Q4 2025 La-Z-Boy Inc Earnings Call

Good morning, everyone welcome to the lazy boy fiscal of 'twenty to 'twenty five fourth quarter conference call.

Operator: Good morning, everyone. Welcome to the La-Z-Boy Fiscal 2025 fourth quarter conference. At this time all participants are in a listen only mode and the floor will be open for questions following the presentation.

At this time all participants are in a listen only mode and the floor will be opened for questions. Following the presentation.

Operator: If anyone should require operator assistance during the conference please press star zero on your phone. Please note this conference is being recorded.

If anyone should require operator assistance during the conference. Please press star zero on your side keypad.

Please note this conference is being recorded.

Mark Becks: I will now turn the conference over to your host, Mark Becks, Director of Investor Relations and Corporate Development. Mark, the floor is yours. Thank you, Jenny.

Speaker Change: I will now turn the conference over to your highest Mark Becks director of Investor Relations and corporate development Mark the floor is yours.

Mark Becks: Thank you Jenny good morning, everyone and thanks for joining us to discuss our fiscal 2025 fourth quarter.

Mark Becks: Good morning, everyone, and thanks for joining us to discuss our fiscal 2025 fourth quarter. Joining me on today's call are Melinda Whittington, La-Z-Boy Inc. Board Chair, President and Chief Executive Officer, and Taylor Luebke, La-Z-Boy's SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through.

Melinda Whittington: Joining me on today's call are Melinda Whittington Lazy Boy Incorporated's Board Chair, President and Chief Executive Officer, and Taylor, Luepke Lazy boys SVP and CFO.

Melinda Whittington: Melinda will open and close the call and Taylor will speak to segment performance and the financials midway through.

Mark Becks: After our prepared remarks, we will open the line for questions.

Melinda Whittington: After our prepared remarks, we will open the line for questions.

Mark Becks: Slides will accompany this presentation and you may view them through our webcast link which will be available for one year.

Melinda Whittington: Kids will accompany this presentation and you may view them through our webcast link which will be available for one year and.

Mark Becks: And a telephone replay of the call will be available for one week beginning this afternoon.

Melinda Whittington: And a telephone replay of the call will be available for one week beginning this afternoon.

Mark Becks: I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors as well as other key information detailed in our SEC filing.

Speaker Change: I would like to remind you that some statements made in today's call may include forward looking statements about lazy boys future performance and other matters.

Speaker Change: Although we believe these statements to be reasonable our actual results could differ materially the most significant risk factors that could affect our future results are described in our annual report on Form 10-K.

Speaker Change: We encourage you review those risk factors as well as other key information detailed in our SEC filings.

Mark Becks: Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website, and it includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck.

Speaker Change: Also our earnings release is available under the news and events tab on the Investor Relations page of our website.

Speaker Change: And it includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck.

Mark Becks: I would also like to call your attention to two changes in our presentation format beginning this quarter. As company-owned stores now represent well over half of our total network, we will be focusing our discussion on company-owned retail metrics only, and no longer report written same-store sales for the entire La-Z-Boy Furniture Gallery's network. We believe this will provide appropriate perspective on current consumer trends while eliminating potential confusion. Additionally, to be more consistent with current industry practice, we have renamed all of our non-GAAP financial measures to adjusted financial measures. For example, non-GAAP diluted EPS has been renamed to adjusted diluted EPS.

Speaker Change: I would also like to call your attention to two changes in our presentation format beginning this quarter.

Speaker Change: As company owned stores now represent well over half of our total network, we will be focusing our discussion on company owned retail metrics only and no longer report written same store sales for the entire lazy boy furniture galleries network.

Speaker Change: We believe this will provide appropriate perspective on current consumer trends, while eliminating potential confusion.

Speaker Change: Additionally to be more consistent with current industry practice, we have renamed all of our non-GAAP financial measures to adjusted financial measures. For example, non-GAAP diluted EPS has been renamed to adjusted diluted EPS Importantly, the methodology for <unk>.

Mark Becks: Importantly, the methodology for calculating these measures remains unchanged. And therefore, any previously reported non-GAAP financial measures that are renamed to corresponding adjusted financial measures remain unchanged.

Speaker Change: These measures remains unchanged and therefore any previously reported non-GAAP financial measures that are renamed to a corresponding adjusted financial measures remain unchanged.

Melinda Whittington: With that, I will now turn the call over to Melinda. Thank you, Mark, and good morning, everyone. Yesterday, following the close of market, we reported our April-ended fourth quarter in fiscal year. We delivered strong results despite continued economic and industry volatility, driving growth and successfully executing on our Century Vision strategy. Highlights for the quarter included consolidated delivered sales of $571 million, growing 3% versus the prior year. Retail segment sales growing 8%, led by new stores and acquisitions. During the quarter, we opened our 200th company-owned La-Z-Boy Furniture Galleries store, and we now own 55% of the total network.

Melinda Whittington: With that I will now turn the call over to Melinda.

Speaker Change: You Mark and good morning, everyone yesterday following the close of market. We reported our April ended fourth quarter and fiscal year. We delivered strong results. Despite continued economic and industry volatility driving growth and successfully executing on our century vision strategy.

Melinda Whittington: Highlights for the quarter included consolidated delivered sales of $571 million growing 3% versus the prior year.

Melinda Whittington: Retail segment sales growing 8% led by new stores and acquisitions during the quarter. We opened our 200 company owned lazy boy furniture galleries stores, and we now own 55% of the total network.

Melinda Whittington: and our wholesale segment sales grew 2% led by our core North American La-Z-Boy wholesale business. Highlights for the year included consolidated delivered sales of $2.1 billion, growing 3% versus the prior year. And within these total company results, our retail segment sales grew 5% for the year, led by the new stores and acquisitions, as we continued progress against our century vision, direct-to-consumer growth strategy. During the fiscal year, we opened a total of 11 new company-owned La-Z-Boy furniture galleries, the most in over two decades, and acquired seven independently-owned stores. Our wholesale segment sales grew 2% for the year, led by sales growth in our core North American La-Z-Boy wholesale business across all four quarters.

Melinda Whittington: And our wholesale segment sales grew 2% led by our core North American Lazy boy wholesale business.

Melinda Whittington: Highlights for the year included consolidated delivered sales of $2 $1 billion growing 3% versus the prior year.

Melinda Whittington: And within these total company results our retail segment sales grew 5% for the year led by the new stores and acquisitions as we continued progress against our century vision direct to consumer growth strategy. During the fiscal year, we opened a total of 11 new.

Melinda Whittington: New company owned Lazy boy, a furniture galleries, the most in over two decades and acquired seven independently owned stores.

Melinda Whittington: Our wholesale segment sales grew 2% for the year led by sales growth in our core North American Lazy boy, a wholesale business across all four quarters, we generated $187 million in operating cash flow for the year up 18% versus prior year at <unk>.

Melinda Whittington: We generated $187 million in operating cash flow for the year, up 18% versus prior year, and returned $113 million to shareholders through share repurchase and dividends, including increasing our dividend 10% for the fourth consecutive year. And finally, we continue to maintain a strong balance sheet with $328 million in cash and no external debt. I'm extremely proud of the results delivered by this organization throughout the fiscal year, with four consecutive quarters of sales growth, including fourth quarter delivered sales that exceeded the high end of our guidance range and adjusted operating margin at the high end of our guidance range, even in the midst of significant external volatility.

