Wholesale segment:	Wholesale segment:									Wholesale segment:
Sales to external customers	Sales to external customers	$	291,170	$	328,533	$	934,511	$	973,973	Sales to external customers	$	263,738	$	319,613	$	499,989	$	643,341
Intersegment sales	Intersegment sales	116,433		94,748		361,141		281,899		Intersegment sales	101,229		126,618		198,453		244,708
Wholesale segment sales	Wholesale segment sales	407,603		423,281		1,295,652		1,255,872		Wholesale segment sales	364,967		446,231		698,442		888,049

Retail segment sales	Retail segment sales	251,157		197,052		739,330		571,319		Retail segment sales	214,309		252,152		422,552		488,173

Corporate and Other:	Corporate and Other:									Corporate and Other:
Sales to external customers	Sales to external customers	30,396		45,988		114,305		126,953		Sales to external customers	33,388		39,567		70,545		83,909
Intersegment sales	Intersegment sales	3,114		3,991		11,572		11,673		Intersegment sales	2,844		4,070		5,748		8,458
Corporate and Other sales	Corporate and Other sales	33,510		49,979		125,877		138,626		Corporate and Other sales	36,232		43,637		76,293		92,367

Eliminations	Eliminations	(119,547)		(98,739)		(372,713)		(293,572)		Eliminations	(104,073)		(130,688)		(204,201)		(253,166)
Consolidated sales	Consolidated sales	$	572,723	$	571,573	$	1,788,146	$	1,672,245	Consolidated sales	$	511,435	$	611,332	$	993,086	$	1,215,423

Operating Income (Loss)	Operating Income (Loss)									Operating Income (Loss)
Wholesale segment	Wholesale segment	$	16,940	$	27,639	$	81,558	$	89,098	Wholesale segment	$	21,450	$	38,476	$	44,953	$	64,618
Retail segment	Retail segment	44,203		24,102		123,855		68,502		Retail segment	27,935		41,500		57,199		79,652
Corporate and Other	Corporate and Other	(18,303)		(12,254)		(48,047)		(29,629)		Corporate and Other	(15,773)		(18,093)		(34,014)		(29,744)
Consolidated operating income	Consolidated operating income	42,840		39,487		157,366		127,971		Consolidated operating income	33,612		61,883		68,138		114,526
Interest expense	Interest expense	(136)		(160)		(414)		(713)		Interest expense	(101)		(119)		(223)		(278)
Interest income	Interest income	2,012		806		3,624		1,029		Interest income	4,042		1,138		7,098		1,612
Other income (expense), net	Other income (expense), net	(1,062)		(1,460)		(834)		(522)		Other income (expense), net	104		183		660		228
Income before income taxes	Income before income taxes	$	43,654	$	38,673	$	159,742	$	127,765	Income before income taxes	$	37,657	$	63,085	$	75,673	$	116,088

Note ~~13:~~12: Income Taxes

Our effective tax rate was ~~27.7% and 26.6%~~26.5% for both the third quarter and nine months ended January 28, 2023, respectively, compared with 24.8% and 25.9% for the third quarter and nine months ended January 22, 2022, respectively. The effective tax rate in the thirdsecond quarter and first ~~nine~~six months ~~of fiscal~~ended October 28, 2023 compared with 25.8% and 26.2% for the second quarter and first six months ended October 29, 2022, ~~was lower partially due to non-taxable gains on corporate owned life insurance and state taxes.~~respectively. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

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Note ~~14:~~13: Earnings per Share

The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings per share:


		Quarter Ended				Nine Months Ended					Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands, except per share data)	(Unaudited, amounts in thousands, except per share data)	1/28/2023		1/22/2022		1/28/2023		1/22/2022		(Unaudited, amounts in thousands, except per share data)	10/28/2023		10/29/2022		10/28/2023		10/29/2022
Numerator (basic and diluted):	Numerator (basic and diluted):									Numerator (basic and diluted):
Net income attributable to La-Z-Boy Incorporated		$	31,726	$	28,467	$	116,291	$	92,549
Income allocated to participating securities (1)		—		—		—		(6)

Net income available to common Shareholders	Net income available to common Shareholders	$	31,726	$	28,467	$	116,291	$	92,543	Net income available to common Shareholders	$	27,199	$	46,077	$	54,678	$	84,565

Denominator:	Denominator:									Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	43,137		43,701		43,111		44,342		Basic weighted average common shares outstanding	43,008		43,104		43,123		43,098
Contingent common shares	Contingent common shares	—		55		—		59		Contingent common shares	296		78		289		76
Stock option dilution	Stock option dilution	—		212		—		239		Stock option dilution	97		—		67		—
Diluted weighted average common shares outstanding(1)	Diluted weighted average common shares outstanding(1)	43,137		43,968		43,111		44,640		Diluted weighted average common shares outstanding(1)	43,401		43,182		43,479		43,174

Earnings per Share:	Earnings per Share:									Earnings per Share:
Basic	Basic	$	0.74	$	0.65	$	2.70	$	2.09	Basic	$	0.63	$	1.07	$	1.27	$	1.96
Diluted	Diluted	$	0.74	$	0.65	$	2.70	$	2.07	Diluted	$	0.63	$	1.07	$	1.26	$	1.96

(1)Prior to fiscal 2019, we granted restricted stock awards that contained non-forfeitable rights to dividends on unvested shares, and we are required to include these participating securities in calculating our basicDiluted earnings per ~~common~~ share was computed using the ~~two-class~~treasury stock method.

The values for contingent common shares set forth above reflect the dilutive effect of common shares that we would have issued to employees under the terms of performance-based share awards if the relevant performance period for the award had been the reporting period.