Melinda Whittington: Turned $113 million to shareholders through share repurchases and dividends, including increasing our dividend, 10% for the fourth consecutive year.

Melinda Whittington: And finally, we continue to maintain a strong balance sheet with $328 million in cash and no external debt.

Melinda Whittington: I'm extremely proud of the results delivered by this organization throughout the fiscal year with four consecutive quarters of sales growth, including fourth quarter delivered sales that exceeded the high end of our guidance range and adjusted rate adjusted operating margin at the high end of our guidance range, even in the midst of.

Melinda Whittington: Significant external volatility.

Melinda Whittington: The success we achieved this year is a testament to strong execution across our company as we progress our Century Vision. We are controlling what we can control to drive growth, and this quarter was yet another proof point. Even as we expect global economic uncertainty to continue challenging consumers in the near term, we are confident in the strength of our business model to outperform our peers and deliver strong financial performance. Our vertically integrated model and agile supply chain give us the foundation to navigate this environment. Approximately 90% of our upholstered units sold in North America are produced in the United States, with our Mexican operations supporting most of the balance.

Melinda Whittington: The success, we achieved this year is a testament to strong execution across our company as we progress our century vision. We are controlling what we can control to drive growth and this quarter was yet another proof point.

Melinda Whittington: Even as we expect global economic uncertainty to continue challenging consumers in the near term we are confident in the strength of our business model to outperform our peers and deliver strong financial performance, our vertically integrated model and agile supply chain gives us the foundation to.

Melinda Whittington: To navigate this environment.

Melinda Whittington: Approximately 90% of our upholstered units sold in North America are produced in the United States with our Mexican operations supporting most of the balance.

Melinda Whittington: and our U.S.-centric footprint has been core to our competitive advantage to delight our consumers with customized product at speed for decades.

Melinda Whittington: And our U S centric footprint has been core to our competitive advantage to delight, our consumers with customized project product at speed for decades and.

Melinda Whittington: In addition... Our Mexican-based cut-and-sew operations support more than two-thirds of this North American upholstered unit production, transforming raw cover sourced from multiple countries around the globe. The vast majority of the products produced and exported out of Mexico are USMCA compliant and therefore not subject to tariffs under current tariff policies. Of course, we will continue to carefully monitor the evolving global trade situation and adjust accordingly, leveraging strategic inventory moves, sourcing adjustments, and continued vendor diversification, as well as nominal pricing actions to manage the evolving landscape as necessary. As part of our Century Vision foundational pillars, we will continue to invest in even further strengthening and increasing the agility of our supply chain.

Melinda Whittington: In addition.

Melinda Whittington: Our Mexican based cut and sew operations support more than two thirds of this north American upholstered unit production transforming raw cover sourced from multiple countries around the globe.

Melinda Whittington: The vast majority of the products produced and exported out of Mexico, or U S. MCA compliant and therefore, not subject to tariffs under current tariff policies.

Melinda Whittington: Of course, we will continue to carefully monitor the evolving global trade situation and adjust accordingly, leveraging strategic inventory moves sourcing adjustments and continued vendor diversification as well as nominal pricing actions to manage the evolving landscape as.

Melinda Whittington: Larry.

Speaker Change: As part of our century vision foundational pillars, we will continue to invest in even further strengthening and increasing the agility of our supply chain.

Melinda Whittington: This spring, we kicked off a multi-year project to redesign our distribution network and home delivery program, further enhancing our ability to deliver high-quality, comfortable custom furniture with quick speed to market. We are leveraging our scale to drive efficiencies across the enterprise, reducing the total number of distribution facilities, and reducing the total mileage products travel, while at the same time supporting a growing network and driving an even better consumer experience. This initiative to transform our distribution network and home delivery program will also help deliver our broader objective of double digit margins in our wholesale segment over the long term.

Speaker Change: This spring, we kicked off a multiyear project to redesign our distribution network and home delivery program further enhancing our ability to deliver high quality comfortable custom furniture with quick speed to market.

Speaker Change: We are leveraging our scale to drive efficiencies across the enterprise, reducing the total number of distribution facilities and reducing the total mileage products travel while at the same time supporting a growing network and driving an even better consumer experience.

Speaker Change: This initiative to transform our distribution network and home delivery program will also help deliver our broader objective of double digit margins in our wholesale segment over the long term.

Melinda Whittington: And before leaving the topic of supply chain, I'd like to highlight a recent example of agility. In May, our upholstery manufacturing facilities in Siloam Springs, Arkansas, suffered extreme damage from a major storm, which included strong winds and hail. Thankfully, all of our employees are safe and the facility was not occupied at the time of the storm. but the damage impacted the manufacturing facility and damaged the front office area to the point of requiring a complete rebuild. I am proud to say that with the help of support teams from across the company, we rebuilt infrastructure, losing just one week of production at the facility, shifted some work between plants, and ultimately minimized consumer and customer delays.

Speaker Change: And before leaving the topic of supply chain I'd like to highlight a recent example of agility.

Speaker Change: In may our upholstery manufacturing facilities, and silo Springs, Arkansas suffered extreme damage from a major storm, which included strong winds and hail.

Speaker Change: Fully all of our employees are safe and the facility was not occupied at the time of the storm.

Speaker Change: But the damage impacted the manufacturing facility and damage their front office area to the point of requiring a complete rebuild.

Speaker Change: Im proud to say that with the help of support teams from across the company, we rebuilt infrastructure, losing just one week of production at the facility.

Speaker Change: <unk> some work between plants, and ultimately minimize consumer and customer delays.

Melinda Whittington: This incredible effort and collaboration reinforces the strength of our supply chain and broader enterprise coordination. and is another proof point of the resiliency of our teams and ability to navigate whatever comes our way.

Speaker Change: This incredible effort and collaboration reinforces the strength of our supply chain and broader enterprise coordination.

Speaker Change: <unk> is another proof point of the resiliency of our teams and ability to navigate whatever comes our way.

Melinda Whittington: Now, turning toward the consumer-facing aspects of our business and written sales trends. During the fourth quarter, total written sales for our company-owned retail segment increased 3% versus last year's fourth quarter. written same store sales for the retail segment, which exclude the benefit of newly opened stores and acquired stores, decreased 5% versus prior year fourth quarter. Stubbornly high mortgage rates and increased volatility in the global economy negatively influenced consumer sentiment and had an adverse impact on industry traffic. Industry data for the quarter was extremely mixed, with public company peers noting same-store sales of relatively flat to declines in the mid-teen range, while industry data as reported by the U.S.

Speaker Change: Now turning toward the consumer facing aspects of our business and written sales trends.

Speaker Change: During the fourth quarter total written sales for our company owned retail segment increased 3% versus last year's fourth quarter.

Speaker Change: Written same store sales for the retail segment, which exclude the benefit of newly opened stores and acquired stores decreased 5% versus prior year fourth quarter.

Speaker Change: Stubbornly high mortgage rates and increased volatility in the global economy negatively influenced consumer sentiment and had an adverse impact on industry traffic.

Speaker Change: Industry data for the quarter was extremely mixed with public company peers, noting same store sales of relatively flat to declines in the mid teen range, while industry data as reported by the U S Census Bureau indicated an increase in the mid single digits.