We exclude the effect of options from our diluted share calculation when the weighted average exercise price of the options is higher than the average market price, since including the options' effect would be anti-dilutive. For the ~~third~~second quarter and ~~nine~~six months ended ~~January~~October 28, 2023, we excluded options to purchase 0.5 million shares and 0.7 million shares, respectively, from the diluted share calculation. For the second quarter and six months ended October 29, 2022, we excluded options to purchase 1.5 million shares from the diluted share calculation. ~~For the third quarter and nine months ended January 22, 2022, we excluded options to purchase 0.2 million shares from the diluted share calculation.~~

Note ~~15:~~14: Fair Value Measurements

Accounting standards require that we put financial assets and liabilities into one of three categories based on the inputs we use to value them:

•Level 1 — Financial assets and liabilities, the values of which are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

•Level 2 — Financial assets and liabilities, the values of which are based on quoted prices in markets that are not active or on model inputs that are observable for substantially the full term of the asset or liability.

•Level 3 — Financial assets and liabilities, the values of which are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Accounting standards require that in making fair value measurements, we use observable market data when available. When inputs used to measure fair value fall within different levels of the hierarchy, we categorize the fair value measurement as being in the lowest level that is significant to the measurement. We recognize transfers between levels of the fair value hierarchy at the end of the reporting period in which they occur.

In addition to assets and liabilities that we record at fair value on a recurring basis, we are required to record assets and liabilities at fair value on a non-recurring basis. We measure non-financial assets such as other intangible assets, goodwill, and other long-lived assets at fair value when there is an indicator of impairment, and we record them at fair value only when we recognize an impairment loss. ~~Refer to Note 1, Basis of Presentation, for additional information.~~

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The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at ~~January~~October 28, 2023 and April ~~30, 2022.~~29, 2023. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.


At January 28, 2023
At October 28, 2023												At October 28, 2023
		Fair Value Measurements											Fair Value Measurements
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total		(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets	Assets											Assets
Marketable securities	Marketable securities	$	—	$	21,044	$	2,737	$	6,886	$	30,667	Marketable securities	$	—	$	9,903	$	—	$	10,153	$	20,056
Held-to-maturity investments	Held-to-maturity investments	1,404		—		—		—		1,404		Held-to-maturity investments	1,285		—		—		—		1,285
Cost basis investments		—		—		7,579		—		7,579

Total assets	Total assets	$	1,404	$	21,044	$	10,316	$	6,886	$	39,650	Total assets	$	1,285	$	9,903	$	—	$	10,153	$	21,341


At April 30, 2022
At April 29, 2023												At April 29, 2023
		Fair Value Measurements											Fair Value Measurements
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total		(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets	Assets											Assets
Marketable securities	Marketable securities	$	—	$	33,578	$	2,500	$	6,543	$	42,621	Marketable securities	$	—	$	16,557	$	—	$	6,995	$	23,552
Held-to-maturity investments	Held-to-maturity investments	1,337		—		—		—		1,337		Held-to-maturity investments	1,351		—		—		—		1,351
Cost basis investment		—		—		7,579		—		7,579

Total assets	Total assets	$	1,337	$	33,578	$	10,079	$	6,543	$	51,537	Total assets	$	1,351	$	16,557	$	—	$	6,995	$	24,903

Liabilities
Contingent consideration liability		$	—	$	—	$	800	$	—	$	800

(1)Certain marketable securities investments are measured at fair value using net asset value per share under the practical expedient methodology.

At ~~January~~October 28, 2023 and April ~~30, 2022,~~29, 2023, we held marketable securities intended to enhance returns on our cash and to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan and our performance compensation retirement plan. ~~We also held other fixed income and cost basis investments.~~

The fair value measurements for our Level 1 and Level 2 securities are based on quoted prices in active markets, as well as through broker quotes and independent valuation providers, multiplied by the number of shares owned exclusive of any transaction costs.

At January 28, 2023 and April 30, 2022, our Level 3 assets included investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes. The fair value of these equity investments (preferred shares and warrants) is not readily determinable and therefore, we estimate the fair value as cost minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments with the same issuer. The convertible notes are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income, consistent with our other available-for-sale debt securities. During the third quarter of fiscal 2023, we invested an additional $0.2 million in convertible notes in one of these privately-held start-up companies. There were no other changes to the fair value of our Level 3 assets during the nine months ended January 28, 2023.

Our Level 3 liability includes our contingent consideration liability resulting from the Joybird acquisition. The fair value is determined using a variation of the income approach, known as the real options method, whereby revenue and earnings are simulated over the earnout periods in a risk-neutral framework using Geometric Brownian Motion. For each simulation path, the potential earnout payments were calculated based on management’s probability estimates for achievement of the revenue and earnings milestones and then were discounted to the valuation date using a discount rate of 6.8%.

The fair value of our contingent consideration liability as of January 28, 2023 reflects our expectation that no additional consideration will be owed based on our most recent financial projections and the terms of the earnout agreement. As a result, during the second quarter of fiscal 2023, we reduced the fair value of the contingent consideration liability by its full carrying value of $0.8 million which was recorded as a favorable impact to selling, general and administrative expense in the consolidated statement of income. There were no other changes to the fair value of our Level 3 liabilities during the nine months ended January 28, 2023.

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

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

Cautionary Note Regarding Forward-Looking Statements

La-Z-Boy Incorporated and its subsidiaries (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, and our business and ~~industry and the effect of the coronavirus ("COVID") pandemic on our business operations and financial results.~~industry.

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

Our actual future results and trends may differ materially from those we anticipate depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our Annual Report for the fiscal year ended April ~~30, 2022,~~29, 2023, under Item 1A, "Risk Factors" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations."~~Operations" and in our other filings with the Securities and Exchange Commission ("SEC"). Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in our Annual Report for the fiscal year ended April ~~30, 2022~~29, 2023 or any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason.

Introduction

Our Business

We are the leading global producer of reclining chairs and 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. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, Kincaid®, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames.

As of ~~January~~October 28, 2023, our supply chain operations included the following:

•Five major manufacturing locations and ~~ten regional~~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

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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. ~~Torreón was the last facility to begin operating as part of our broader Mexico manufacturing expansion in fiscal 2021 and 2022 and accounted for approximately 3% of our La-Z-Boy branded production.~~ As a result of this action, charges were recorded within the Wholesale segment in the third ~~quarter~~and fourth quarters of fiscal 2023, oftotaling $9.2 million in selling, general and administrative ("SG&A") expense for the impairment of various assets, primarily long-lived assets, and ~~$0.9~~$1.6 million in cost of sales, primarily related to severance. During the first quarter of fiscal 2024, we terminated our lease on the Torreón facility and recognized a $1.2 million gain in SG&A expense within the Wholesale segment related to the settlement of our lease obligation on the previously impaired long-lived assets.

During the second quarter of fiscal 2024, we announced further actions intended to drive efficiencies and optimize our manufacturing capacity in our global supply chain operations. As part of this initiative, we made the decision to shift upholstery production from our Ramos, Mexico operations to our other upholstery plants and relocate our cut and sew operations back to Ramos, Mexico, resulting in the permanent closure of our leased cut and sew facility in Parras, Mexico. As a result of these actions, charges were recorded within the Wholesale segment in the second quarter of fiscal 2024, totaling $3.6 million in cost of sales, primarily related to severance, and $3.0 million in SG&A expense for the accelerated depreciation of fixed assets.

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

We sell our products through multiple channels: to furniture retailers or distributors in the United States, Canada, and approximately 5550 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 ~~346~~353 La-Z-Boy Furniture Galleries® stores and ~~519~~521 La-Z-Boy Comfort Studio® locations, each dedicated to marketing our La-Z-Boy branded products. We consider this dedicated space to be “proprietary.”

◦La-Z-Boy Furniture Galleries® stores help consumers furnish their homes by combining the style, comfort, and quality of La-Z-Boy furniture with our available design services. We own ~~167~~177 of the La-Z-Boy Furniture Galleries® stores, while the remainder are independently owned and operated.

◦La-Z-Boy Comfort Studio® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products. All ~~519~~521 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 ~~3.0~~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 ~~630~~623 outlets and approximately ~~1.9~~1.8 million square feet of proprietary floor space.

◦

•In total, our proprietary floor space includes approximately ~~12.5~~12.0 million square feet worldwide.

•Joybird sells product primarily online and also has a limited ~~amount of proprietary~~ retail showroom floor space ~~including seven~~through 11 small-format stores in key urban markets.

Century Vision Strategy

Our goal is to deliver value to our shareholders over the long term ~~through~~by executing our Century Vision, our strategic ~~initiatives.~~plan for growth to our centennial year in 2027, in which we aim to grow sales and market share and strengthen our operating margins. The foundation of our strategic ~~initiatives~~plan is ~~driving profitable sales~~to drive disproportionate growth ~~in all areas~~ of our ~~business.~~

two consumer brands, La-Z-Boy and Joybird, by delivering the transformational power of comfort with a consumer-first approach. We plan to drive growth in the following ways:

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Expanding the La-Z-Boy brand reach

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus and expanded omni-channel presence. Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer-base growth opportunities. ~~Our~~We launched our new brand campaign and marketing platform ~~featuring celebrity brand ambassador Kristen Bell is~~in fiscal 2024, Long Live the Lazy, with compelling messaging designed to ~~drive brand~~increase recognition and ~~inject youthful style and sensibility into our marketing campaign, which is intended to~~consideration of the brand. We expect this new messaging will enhance the appeal of our brand with a ~~younger~~broader consumer base. Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person. We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

•~~Expanding the reach of~~Growing our ~~branded distribution channels, which include the~~ La-Z-Boy Furniture Galleries® store network ~~and the La-Z-Boy Comfort Studio~~® ~~locations, our store-within-a-store format~~. ~~While the consumer’s purchase~~

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~~journey may start 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.~~ 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.

•~~Growing~~ We are prioritizing growth of our company-owned ~~retail business.~~ ~~We are focused on growing this~~Retail business ~~by increasing same-store sales through improved execution at the store level and~~ 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 ~~regional~~ distribution centers, where we see opportunity for growth, or where we believe we have opportunities for further market penetration. Additionally, we are testing potential store formats to expand our reach to value-seeking consumers and currently operate two Outlet by La-Z-Boy stores.

•~~Accelerating~~Expanding the ~~growth~~reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy Furniture Galleries® store network and the La-Z-Boy Comfort Studio® locations, our store-within-a-store format. While consumers increasingly interact with the brand digitally, our consumers also demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Furniture Galleries® store, or La-Z-Boy Comfort Studio®, experience and provide design services. In addition to our branded distribution channels, approximately 2,200 other dealers sell La-Z-Boy products, 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. We believe there is significant growth potential for our consumer brands through these retail channels.

Profitably growing the Joybird ~~brand.~~brand

•Profitably growing the Joybird brand with a digital-first consumer experience. During fiscal 2019, we purchased Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture with a direct-to-consumer model. We believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling profitable growth through an increase in digital marketing spend to drive awareness and customer acquisition, ongoing investments in technology, an expansion of product assortment, and providing additional small-format stores in key urban markets to enhance our consumers' omni-channel experience.