Melinda Whittington: Census Bureau indicated an increase in the mid-single digit. Our objective remains unchanged, to continuously grow and gain share in the large and fragmented furniture and home furnishings industry, regardless of existing market conditions. We are leveraging the strength of our iconic brand, new and innovative marketing, strong product offerings, and excellent in-store execution to delight and inspire consumers. Our retail network is growing, and our ability to deliver mass personalization with speed to market differentiates La-Z-Boy. These competitive advantages are unlocking a long-term runway for growth.

Speaker Change: Our objective remains unchanged to continuously grow and gain share in the large and fragmented furniture and home furnishings industry, regardless of existing market conditions, we are leveraging the strength of our iconic brand new and innovative marketing strategies.

Speaker Change: Wrong product offerings and excellent in store execution to delight and inspire consumers.

Speaker Change: Our retail network is growing and our ability to deliver mass personalization with speed to market differentiates lazy boy.

Speaker Change: These competitive advantages are unlocking a long term runway for growth.

Melinda Whittington: On our Joybird business, written sales trends decreased 21% in the quarter versus a year ago. As a digitally native brand, we believe the Joybird consumer has been more significantly impacted by rising macro uncertainty. This pressure is likely to persist in the near term, amid ongoing macroeconomic volatility, and we are making appropriate adjustments to prudently navigate during this time. Notably, we are seeing relatively stronger written trends in our Joybird physical stores, where we are able to more fully serve the consumer and overcome these purchase barriers.

Speaker Change: On our Joy bird business written sales trends decreased 21% in the quarter versus a year ago.

Speaker Change: As a digitally native brand, we believe the <unk> consumer has been more significantly impacted by rising macro uncertainty.

Speaker Change: This pressure is likely to persist in the near term amid ongoing macroeconomic volatility and we are making appropriate adjustments to prudently navigate during this time.

Speaker Change: Notably we are seeing relatively stronger written trends and our joy bird physical stores, where we are able to more fully serve the consumer and overcome these purchase barriers.

Speaker Change: Turning toward our broader strategic roadmap I'd like to spend a few minutes recapping progress over the year on a century vision objectives.

Melinda Whittington: Turning toward our broader strategic roadmap, I'd like to spend a few minutes recapping progress over the year on our Century Vision objectives. Recall, Century Vision is our strategic framework setting up La-Z-Boy Inc for continued growth in the future as we celebrate our centennial in 2027 and beyond, driving top-line growth at a pace double the market and delivering consistent double-digit operating margins over the long term. We have successfully expanded La-Z-Boy's brand reach over the past several years and will continue to execute this strategy. Our total furniture galleries network ended the year with 366 stores. We remain on track to grow the total network to over 400 stores, led by strong growth in company-owned stores.

Speaker Change: Call century vision as our strategic framework setting up lazy boy incorporated for continued growth in the future as we celebrate our centennial in 2027 and beyond driving topline growth at a pace double the market and delivering consistent double digit operating margins over the long term.

Speaker Change: We have successfully expanded lazy boys brand reach over the past several years and we will continue to execute this strategy. Our total furniture galleries network ended the year with 366 stores.

Speaker Change: We remain on track to grow the total network to over 400 stores led by strong growth in company owned stores.

Melinda Whittington: During the year, our company-owned retail segment surpassed the 200-store milestone, nearly doubling our store count over the last 10 years and ending the year with 203 company-owned stores. We opened 11 new stores in the year, the most in two decades, and purchased 7 stores from independent owners. The company-owned store footprint now represents 55% of the total La-Z-Boy furniture gallery's network, up from 34% a decade ago. We will continue to grow our direct-to-consumer business, where we own the entire end-to-end consumer experience, can delight the consumer, and are able to collect and leverage even more value-added consumer insights to strengthen the flywheel.

Speaker Change: During the year, our company owned retail segment surpassed the 200 store milestone nearly doubling our store count over the last 10 years and ending the year with 203 company owned stores.

Speaker Change: We opened 11, new stores in the year. The most in two decades and purchased seven stores from independent owners.

Speaker Change: The company owned store footprint now represents 55% of the total lazy boy furniture galleries network up from 34% a decade ago.

Speaker Change: We will continue to grow our direct to consumer business, where we own the entire end to end consumer experience.

Speaker Change: Delight, the consumer and are able to collect and leverage even more value added consumer insights to strengthen the flywheel.

Melinda Whittington: In wholesale, we continue to expand our brand reach with compatible strategic partners to serve more consumers. This strategic initiative is driving increased share of voice for the La-Z-Boy brand and providing a broader range of consumers access to our brand. There remains considerable opportunity in growing with existing strategic regional partners like Rooms to Go, Gardner-White, Furniture Row, and Slumberland, while also selectively expanding our pipeline of new strategic partners. Additionally, we will continue to invest in our comfort studios and branded spaces that offer unique store-within-a-store branding at larger independent retailers. Brand building is another core pillar of our Century Vision growth strategy.

Speaker Change: In wholesale we continued to expand our brand reach with compatible strategic partners to serve more consumers. This strategic initiative is driving increased share of voice for the lazy boy brand and providing a broader range of consumers access to our brand.

Speaker Change: There remains considerable opportunity and growing with existing strategic regional partners like rooms to go Gardner wide furniture row, and slumberland, while also selectively expanding our pipeline of new strategic partners.

Speaker Change: Additionally, we will continue to invest in our comfort studios and branded spaces that offer unique store within a store branding at larger independent retailers.

Speaker Change: Brand building is another core pillar of our century vision growth strategy recall, when we embarked on century vision, we conducted extensive consumer research and we continue to do so.

Melinda Whittington: Recall, when we embarked on Century Vision, we conducted extensive consumer research and we continue to do so. One of our earliest learnings was that while La-Z-Boy had the highest brand awareness in furniture, much of that was driven by distant memory. When we launched the Long Live the Lazy campaign, our intent was to go back to our roots of comfort and quality while being more relevant for today's consumers. Our next phase of this journey is launching a new brand identity this summer, continuing to make our brand more relevant while reaching a broader audience. Our refreshed brand identity will consist of a new look and feel, tone and brand voice and be more applicable to today's digital world.

Speaker Change: One of our earliest learnings was that while lazy boy had the highest brand awareness in furniture much of that was driven by distant memory.

Speaker Change: When we launched the long live the lazy campaign, our intent was to go back to our roots of comfort and quality, while being more relevant for today's consumers.

Speaker Change: Our next phase of this journey is launching a new brand identity. This summer continuing to make our brand more relevant while reaching a broader audience. A refreshed brand identity will consist of a new look and feel tone and brand voice and be more applicable to today's digital world.

Melinda Whittington: Today's presentation slides provide a sneak peek into the new look and feel with more to come in August around National Lazy Day.

Speaker Change: Today's presentation slides provide a sneak peek into the new look and feel with more to comment August around national Lazy day.

Melinda Whittington: Another core pillar of our Century Vision is to optimize the Joybird brand to drive sales, growth, and profitability. Joybird had a solid year with sales increasing 5% and adjusted operating margin slightly positive for the year. And this past month, we opened our 13th Joybird store in Costa Mesa, California, our first new location since November of 23. While the Joybird core consumer is particularly challenged in the current economic uncertainty. The brand continues to have significant opportunity to grow share, and we remain committed to disciplined investments in the business to position the brand for long-term success, with three to four total new stores planned for Fiscal 26.

Speaker Change: Another core pillar of our century vision is to optimize the joy bird brand to drive sales growth and profitability.

Speaker Change: <unk> had a solid year with sales, increasing 5% and adjusted operating margin slightly positive for the year.

Speaker Change: And this past month, we opened our 13th delivered store in Costa Mesa, California, Our first new locations since November 23.

Speaker Change: While the <unk> core consumer is particularly challenged in the current economic uncertainty there.

Speaker Change: The brand continues to have significant opportunity to grow share and we remain committed to disciplined investments in the business to position the brand for long term success with three to four total new stores planned for fiscal 'twenty six.

Melinda Whittington: The final pillar of CenturyVision is strengthening our foundational capabilities and agility across our supply chain, technology, and people. As I noted earlier, navigating external uncertainty and weather challenges and initiating our distribution redesign are great examples of recent progress and continued opportunity for even more progress, with distribution redesign being a key enabler towards systemic strengthening of our wholesale operating market. As we begin Fiscal 26, we're optimistic about our ability to continue to outperform the market, consistent with our performance in Fiscal 25. While challenged in the near term, we still believe our industry will experience a meaningful period of growth longer term, as addressing the structural housing shortage and eventual further interest rate cuts will enable a rebound in housing fundamentals.

Speaker Change: The final pillar of Central vision is strengthening our foundational capabilities and agility across our supply chain technology and people.

Speaker Change: As I noted earlier navigating external uncertainty and weather challenges and initiating our distribution redesign are great. Examples of recent progress and continued opportunity for even more progress with distribution redesign being a key enabler towards systemic strengthening.

Speaker Change: Of our wholesale operating margins.

Speaker Change: As we begin fiscal 'twenty six we're optimistic about our ability to continue to outperform the market consistent with our performance in fiscal 'twenty five.

Speaker Change: <unk> challenged in the near term, we still believe our industry will experience a meaningful period of growth longer term as addressing the structural housing shortage and eventual further interest rate cuts will enable a rebound in housing fundamentals.

Melinda Whittington: We continue to grow our business and strengthen our foundation to disproportionately benefit from that industry rebound when it occurs.

Speaker Change: We continue to grow our business and strengthen our foundation to disproportionately benefit from that industry rebound when it occurs.

Taylor Luebke: And now, let me turn the call over to Taylor to review the financial results in more detail. Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis, formally referred to as non-GAAP. We believe the adjusted presentation better reflects underlying operating trends and performance of a business. Adjusted results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2025 fourth quarter sales grew 3% to $571 million versus the prior year, primarily driven by acquisitions and new stores in the retail segment and continued momentum in our core North America La-Z-Boy wholesale business.

Taylor: And now let me turn the call over to Taylor to review the financial results in more detail Taylor.

Taylor: Thank you Melinda and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis, formerly referred to as non-GAAP.

Speaker Change: We believe the adjusted presentation better reflects underlying operating trends and performance of our business.

Speaker Change: Adjusted results exclude items, which are detailed in our press release and in the tables in the appendix section of our conference call slides.

Speaker Change: On a consolidated basis fiscal 2025 for core sales grew 3% to $571 million versus the prior year, primarily driven by acquisitions and new stores in our retail segment and continued momentum in our core North America Lazy boy wholesale business.

Taylor Luebke: Consolidated Gap Operating Income was $30 million, and Adjusted Operating Income was $54 million, an increase of 3% versus last year's fourth quarter. Insolidated Gap Operating Margin was 5.2%, and Adjusted Operating Margin was 9.4% flat versus a year ago, as lower input costs, including reduced commodity prices and improved sourcing, and better leverage on marketing investments. We're offset by the impact of a significant ongoing customer transition in our international wholesale. as well as incremental tariff expenses in the quarter. Diluted earnings per share totaled $0.36 on a gap basis and $0.92 on an adjusted gap. both of which include a 10 cent impact from unfavorable foreign tax discreet items. As I move to the segment discussion, my comments from here will focus on our adjusted reporting, unless specifically stated otherwise.

Speaker Change: Holidayed GAAP operating income was $30 million in it.

Speaker Change: Adjusted operating income was $54 million, an increase of 3% versus last year's fourth quarter.

Speaker Change: Consolidated GAAP operating margin was five 2% and adjusted operating margin was nine 4% flat versus year ago, as lower input costs, including reduced commodity prices and improved sourcing and better leverage on marketing investments were offset by the impact of a significant ongoing customer transition in our.

Speaker Change: <unk> wholesale business as well as incremental tariff expenses in the quarter.

Speaker Change: Diluted earnings per share totaled 36 on a GAAP basis and 92 on an adjusted basis, both of which include a <unk> 10 impact from unfavorable foreign tax discrete items.

Speaker Change: As I move to the segment discussion my comments from here will focus on our adjusted reporting unless specifically stated otherwise.

Taylor Luebke: Starting with the retail segment, for the fourth quarter, delivered sales were 247 million, up 8% over the prior year's fourth quarter, driven primarily by new and acquired stores. Retail adjusted operating margin was 13.1% versus 14.2%, primarily due to investment in new stores, as we absorbed the increased selling expenses and fixed costs supporting our long-term strategy of growing our retail business. Expanding the La-Z-Boy Furniture Galleries Network is a key element of our Century Vision Growth Strategy and we made substantial progress in Q4 and the full fiscal year, with five new stores and two acquisitions for the quarter, and eleven new stores and seven acquisitions for the full year.

Speaker Change: Starting with the retail segment for the fourth quarter delivered sales were $247 million up 8% over the prior year's fourth quarter, driven primarily by new Aircard stores.

Speaker Change: Retail adjusted operating margin was 13, 1% versus 14, 2%, primarily due to investment in new stores as we absorbed the increased selling expenses and fixed costs supporting our long term strategy of growing our retail business.

Speaker Change: Expanding <unk> furniture galleries network is a key element of our century vision growth strategy and we made substantial progress in Q4 and the full fiscal year with five new stores in two acquisitions for the quarter and 11, new stores and seven acquisitions for the full year.

Taylor Luebke: For our wholesale segment, delivered sales for the quarter increased 2% to $402 million driven by growth in our core North America La-Z-Boy wholesale business through favorable shift in product and channel mix as a result of higher sales to our La-Z-Boy furniture gallery. partially offset by the continued impact of a significant customer transition in our international wholesale business. Adjusted operating margin for the wholesale segment was 8.5% flat versus last year's fourth quarter, as gross margin and SG&A as a percent of sales were largely unchanged. Continued margin expansion in core North America La-Z-Boy wholesale business was offset by the margin impact of a significant customer transition in the international wholesale business as well as incremental tariff expense in the core.

Speaker Change: For our wholesale segment delivered sales for the quarter increased 2% to $402 million driven by growth in our core North America Lazy boy wholesale business through favorable shift in product and channel mix as a result of higher sales to our lazy boy furniture galleries.

Speaker Change: Partially offset by the continued impact of a significant customer transition in our international wholesale business.

Speaker Change: Adjusted operating margin for the wholesale segment was eight 5%.

Speaker Change: Not versus last year's fourth quarter as gross margin and SG&A as a percentage of sales were largely unchanged.