Enhancing our enterprise capabilities

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth.~~In addition~~ Key to ~~our branded distribution channels, approximately 2,200 other dealers sell La-Z-Boy products, providing us~~successful growth is ensuring we have 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. We believe there is significant growth potential for our consumer brands through these retail channels. Our strategic initiatives focus on enhancing our enterprise capabilities to support ~~the~~that growth, ~~of our consumer brands and improving the agility of our~~including an agile supply chain, ~~so that it can more broadly support all~~modern technology for consumers and employees, and by delivering a human-centered employee experience. Through our ~~consumer brands.~~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 ~~Wholesale~~Retail segment and the Wholesale segment.

•Retail ~~segment.~~Segment. Our Retail segment consists of one operating segment comprised of our 177 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other accessories, to end consumers through these stores.

•Wholesale Segment. 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

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brands: American Drew®, Hammary® and Kincaid®. The Wholesale segment also includes our international wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood) furniture, such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

•~~Retail Segment. Our Retail segment consists of one operating segment comprised of our 167 company-owned La-Z-Boy Furniture Galleries~~® ~~stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods~~Corporate and ~~other accessories, to end consumers through these stores.~~

•~~Corporate &~~ Other. Corporate &and Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website, www.joybird.com. None of the operating segments included in Corporate &and Other meet the requirements of reportable segments.

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Results of Operations

Fiscal ~~2023 Third~~2024 Second Quarter Compared with Fiscal ~~2022 Third~~2023 Second Quarter

La-Z-Boy Incorporated


		Quarter Ended					Nine Months Ended							Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	1/28/2023		1/22/2022		% Change	1/28/2023		1/22/2022		% Change		(Unaudited, amounts in thousands, except percentages)	10/28/2023		10/29/2022		% Change	10/28/2023		10/29/2022		% Change
Sales	Sales	$	572,723	$	571,573	0.2%	$	1,788,146	$	1,672,245	6.9	%	Sales	$	511,435	$	611,332	(16.3)%	$	993,086	$	1,215,423	(18.3)	%
Operating income	Operating income	42,840		39,487		8.5%	157,366		127,971		23.0	%	Operating income	33,612		61,883		(45.7)%	68,138		114,526		(40.5)	%
Operating margin	Operating margin	7.5%		6.9%			8.8%		7.7%				Operating margin	6.6%		10.1%			6.9%		9.4%

Sales

Consolidated sales ~~increased $1.2~~decreased $99.9 million, or ~~0.2%~~16%, and ~~$115.9~~$222.3 million, or 7%18%, in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago. ~~The increase~~Sales in the first six months of fiscal 2023 were fueled by the delivery of a significant backlog resulting from heightened demand in prior periods. As a result, the decrease in sales ~~for both periods~~during the second quarter and first six months of fiscal 2024 reflects a return to industry-wide seasonal trends relative to a historically high comparative period. To a lesser extent, sales also decreased in the ~~realization~~second quarter and first six months of fiscal 2024 as a result of selective pricing and ~~surcharge~~promotional actions taken to counteract rising raw material and freight costs, along with a favorable impact from product and channel mix as sales in our Retail business grew. These increases in sales more than offset a decline in delivered unit volume.maintain competitiveness.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, ~~increased 60~~decreased 350 basis points and ~~110~~250 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

•Gross margin, which is calculated as gross profit as a percentage of sales, increased ~~460~~270 basis points and ~~330~~360 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

◦Changes in our consolidated mix improved gross margin by ~~290 basis points and 240~~70 basis points in the ~~third quarter and~~ first ~~nine~~six months of fiscal ~~2023, respectively,~~2024 compared with the same ~~periods~~period a year ago, driven by relative growth of our Retail segment, which has a higher gross margin than our Wholesale segment.

◦Lower input costs, led by declining raw material costs and favorable duty expense, improved gross margin in the second quarter and first six months of fiscal 2024, compared with the same periods a year ago. As input costs continued to decline, we took selective pricing and promotional actions to maintain competitiveness, which partially offset these benefits.

◦Compared with the same ~~periods~~period a year ago, gross margin in the ~~third quarter and~~ first ~~nine~~six months of fiscal ~~2023~~2024 further benefited from ~~pricing and surcharge actions taken~~a favorable shift in ~~prior periods.~~product mix toward higher priced products.

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◦~~The~~During the second quarter of fiscal 2024 we recognized $3.6 million in severance-related charges as part of our global supply chain optimization initiative, resulting in a 70 basis point and 40 basis point decrease in gross margin in the second quarter and first ~~nine~~six months of fiscal 2023 was negatively impacted by higher freight and raw material costs driven by global supply chain challenges. These costs have decreased during the fiscal year, resulting in in a gross margin benefit in the third quarter of fiscal 20232024, respectively, compared with the same ~~period last year.~~periods a year ago.

•~~Selling, general and administrative ("~~SG~~&A")~~&A expenses as a percentage of sales increased ~~400~~620 basis points and ~~220~~610 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

◦Changes in our consolidated mix increased SG&A expense as a percentage of sales by ~~80 basis points and 150~~60 basis points in the ~~third quarter and~~ first ~~nine~~six months of fiscal ~~2023, respectively,~~2024 compared with the same ~~periods~~period a year ago, driven by relative growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

◦~~Charges~~As a part of our global supply chain optimization initiatives, during the first quarter of fiscal 2024 we recognized a $1.2 million gain related to the ~~closure~~settlement of our Torreón, Mexico ~~manufacturing facility~~lease obligation on previously impaired long-lived assets and during the second quarter of fiscal 2024, we recognized $3.0 million in accelerated depreciation related to long-lived assets at our Ramos, Mexico facility. Together, these items resulted in a ~~160~~60 basis point and 5020 basis point increase in SG&A expense as a percentage of sales in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively.

◦The remaining increase in SG&A expense as a percentage of sales was primarily driven by lower delivered sales relative to selling expenses and fixed costs as total SG&A expenses were up $1.4 million and down $5.8 million in the second quarter and first six months of fiscal 2024, respectively, compared with the same periods a year ago.

◦SG&A expense as a percentage of sales was impacted during the third quarter and first nine months of fiscal 2023 by increased investments in marketing, to pre-pandemic levels as a percentage of sales, to drive written sales. The third quarter of fiscal 2023 was further impacted by higher selling expenses, as a percentage of sales, primarily driven by higher written sales in our Retail segment.

We discuss each segment’s results in the following section.

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Retail Segment


		Quarter Ended					Nine Months Ended							Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	1/28/2023		1/22/2022		% Change	1/28/2023		1/22/2022		% Change		(Unaudited, amounts in thousands, except percentages)	10/28/2023		10/29/2022		% Change	10/28/2023		10/29/2022		% Change
Sales	Sales	$	251,157	$	197,052	27.5%	$	739,330	$	571,319	29.4	%	Sales	$	214,309	$	252,152	(15.0)%	$	422,552	$	488,173	(13.4)	%
Operating income	Operating income	44,203		24,102		83.4%	123,855		68,502		80.8	%	Operating income	27,935		41,500		(32.7)%	57,199		79,652		(28.2)	%
Operating margin	Operating margin	17.6%		12.2%			16.8%		12.0%				Operating margin	13.0%		16.5%			13.5%		16.3%

Sales

The Retail segment’s sales ~~increased $54.1~~decreased $37.8 million, or ~~27%~~15%, and ~~$168.0~~$65.6 million, or ~~29%~~13%, in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago, ~~led by~~primarily due to a ~~23% and 24% increase~~decline in delivered same-store sales ~~for each respective period. Additionally,~~resulting from the ~~Retail segment benefited from~~adverse comparison to historic sales levels in the prior year, which were fueled by the delivery of previously built backlog. The decrease in delivered same-store sales was partially offset by a ~~$14.3~~$5.7 million and ~~a $44.1~~$13.7 million increase in sales during the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, from ~~sales related to~~ our retail store acquisitions that occurred in fiscal ~~2022~~2023 and fiscal ~~2023.~~2024.

~~Written same-store~~While delivered sales ~~increased~~were down relative to the same periods last year, written sales were up 3% ~~but decreased 8%~~and 5% in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago. The ~~decrease~~increases were driven by relatively flat and a 1% increase in written same-store sales for the second quarter and first ~~nine~~six months of fiscal 2023 reflects softer demand across the industry driven by economic uncertainty and weaker consumer sentiment relative to the prior period which saw significant increases in consumer furniture demand. Although these challenging industry trends continued through the third quarter of fiscal 2023, the benefit of pricing actions taken in prior periods and strong store-level execution with improved conversion drove an increase in written sales compared2024, respectively, with the ~~same period last year.~~

remainder primarily attributable to acquired retail stores. Same-store sales include the sales of all currently active stores which have been open and company-owned for each comparable period.

Operating Margin

The Retail segment's operating margin ~~increased 540~~decreased 350 basis points and ~~480~~280 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

•Gross margin increased ~~110~~90 basis points and 40120 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago, primarily due to prior period pricing actions taken by the Retail business which were realized as products were delivered to ~~offset increases in product costs.~~consumers.

•SG&A expense as a percentage of sales ~~decreased 430~~increased 440 basis points and ~~440~~400 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago, primarily due to ~~higher~~lower delivered sales relative to selling expenses and fixed costs, mainly occupancy expenses.

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Wholesale Segment


		Quarter Ended					Nine Months Ended							Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	1/28/2023		1/22/2022		% Change	1/28/2023		1/22/2022		% Change		(Unaudited, amounts in thousands, except percentages)	10/28/2023		10/29/2022		% Change	10/28/2023		10/29/2022		% Change
Sales to external customers	Sales to external customers	$	291,170	$	328,533		$	934,511	$	973,973			Sales to external customers	$	263,738	$	319,613		$	499,989	$	643,341
Intersegment sales	Intersegment sales	116,433		94,748			361,141		281,899				Intersegment sales	101,229		126,618			198,453		244,708
Total Sales	Total Sales	407,603		423,281		(3.7)%	1,295,652		1,255,872		3.2	%	Total Sales	364,967		446,231		(18.2)%	698,442		888,049		(21.4)	%
Operating income	Operating income	16,940		27,639		(38.7)%	81,558		89,098		(8.5)	%	Operating income	21,450		38,476		(44.3)%	44,953		64,618		(30.4)	%
Operating margin	Operating margin	4.2%		6.5%			6.3%		7.1%				Operating margin	5.9%		8.6%			6.4%		7.3%

Sales

The Wholesale segment’s sales decreased ~~$15.7~~$81.3 million, or ~~4% but increased $39.8~~18%, and $189.6 million, or 3%21%, in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago. Over the same periods, intercompany sales from our Wholesale segment to our Retail segment ~~increased 23%~~decreased 20% and ~~28%~~19%, respectively. ~~Total~~The decrease in sales in both periods benefited from the realization of pricing and surcharge actions taken in response to rising manufacturing costs, combined with favorable channel and product mix reflecting the shift to our La-Z-Boy Furniture Galleries® ~~network. These benefits more than offset~~primarily reflects a decline in delivered unit volume inas the ~~first nine months of fiscal 2023, as we continue to work down the~~significant backlog built up in prior periods ~~back~~returns to pre-pandemic levels ~~but only partially offset lower delivered volume~~and the industry returns to typical seasonality. To a lesser extent, sales also decreased in the ~~third~~second quarter and first six months of fiscal ~~2023.~~2024, as a result of selective pricing and promotional actions taken to maintain competitiveness.