Speaker Change: Continued margin expansion in core North America, ladies wear wholesale business was offset by the margin impact of a significant customer transition and the international wholesale business as well as incremental tariff expense in the quarter.

Taylor Luebke: To note, this significant customer transition triggered an impairment of the goodwill related to our UK business during the quarter. As background, we acquired the UK wholesale distribution business in fiscal 2017, followed by the UK manufacturing business in fiscal 2022. We remain committed to growth of the La-Z-Boy brand in the UK, and our new strategic partnership announced last September with DFS, the market leader in the UK. For Joybird, reported in Corporate & Other, delivered sales were $36 million, down 2% versus the prior year quarter, as positive retail store growth was more than offset by declines in the online business.

Speaker Change: To note this significant customer transitioning triggered an impairment of goodwill related to our UK business during the quarter.

Speaker Change: As background, we acquired the UK wholesale distribution business in fiscal 2017, followed by the UK manufacturing business in fiscal 2022.

Speaker Change: We remain committed to growth of the lazy boy brand in the UK and our new strategic partnership announced last September with DFS the market leader in the UK.

Speaker Change: For Joy Bird reported in corporate and other delivered sales were $36 million down 2% versus the prior year quarter as positive retail store growth was more than offset by declines in the online business importantly.

Taylor Luebke: Importantly, Joybird adjusted operating margin was positive in the fourth quarter, relatively flat versus prior year fourth quarter, and slightly positive for the year.

Speaker Change: Importantly, <unk> adjusted operating margin was positive in the fourth quarter relatively flat versus prior year fourth quarter and slightly positive for the year.

Taylor Luebke: Moving on to full year results for fiscal 2025. Sales grew 3% to $2.1 billion, driven by acquisitions and new stores in our La-Z-Boy retail business and growth in our core North America La-Z-Boy wholesale business. In addition, Joybird grew 5% for the fiscal year. Consolidated Gap Operating Income was $136 million and Adjusted Operating Income was $161 million, a 1% increase versus fiscal 2020. consolidated GAAP operating margin was 6.4% and adjusted operating margin was 7.6% down 20 basis points versus fiscal 2024. Gap diluted EPS was $2.35 for fiscal 2025 and adjusted diluted EPS was $2.92 for the year versus $2.98 in fiscal 2024.

Speaker Change: Moving on to full year results for fiscal 2025.

Speaker Change: Sales grew 3% to $2 1 billion, driven by acquisitions, and new stores, and our lazy boy retail business and growth in our core North America ways, where wholesale business. In addition driver grew 5% for the fiscal year.

Speaker Change: Consolidated GAAP operating income was $136 million and adjusted operating income was $161 million, a 1% increase versus fiscal 2024.

Speaker Change: Consolidated GAAP operating margin was six 4% and adjusted operating margin was seven 6% down 20 basis points versus fiscal 2024.

Speaker Change: GAAP diluted EPS was $2 35 for fiscal 2024, and adjusted diluted EPS was $2 92 for.

Speaker Change: For the year versus $2 98 in fiscal 2024.

Taylor Luebke: Gap diluted EPS and adjusted diluted EPS for fiscal 2025 both include a 10 cent impact from unfavorable foreign tax discrete items. Moving on to our Consolidated Adjusted Gross Margin and SG&A Performance for Fiscal 2025 Full Year. Fiscal Year Consolidated Adjusted Gross Margin for the entire company increased 70 basis points versus the prior year. Gross margin expansion was primarily driven by the shift in consolidated mix towards our retail segment, which has a higher gross margin rate than our wholesale segment. as well as lower input costs led by reduced commodity prices and improved sourcing. Adjusted SG&A as a percent of sales for the fiscal year increased by 90 basis points compared with last year.

Speaker Change: GAAP diluted EPS and adjusted diluted EPS for fiscal 2020 for both include a <unk> 10 impact from unfavorable foreign tax discrete items.

Speaker Change: Moving onto our consolidated adjusted gross margin and SG&A performance for fiscal 2025 four years.

Speaker Change: Fiscal year consolidated adjusted gross margin for the entire company increased 70 basis points versus the prior year.

Speaker Change: Gross margin expansion was primarily driven by the shift in consolidated mix towards our retail segment, which has a higher gross margin rates in our wholesale segment as well as lower input costs led by reduced commodity prices and improved sourcing.

Speaker Change: Adjusted SG&A as a percent of sales for the fiscal year increased by 90 basis points compared with last year, primarily driven by growth in our retail segment due to investments in acquisitions, and new stores, which carries a higher fixed cost structure relative to wholesale and fixed cost deleverage on lower sales in our international wholesale business due to.

Taylor Luebke: Primarily driven by growth in our retail segment due to investment and acquisitions in new stores, which carries a higher fixed cost structure relative to wholesale, and fixed costy leverage on lower sales in our international wholesale business due to a significant customer transition. Our effective tax rate on a gap basis for the fiscal year was 31.4% versus 24.8% in fiscal 2024. The increase in the effective tax rate in fiscal 2025 compared with the prior year was primarily a result of a one-time tax effect of a non-deductible goodwill impairment charge related to the United Kingdom Reporting Unit, along with the impact from unfavorable foreign tax discrete items. This increase disproportionately impacted the fourth quarter where our effective tax rate on a gap basis was 52.1% compared to 25.5% in the prior year.

Speaker Change: Significant customer transition.

Speaker Change: Our effective tax rate on a GAAP basis for the fiscal year was 31, 4% versus 24, 8% in fiscal 2020 for the.

Speaker Change: The increase in the effective tax rate in fiscal 2025 compared with the prior year was primarily result of a one time tax effect of non deductible goodwill impairment charge related to the United Kingdom reporting year, along with the impact from unfavorable foreign tax discrete items.

Speaker Change: This increase disproportionately impacted the fourth quarter, where our effective tax rate on a GAAP basis was 52, 1% compared to 25, 5% in the prior year.

Taylor Luebke: Absent these discrete items and non-deductible goodwill impairment, the effective tax rate would have been 23.2% for the fourth quarter and 24.9% for the full fiscal year. We expect our effective tax rate to be in the range of 26 to 27% for fiscal 2020.

Speaker Change: Absent these discrete items and non deductible goodwill impairment the effective tax rate would have been 23, 2% for the fourth quarter and 24, 9% for the full fiscal year.

Speaker Change: We expect our effective tax rate to be in the range of 26% to 27% for fiscal 2026.

Taylor Luebke: Turning to liquidity, we ended the year with a robust balance sheet, $328 million in cash and no externally funded debt. We generated $187 million in cash from operating our... an increase of 18% versus fiscal 2024 and ended the year strong with $62 million in operating cash generated in the fourth quarter, up 17% versus last year's fourth quarter. We invested $74 million in capital expenditures during the year, primarily related to La-Z-Boy furniture galleries, new stores and remodels, and manufacturing-related investments. We also spent $30 million on acquisitions of seven independent La-Z-Boy furniture galleries during the year. During the fiscal year, we returned $113 million to shareholders through dividends and share purchases, up 32% versus the prior year comparable period, including $35 million paid in dividends.

Speaker Change: Turning to liquidity, we ended the year with a robust balance sheet $328 million in cash and no externally funded debt.

Speaker Change: We generated $187 million in cash from operating activities, an increase of 18% versus fiscal 2024 and ended the year strong with $62 million in operating cash generated in the fourth quarter up 17% versus last year's fourth quarter.