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Operating Margin

The Wholesale segment's operating margin decreased ~~230~~270 basis points and 8090 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

•Gross margin increased ~~300~~250 basis points and ~~200~~360 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

◦~~Gross~~Favorable input costs, including declining raw material costs and duty expense, drove a 610 basis point and 490 basis point increase in gross margin ~~increased 250 basis points and 520 basis points in~~during the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ~~ago, from~~ago. With the continued decline in input costs, we took selective pricing and ~~surcharge~~promotional actions ~~taken~~to maintain competitiveness, resulting in ~~response to rising raw material costs resulting from global supply challenges~~a 250 basis point and 150 basis point decrease in gross margin, compared with the same respective periods of the prior ~~periods.~~year.

◦~~Declining freight costs drove an 80~~Gross margin in the first six months of fiscal 2024 also benefited 60 basis points from a favorable shift in product mix towards higher priced products.

◦During the second quarter of fiscal 2024 we recognized $3.6 million in severance-related charges as part of our global supply chain optimization initiative, resulting in a 100 basis point and 4050 basis point ~~increase~~decrease in gross margin ~~during~~in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

◦~~Higher raw material costs led to a 160 basis point decrease in gross margin during the first nine months of fiscal 2023 compared with same period a year ago.~~

◦Gross margin decreased 100 basis points in the first nine months of fiscal 2023, compared with the same period a year ago, due to higher costs related to plant inefficiencies during the first half of fiscal 2023.

•SG&A expense as a percentage of sales increased ~~530~~520 basis points and ~~280~~450 basis points in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ~~ago~~ago.

◦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 the ~~third~~second quarter ~~of fiscal 2023~~ and ~~to a lesser extent, in the~~ first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago.

◦~~Additionally, charges related to the closure~~Higher marketing expense in support of our ~~Torreón, Mexico manufacturing facility in~~Long Live the ~~third quarter of fiscal 2023, resulted in~~Lazy campaign launch drove a 230 basis point and 70160 basis point increase in SG&A expense as a percentage of sales in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago. Investments in this campaign support all La-Z-Boy branded products, including those sold through our Retail segment.

◦As a part of our global supply chain optimization initiatives, during the first quarter of fiscal 2024 we recognized a $1.2 million gain related to the settlement of our Torreón, Mexico lease obligation on previously impaired long-lived assets and during the second quarter of fiscal 2024, we recognized $3.0 million in accelerated depreciation related to long-lived assets at our Ramos, Mexico facility. Together, these items resulted in an 80 basis point and 30 basis point increase in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2024, respectively.

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Corporate and Other


		Quarter Ended					Nine Months Ended							Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	(Unaudited, amounts in thousands, except percentages)	1/28/2023		1/22/2022		% Change	1/28/2023		1/22/2022		% Change		(Unaudited, amounts in thousands, except percentages)	10/28/2023		10/29/2022		% Change	10/28/2023		10/29/2022		% Change
Sales	Sales	$	33,510	$	49,979	(33.0)%	$	125,877	$	138,626	(9.2)	%	Sales	$	36,232	$	43,637	(17.0)%	$	76,293	$	92,367	(17.4)	%
Intercompany eliminations	Intercompany eliminations	(119,547)		(98,739)		(21.1)%	(372,713)		(293,572)		(27.0)	%	Intercompany eliminations	(104,073)		(130,688)		20.4%	(204,201)		(253,166)		19.3	%
Operating loss	Operating loss	(18,303)		(12,254)		(49.4)%	(48,047)		(29,629)		(62.2)	%	Operating loss	(15,773)		(18,093)		12.8%	(34,014)		(29,744)		(14.4)	%

Sales

Corporate and Other sales decreased ~~$16.5~~$7.4 million and ~~$12.7~~$16.1 million in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago. The change in sales was primarily led by Joybird sales which decreased ~~35%~~$5.8 million to ~~$28.9~~$32.3 million and ~~11%~~$12.9 million to ~~$109.7~~$67.9 million in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023, respectively. While Joybird sales benefited from increased online conversion, overall delivered volume declined~~2024, respectively, largely due to lower ~~written sales~~delivered volume resulting from continued demand challenges. Compared with the ~~prior sequential quarter combined with slowing online traffic and demand challenges consistent with those recently experienced across the e-commerce home furnishings industry. Written~~respective periods a year ago, written sales for Joybird were ~~down 21% and 14%~~up 5% in the ~~third~~second quarter ~~and~~of fiscal 2024, resulting from effective marketing investments driving higher website traffic, but down 8% in the first ~~nine~~six months of fiscal ~~2023, respectively, compared with the same periods a year ago, reflecting the items noted above.~~2024.

Intercompany eliminations ~~increased~~decreased in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023~~2024 compared with the same periods a year ago due to ~~higher~~lower sales from our Wholesale segment to our Retail segment.

Operating Loss

Our Corporate and Other operating loss ~~increased $6.0 million and $18.4~~decreased $2.3 million in the ~~third~~second quarter ~~and~~of fiscal 2024, but increased $4.3 million in the first ~~nine~~six months of fiscal ~~2023, respectively,~~2024, compared with the same periods a year ~~ago, primarily due to Joybird's~~ago. The second quarter of fiscal 2024 benefited from improved Joybird operating ~~loss resulting from lower sales volume and higher input costs. Additionally, operating loss was impacted in~~performance while the first ~~nine~~six months of fiscal ~~2023 by increased investments~~2024 experienced lower operating profit from our global trading company in ~~marketing to drive customer acquisition~~Hong Kong. Additionally, Corporate and ~~awareness.~~Other's operating loss includes intercompany inventory profit elimination adjustments which were favorable in the second quarter but unfavorable during the first six months of fiscal 2024, compared with the same periods a year ago.

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Non-Operating Income (Expense)

Interest Income

Interest income was ~~$1.2~~$2.9 million and ~~$2.6~~$5.5 million higher in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2023,~~2024, respectively, compared with the same periods a year ago, primarily driven by higher interest ~~rates.~~

~~Other Income (Expense), Net~~

Other income (expense), net was $1.1 million and $0.8 million of expense in the third quarter and first nine months of fiscal 2023, respectively, primarily due to exchange rate losses. Other income (expense), net was $1.5 million and $0.5 million of expense in the third quarter and first nine months of fiscal 2022, respectively, primarily due to unrealized lossesrates on ~~investments and exchange rate losses, respectively.~~higher cash balances.

Income Taxes

Our effective tax rate was ~~27.7% and 26.6%~~26.5% for both the third quarter and nine months ended January 28, 2023, respectively, compared with 24.8% and 25.9% for the third quarter and nine months ended January 22, 2022, respectively. The effective tax rate in the thirdsecond quarter and first ~~nine~~six months of fiscal ~~2022 was lower partially due to non-taxable gains on corporate owned life insurance~~2024 compared with 25.8% and ~~state taxes.~~26.2% for the second quarter and first six months of fiscal 2023. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

Liquidity and Capital Resources

Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash from operations, and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital ~~expenditures.~~ expenditures, including fiscal 2024 contractual obligations.

We had cash, cash equivalents and restricted cash of ~~$284.0~~$333.5 million at ~~January~~October 28, 2023, compared with ~~$248.9~~$346.7 million at April ~~30, 2022.~~29, 2023. In addition, we had investments to enhance our returns on cash of ~~$15.8~~$8.7 million at ~~January~~October 28, 2023, compared with ~~$27.2~~$11.6 million at April ~~30, 2022.~~29, 2023.

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


		Nine Months Ended					Six Months Ended
(Unaudited, amounts in thousands)	(Unaudited, amounts in thousands)	1/28/2023		1/22/2022		(Unaudited, amounts in thousands)	10/28/2023		10/29/2022
Cash Flows Provided By (Used For)	Cash Flows Provided By (Used For)					Cash Flows Provided By (Used For)
Net cash provided by operating activities	Net cash provided by operating activities	$	127,052	$	45,192	Net cash provided by operating activities	$	56,876	$	30,954
Net cash used for investing activities	Net cash used for investing activities	(57,965)		(77,036)		Net cash used for investing activities	(25,304)		(44,138)
Net cash used for financing activities	Net cash used for financing activities	(33,894)		(122,288)		Net cash used for financing activities	(43,883)		(25,937)
Exchange rate changes	Exchange rate changes	(4)		(593)		Exchange rate changes	(900)		(1,841)
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	$	35,189	$	(154,725)	Change in cash, cash equivalents and restricted cash	$	(13,211)	$	(40,962)

Operating Activities

During the first ~~nine~~six months of fiscal ~~2023,~~2024, net cash provided by operating activities was ~~$127.1 million.~~$56.9 million, an increase of $25.9 million compared with the prior year, mainly due to a smaller reduction in customer deposits, reflecting a reduced backlog, partially offset by lower net income. Our cash provided by operating activities in fiscal 2024 was primarily attributable to net income, adjusted for non-cash items, ~~and a $42.5 million decrease in receivables. This was~~ partially offset by a ~~$61.2~~$22.8 million decrease in other liabilities, mainly due to the payout of our fiscal 2023 incentive compensation awards during the first quarter of fiscal 2024, along with a $13.8 million decrease in customer deposits ~~as we continue to work down our backlog to pre-pandemic levels.~~reflecting the reduced backlog.

Investing Activities

During the first ~~nine~~six months of fiscal ~~2023,~~2024, net cash used for investing activities was ~~$58.0~~$25.3 million, a decrease of $18.8 million compared with the prior year primarily due to lower capital expenditures and higher proceeds from asset sales. Cash used for investing activities in fiscal 2024 included the following:

•Cash used for capital expenditures in the period was ~~$57.4~~$26.5 million compared with ~~$58.6~~$40.4 million during the first ~~nine~~six months of fiscal ~~2022,~~2023, which is primarily related to ~~improvements to~~La-Z-Boy Furniture Galleries® (new stores and remodels) and upgrades at our ~~retail stores, new store openings, and plant upgrades to our upholstery~~ manufacturing and distribution ~~facilities in Neosho, Missouri. Spending~~facilities. We anticipate that spending on these items will continue in fiscal ~~2023~~2024 with full year fiscal ~~2023~~2024 capital expenditures expected to be in the range of ~~$75~~$60 to ~~$80~~$70 million. We have no material contractual commitments outstanding for future capital expenditures.

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•Cash used for acquisitions was ~~$11.9~~$7.3 million, primarily related to the acquisition of the ~~Denver,~~Colorado Springs, Colorado and ~~Spokane, Washington~~Lafayette, Louisiana retail businesses.

•Proceeds from the sale of investments, net of investment purchases was ~~$11.2~~$4.5 million.

Financing Activities

On October 15, 2021, we entered into a five-year ~~$200.0~~$200 million unsecured revolving credit facility ~~(the~~(as amended, the “Credit Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes. We may increase the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of each lender to participate in such an increase, up to an additional amount of $100 million. The Credit Facility will mature on October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions. As of ~~January~~October 28, 2023, we have no borrowings outstanding under the Credit Facility.