Speaker Change: We invested $74 million in capital expenditures during the year, primarily related to lazy boy furniture galleries, new stores, and Remodels and manufacturing related investments.

Speaker Change: We also spent $30 million on acquisitions of seven independent La Z boy furniture galleries during the year.

Speaker Change: During the fiscal year, we returned $130 million to shareholders through dividends and share repurchases of 32% versus the prior year comparable period, including 35 million paid in dividends.

Taylor Luebke: In November, we increased the dividend 10% for the fourth consecutive year. Additionally, we repurchased 2 million shares in the year, which leaves 3.7 million shares available on our existing share repurchase authorization. We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. In fiscal 2025, our capital allocation was 48% reinvested into the business and 52% returned to shareholders.

Speaker Change: In November we increased the dividend, 10% for the fourth consecutive year.

Speaker Change: Additionally, we repurchased 2 million shares in the year, which leaves $3 7 million shares available on our existing share repurchase authorization.

Speaker Change: We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders.

Speaker Change: In fiscal 2025 of our capital allocation was 48% reinvested into the business and 52% return to shareholders.

Speaker Change: Before turning the call back to Melinda, Let me highlight several important items for fiscal 2026, and our first quarter.

Taylor Luebke: Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our first quarter. Consistent with our Century Vision strategy, we continue to target sales growth double the industry growth rate and double-digit operating margins over the long term with the benefit of more normalized industry conditions. On fiscal 2026, we expect consumers to be challenged by the volatile macroeconomic environment and we are planning prudently to navigate the year ahead while still expecting to continue outperforming the industry. Assuming no significant changes in external factors, we expect fiscal first quarter sales to be in the range of $490 to $510 million, reflecting modest growth against the challenged consumer environment.

Speaker Change: Consistent with our century vision strategy, we continue to target sales growth double the industry growth rate and double digit operating margins over the long term with the benefit of a more normalized industry conditions.

Speaker Change: In fiscal 2026, we expect consumers to be challenged by the volatile macroeconomic environment and we're planning prudently to navigate the year ahead, while still expecting to continue outperforming the industry.

Speaker Change: Assuming no significant changes in external factors, we expect fiscal first quarter sales to be in the range of $490 million to $510 million, reflecting modest growth against a challenging consumer environment.

Taylor Luebke: We expect adjusted operating margin to be in the range of 5.5 to 7 percent, including the impact of transitory pressure from our UK and Joybird businesses, as well as investment in our distribution network and home delivery redesign project. We expect to open approximately 15 new company-owned and independent La-Z-Boy furniture gallery stores during the year, of which the majority are company-owned, as well as three to four new Joybirds. The global trade environment remains dynamic, and we have and will continue to execute our playbook to mitigate the impact. This includes leveraging the strength and agility of our supply chain through strategic inventory moves, sourcing adjustments, continued vendor diversification, as well as potential pricing action.

Speaker Change: We expect adjusted operating margin to be in the range of five 5% to 7%.

Speaker Change: <unk> the impact of transitory pressure from our UK enjoy bird businesses as well as investment in our distribution network and home delivery redesign project.

Speaker Change: We expect to open approximately 15, new company owned and independent La Z Boy furniture Gallery stores during the year of which the majority of our company owned as well as three to four new <unk> stores.

Speaker Change: The global trade environment remains dynamic and we have and will continue to execute our playbook to mitigate the impact. This includes leveraging the strength and agility of our supply chain through strategic inventory moves sourcing adjustments continued vendor diversification as well as potential pricing actions.

Taylor Luebke: We anticipate adjustments for purchase accounting charges for the year to be in the range of one cent to two cents per share. We expect capital expenditures to be in the range of $90 to $100 million for fiscal 2026 as we invest to strengthen the company for the future consistent with our Century Vision strategy. This includes investments in our La-Z-Boy furniture galleries for new stores and remodels. Our multi-year project to redesign our distribution network and home delivery program and continued manufacturing-related investments. Our capital allocation target is to reinvest 50% of operating cash back into the business and return 50% to shareholders and share purchases and dividends over the long term.

Speaker Change: We anticipate adjustments for purchase accounting charges for the year to be in the range of <unk> <unk> per share.

Speaker Change: We expect capital expenditures to be in the range of 90 to 100 million for fiscal 2026, as we invest to strengthen the company for the future consistent with our century vision strategy.

Speaker Change: This includes investments in our <unk> furniture galleries for new stores Remodels.

Speaker Change: Our multi year project to redesign our distribution network and home delivery program and continued manufacturing related investments.

Speaker Change: Our capital allocation target is to reinvest 50% of operating cash back into the business and return, 50% to shareholders and share repurchases and dividends over the long term.

Taylor Luebke: In fiscal 2025, this was tilted towards shareholders, and looking to fiscal 2026, we expect capital allocation to be more tilted to investments into the business as we execute our Century Vision strategy.

Speaker Change: In fiscal 2020 bonds. This was tilted towards shareholders and looking to fiscal 2026, we expect capital allocation to be more tilted to investments into the business as we execute our century vision strategy.

Melinda Whittington: And with that, I will turn the call back to Melinda.

Melinda Whittington: And with that I will turn the call back to Melinda.

Melinda Whittington: Thanks, Taylor. We delivered a strong quarter-end fiscal year in a volatile environment, once again demonstrating our ability to adapt and deliver. While we expect the consumer will be challenged for the foreseeable future, we also expect to continue to outperform the industry and deliver long-term profitable growth while prudently investing in the business. Our strong brand and vertical integration that includes company-owned retail and an agile supply chain along with our strong balance sheet provide us the foundation for continued growth.

Melinda Whittington: Thanks Taylor.

Melinda Whittington: We delivered a strong quarter and fiscal year in a volatile environment once again, demonstrating our ability to adapt and deliver.

Melinda Whittington: While we expect the consumer will be challenged for the foreseeable future. We also expect to continue to outperform the industry and deliver long term profitable growth, while prudently investing in the business our strong brand and vertical integration that includes company owned retail and an agile supply chain.

Melinda Whittington: Along with our strong balance sheet provide us the foundation for continued growth.

Melinda Whittington: Before I close, I'd like to note that during the fourth quarter, La-Z-Boy Inc. was named to Newsweek's lists of America's Most Loved Brands and Most Trustworthy Companies for 2025. These awards, based on independent survey data, are additional recognition of our brand relevance and the enduring strength of our iconic brand and company.

Melinda Whittington: Before I close I'd like to note that during the fourth quarter Lazy Boy incorporated was named to Newsweek's list of America's most loved brands and most trustworthy companies for 2025.

Melinda Whittington: These awards based on independent survey data or additional recognition of our brand relevance and the enduring strength of our iconic brand and company.

Melinda Whittington: I want to thank the entire La-Z-Boy Incorporated team for their hard work, skill, and flexibility in navigating a very dynamic environment. We are focused on driving value for all stakeholders, and I look forward to the year ahead.

Melinda Whittington: I want to thank the entire lazy boy incorporated team for their hard work skill and flexibility in navigating a very dynamic environment. We are focused on driving value for all stakeholders and I look forward to the year ahead.