The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of certain assets. As of ~~January~~October 28, 2023, we were in compliance with our financial covenants under the Credit Facility. We believe our cash ~~on hand,~~and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.

During the first ~~nine~~six months of fiscal ~~2023,~~2024, net cash used for financing activities was ~~$33.9~~$43.9 million, an increase of $17.9 million compared with the prior year, primarily due to higher share repurchases. 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 ~~$5.0~~$20.0 million in the first ~~nine~~six months of fiscal ~~2022~~2024 to repurchase ~~0.2~~0.7 million shares. As of ~~January~~October 28, 2023, ~~7.3~~6.6 million shares remained available

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for repurchase pursuant to this authorization. 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 ~~$22.0~~$15.6 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms. We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time.

•Cash paid for holdback payments made on prior-period acquisitions was $5.0 million for ~~the~~a guaranteed ~~payments~~payment related to the acquisition of Joybird.

Exchange Rate Changes

~~From the end of fiscal year 2022~~Due to ~~the end of the third quarter of fiscal 2023,~~ changes in exchange rates, ~~had a de minimis impact on~~ our cash, cash equivalents, and restricted cash ~~slightly impacting~~decreased by $0.9 million for the six months ended October 28, 2023. These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

Other

During the ~~third~~second quarter of fiscal ~~2023,~~2024, there were no material changes to the information about our contractual obligations and commitments ~~shown in the table contained~~disclosed in our Annual Report on Form 10-K for the fiscal year ended April ~~30, 2022.~~29, 2023. 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 Policies

We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April ~~30, 2022.~~29, 2023. There were no material changes to our critical accounting policies or estimates during the ~~nine~~six months ended ~~January~~October 28, 2023.

Recent Accounting Pronouncements

See Note 1, Basis of Presentation, to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting standards and other new accounting standards.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first ~~nine~~six months of fiscal ~~2023,~~2024, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April ~~30, 2022.~~29, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the ~~third~~second quarter of fiscal ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS

We disclosed our risk factors in our Annual Report on Form 10-K for the fiscal year ended April ~~30, 2022.~~29, 2023. There have been no material changes to our risk factors during the first ~~nine~~six months of fiscal ~~2023.~~2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our board of directors has authorized the repurchase of Company stock. With respect to the second quarter of fiscal 2024, pursuant to the existing board authorization, we adopted a plan to repurchase company ~~stock.~~stock pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The plan was effective July 31, 2023. Under this plan, our broker had the authority to repurchase Company shares on our behalf, subject to SEC regulations and the price, market volume and timing constraints specified in the plan. The plan expired at the close of business on October 27, 2023. We spent $10.0 million in the second quarter of fiscal 2024 to repurchase 0.3 million shares, pursuant to the plan and as discretionary purchases. As of ~~January~~October 28, 2023, ~~7.3~~6.6 million shares remained available for repurchase pursuant to the board authorization. ~~There were no share~~With the operating cash flows we anticipate generating in fiscal 2024, we expect to continue repurchasing Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.

The following table summarizes our repurchases ~~under the authorized plan~~of Company stock during the ~~third~~ quarter ~~of fiscal 2023. Amounts in the table below include~~ended October 28, 2023 and includes shares purchased from employees to satisfy their withholding tax obligations upon vesting of restricted ~~shares.~~shares:

~~The following table summarizes our repurchases of company stock during the quarter ended January 28, 2023:~~

(Unaudited, 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 November (October 30 – December 3, 2022) — $ — — 7,262
Fiscal December (December 4 – December 31, 2022) — $ — — 7,262
Fiscal January (January 1 – January 28, 2023) 2 $ — — 7,262
Fiscal Third Quarter of 2023 2 — 7,262


(Unaudited, 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 August (July 30 – September 2, 2023)	125	$	31.19	125	6,780
Fiscal September (September 3 – September 30, 2023)	96	$	31.15	96	6,684
Fiscal October (October 1 – October 28, 2023)	106	$	29.55	106	6,578
Total (Fiscal Second Quarter of 2024)	327			327	6,578

(1) ~~There were no~~In addition to the 326,284 shares we repurchased during the quarter as part of our publicly announced, board-authorized plan described ~~above. During the quarter ended January 28, 2023, 2,204~~above, this column includes 138 shares ~~were~~we repurchased from employees to satisfy their withholding tax obligations upon vesting of restricted ~~shares with an average share price of $26.86.~~shares.

(2) On October 28, 1987, our board of directors announced the authorization of the plan to repurchase ~~company~~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.

ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Officers

During the quarter ended October 28, 2023, none of our directors or officers adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

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ITEM 6. EXHIBITS


Exhibit Number						Description
~~(4.1)~~						~~First Amendment to Credit Agreement dated as of December 20, 2022, among La-Z-Boy Incorporated, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent~~
(31.1)						Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)
(31.2)						Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)
(32)						Certifications of Executive Officers pursuant to 18 U.S.C. Section 1350(b)
(101.INS)						Inline XBRL Instance Document
(101.SCH)						Inline XBRL Taxonomy Extension Schema Document
(101.CAL)						Inline XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)						Inline XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)						Inline XBRL Taxonomy Extension Presentation Linkbase Document
(101.DEF)						Inline XBRL Taxonomy Extension Definition Linkbase Document
(104)						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~January~~October 28, 2023, formatted in Inline XBRL (included in Exhibit 101)

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			LA-Z-BOY INCORPORATED
			(Registrant)


Date: ~~February 21,~~November 29, 2023


			BY: /s/ Jennifer L. McCurry
			Jennifer L. McCurry Vice President, Corporate Controller and Chief Accounting Officer