Mark Becks: Mark? Thank you, Melinda. We will begin the question and answer period now. Jenny, please review the instructions for getting into the Q2Ask class. Thank you very much Mark. We are now opening the floor for questions. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is You may press star 2 if you would like to remove your question. For any participants using speaker equipment, it might be necessary to pick up your handset before you begin. Please wait a moment whilst we poll for...

Melinda Whittington: Mark Thank.

Melinda Whittington: Thank you Melinda we.

Melinda Whittington: We will begin the question and answer period now Jenny. Please review the instructions for getting into the queue to ask questions.

Melinda Whittington: Thank you very much Mark we are now opening the floor for questions. If you would like to ask a question. Please press star one on your phone keypad now a confirmation tone will indicate that your line is Nicky you May press star two if you would like to remove your question from the queue for any participants using speaker equipment it might be necessary.

Melinda Whittington: Pick up your handset before pressing the keys. Please wait a moment, whilst we poll for questions.

Speaker Change: Thank you. Your first question is coming from Bobby Griffin of Raymond James Bobby Your line is live.

Operator: Thank you.

Operator: Your first question is coming from Bobby Griffin of Raymond James. Bobby, your line is Thank you. Good morning, everybody. Thanks for taking my questions. Good morning. I guess first, a lot of new stuff to unpack on this call, so I appreciate all the details. Maybe when we start with the wholesale segment and the potential to get back to 10%, it's about 280 basis points, I guess, of expansion. Could you maybe bucket what the size of each of the drivers, you know, between the distribution network changes? I believe, you know, there'll be some industry volume there, too, as well as recapturing the UK transition.

Bobby Griffin: Thank you good morning, everybody. Thanks for taking my questions.

Bobby Griffin: Good morning, Robert.

Bobby Griffin: I guess I guess first lots of a lot of new stuff unpack on this call. So appreciate all the details maybe when we start with the wholesale segment and the potential to get back to 10%.

Bobby Griffin: 280 basis points I guess of expansion could you maybe bucket what the size of each of the drivers between the distribution network changes I believe there'll be some industry volume there too as well as recapturing the UK transition can you maybe give some flavor or some color on how big is each one of those drivers.

Bobby Griffin: Can you maybe give some flavor or some color on, you know, how big is each one of those drivers and is there anything I might have missed, too, as the path back to 10%? Yeah, thanks, Bobby, for the question. Yeah, you know, part of our margin algorithm over for Century Vision is to advance wholesale to double-digit over the long term. Now, that's also requires normalized, call it, industry growth, which we're currently not in at current state, but as we've talked in the past, as we think about bridging from where we're at today to call that 10% over the long term, we believe about half percent is fully in our control, and this distribution and home delivery redesign project is going to meaningfully help accomplish part of that, you know, over a multi-year project.

Bobby Griffin: Is there anything I might have missed too as the path back to 10%.

Speaker Change: Yes, Thanks, Robbie for the question, yes, part of our margin algorithm over a century version is to advance wholesale to double digit over the long term now thats also.

Speaker Change: Requires normalized call it industry growth, which we're currently not in its current state, but as we've talked in the past as we think about bridging from where we're at today to a call that 10% over the long term, we believe about 5% is fully in our control.

Speaker Change: This distribution and home delivery redesign project is going to meaningfully help accomplish part of that over a multiyear project.

Bobby Griffin: The other half, frankly, is requirement of just a healthy industry, which is backed by a healthy housing. So, so that's.

Speaker Change: Other half frankly is as requirement of just a healthy industry, which is backed by a healthy housing market.

Speaker Change: So that's for sure.

Melinda Whittington: And then, Melinda, maybe on the redesign and distribution project, can you talk a little bit, you know, about why now? I guess, you know, obviously it is part of Century Vision. Is it just also part that, you know, the scale of the business has gotten bigger, you own more of the corporate-owned stores? Just curious on, you know, the timing of the decision of why now to do the distribution project. Yeah, absolutely. And you really hit it on the head. I mean, we are, over recent years with, you know, a lot more acquisition, that sort of built pieces, pieces that we have the opportunity for efficiency, as well as just really stepping back and with the expertise we have in the business today to just make sure that we have the right network to support our business as we go forward.

Speaker Change: And then millenia, maybe on the redesign and distribution project can you talk a little bit about why now I guess you know obviously this part of Central vision is it just also part that the scale of the business has gotten bigger your own more of the corporate owned stores just curious on the timing of of the decision of why now to do the.

Speaker Change: Some projects.

Speaker Change: Yes, absolutely and you really hit it on the head.

Speaker Change: Over recent years with a lot more acquisition that sort of built pieces pieces that we have the opportunity for efficiency as well as just really stepping back and with the expertise we have in the business today to just make sure that we have the right network to support our business as we go forward.

Speaker Change: So there'll be a server a several year project.

Melinda Whittington: So, it'll be a several year project, you know, and by the time we're done, we will have overall reduced our total warehouse overhead, optimized routes and miles traveled, reduced inventory levels we need to carry, and ultimately improve that delivery experience that's going into the consumer homes as well. So, it certainly drives an efficiency side of things, but even more importantly, it drives an even better service level to our consumers because we'll be able to cut time out of the system and less miles on product as well.

Speaker Change: And by the time, we're done we will have have overall reduced our total warehouse overhead.

Speaker Change: Optimize routes and miles traveled reduced inventory levels, we need to carry and ultimately improve that delivery experience is going into the consumer homes as well. So it certainly drives an efficiency side of things, but even more importantly, it drives an even better service level to our consumers because we will.

Speaker Change: Be able to to cut time out of the system and less less miles on product as well.

Bobby Griffin: Appreciate it, and I guess lastly for me, can you talk a little bit about what you've seen maybe on written orders here in May or the quarter-to-day period? I think, you know, it was pretty well-known President's Day was soft, but just curious if there's been any kind of change in the monthly cadence over maybe more of the near-term time frame. Yeah, you know, our Memorial Day was a solid start to the year, and we certainly saw, you know, strong execution in-store. If I go back to across Q4, February was our most challenged month, as you note.

Speaker Change: Appreciate it and I guess lastly from me.

Speaker Change: Can you talk a little bit, but what you're seeing maybe on written orders here may or the quarter to date period I think it was pretty well known presence there was soft but just curious if theres been any kind of change in the monthly cadence.

Speaker Change: Maybe more of the near term timeframe.

Speaker Change: Yes.

Speaker Change: Tomorrow day was a solid start to the year and we certainly saw it in our strong execution in store if I go back to across Q4 February was our most challenged month as you note.

Melinda Whittington: And so what, you know, what we're really looking to do, as we always do, is drive that total written number, leveraging our new stores, our acquisitions, and then maximizing what we are getting out of each individual store. So, you know, I think with where the consumer is right now, you know, we'll need to continue to be very active on that. But again, out of the fourth quarter, February was really the most challenged month, and we're pleased with where we started out on Memorial Day. So it'll, you know, I think the consumer will need to stay actively engaged to drive through this period.

Speaker Change: What we're really looking to do as we always do is drive that total written number.

Speaker Change: Leveraging our new stores or acquisitions, and then maximizing what we are getting out of each individual store. So I think with where the consumer is right now.

Speaker Change: We will need to continue to be very active on that.

Speaker Change: But again out of out of the fourth quarter February was really the most challenged month.

Speaker Change: And we're pleased with where we started out of memorial day. So it will I think the consumer will need to stay actively engaged to to drive through this period.

Bobby Griffin: Very good. Well, good to hear that Memorial Day was better than Presidents Day. One day, we will be talking about a better furniture industry, hopefully. One of these days. Thank you. Thanks for taking my questions, and best of luck. Thanks, Bobby. Thank you very much.

Speaker Change: Very good well good to hear that Memorial day was better and presence that one day, we will be talking about a better furniture industry hopefully soon <unk>.

Speaker Change: Thank you.

Speaker Change: Thanks for taking my questions.

Speaker Change: Best of luck.

Speaker Change: Thanks, Bobby Thanks Barbara.

Speaker Change: Thank you very much and your next question is coming from Anthony <unk> of Sidoti <unk> Company. Anthony Your line is live.

Anthony Lebiedzinski: And your next question is coming from Anthony Lebiedzinski of Sudota. Anthony, your line is... Good morning, and thank you for taking the questions. So yeah, certainly, you know, nice to see the sales outperformance for the quarter.

Anthony: Good morning, guys. Thank you for taking the questions. So nice.

Speaker Change: Nice to see the sales outperformance for the quarter and so.

Melinda Whittington: And so, first, let's start with that, you know, so just relative to your guidance that you issued back in February, So even with a softer start, as you alluded to, I mean, can you just give us the reasons, main reasons for the sales outperformance versus your outlook that you provided a few months ago? Overall, I'd say, you know, broad-based, so no one individual driver. At the time we were, you know, we put guidance out there in February, we had just come off President's Day, which I think across the industry was, was, you know, fairly challenged, just a lot of, a lot of new macroeconomic news really coming out at that time.

Speaker Change: First of all I'll start with that so just relative to your guidance that you issued back in February.

Speaker Change: So even with a softer start as you alluded to I mean can you just give us the reasons main reasons for the sales outperformance versus your.

Speaker Change: Outlook that you provided a.

Speaker Change: A few months ago.

Speaker Change: Overall, I'd say broad based so no one individual driver at the time, we were we put guidance out there in February we had just come off Presidents' day, which I think across the industry was was it a fairly challenged just is a lot a lot of new macroeconomic news really coming out.

Speaker Change: At that time.

Melinda Whittington: And so, you know, we mentioned that our, our written trends across the quarter, February was, was the most challenged from a year-on-year growth basis. So, you know, we were pleased. Again, we do what we always do there, which is to, to work to execute and delight the consumer and work with our business partners on the B2B side as well. And so, you know, as the year went on, you know, we mentioned that, you know, February was the toughest month. So, you know, we go back to, to what we, what we do best, which is execute and make sure that we're doing right by the consumer.

Speaker Change: And so we mentioned that our our written trends across the quarter February was was the most challenged from a year on year growth basis.

Speaker Change: We were pleased again, we do what we always do there which is to to work to execute and delight the consumer and work with our business partners on the <unk> side as well.

Speaker Change: And so.

Speaker Change: As the year went on as we mentioned that.

Speaker Change: February was the toughest months. So if we go back to what we what we do best which is execute and make sure that we're doing right by the consumer and we were pleased that the quarter ended up finishing up a little bit stronger than what we had initially expected even in the midst of what ended up being <unk>.

Melinda Whittington: And we were pleased that the, that the quarter ended up finishing up, you know, a little bit stronger than, than what we had initially expected, even in the midst of what ended up being increased macroeconomic challenges throughout the quarter. Understood.

Speaker Change: Increased macroeconomic challenges throughout the quarter.

Speaker Change: Understood and then a couple of questions on Paris. So.

Anthony Lebiedzinski: And then a couple of questions on tariffs. So you mentioned there was some tariff expense. I'm not sure if you quantified that. Maybe I missed that, but if you could just maybe expand on that and as to how much of the tariff expense are you thinking will be impacting your first quarter results. And as far as pricing, you've talked about some potential, I think, pricing actions. So is any pricing included in the first quarter outlook? Sorry for the long-winded questions. Thanks, Andrew.

Speaker Change: You mentioned there was some.

Speaker Change: Tariff expense.

Speaker Change: Have you quantified that maybe I missed that.

Speaker Change: So could you just maybe expand on that end.

Speaker Change: How much of the tariff expense are you thinking is it will be.

Speaker Change: Impacting your first quarter results.

Speaker Change: And as far as pricing.

Speaker Change: You talked about some potential think pricing action so.

Speaker Change: Is there any pricing, including in the first quarter outlook.

Speaker Change: Sorry for the long winded question.

Speaker Change: Thanks, David Let me try to hit those one by one maybe not in the right order.

Taylor Luebke: Let me try to hit those one by one, maybe not in the right order that you asked them. So as we've talked before, and as a reminder, we've been planning against multiple different scenarios since basically last fall, as we know kind of trade policy could potentially evolve. So we were well ahead of kind of different actions we would take to mitigate anything that happened. And, you know, essentially at the start of our last quarter is when All of these things went into place that we responded to agilely and balanced and calm. And our policy at La-Z-Boy here is we act on fact, we wait a week to ensure it sticks, and then we execute our playbook to mitigate the impact to our company while also being cognizant of our consumers.

Speaker Change: So.

Speaker Change: As we've talked before and as a reminder, we've been planning against multiple different scenarios and that's basically the last fall as we know.

Speaker Change: Kind of trade policy could potentially evolve. So we were well ahead of kind of different actions, we would take to mitigate.

Speaker Change: Anything that happened in Europe, essentially at the start of our last quarter's win.

Speaker Change: Things went into place that we responded to annually and balanced and calm and our policy.

Speaker Change: <unk> as we.

Speaker Change: One fact, we wait a week to insurance sticks, and we execute our playbook to mitigate the impact to our company, while also being cognizant of our consumers.

Speaker Change: Customers so over more immediate term in quarter four as you can imagine.

Taylor Luebke: So over the more immediate term in quarter four, as you can imagine with the general. Flurry of activity, there is a moment in time where actions we put into place can't completely mitigate impact as we put nominal pricing actions into the market, you know, for a core upholstered business, you know, low single digits, as well as, you know, really great work on our supply chain on strategic inventory moves to get ahead of potential trade policy changes as well as just inventory productivity on utilizing what we have on hand. As we look forward, we, A, want to remain agile and respond to how anything could change.

Speaker Change: General.

Speaker Change:

Speaker Change: Flurry of activity there is a moment in time, where actions we've put into place can completely mitigate impact as reported nominal pricing actions into the market.

Speaker Change: For our core upholstery business low single digits.

Speaker Change: As well as really great work on our supply chain on our strategic inventory moves to get ahead of potential trade policy changes as well as just inventory productivity on utilizing what we have on hand, as we look forward, we want to remain agile to respond how anything could change.

Anthony Lebiedzinski: The plans we put into market, we believe, mitigate the exposure we have, but frankly, our biggest concern has always been what does it do to the consumer, which has been relatively challenged now for a bit, so that's one we continue to watch. But overall, really happy with the team and our agility and think we're well positioned heading into quarter one of this. Understood. Okay.

Speaker Change: The plans, we put into market, we believe mitigate.

Speaker Change: The exposure, we have but frankly, our biggest concern has always been what does it do to the consumer which has been relatively challenged now.

Speaker Change: For a bit so thats why we continue to watch, but overall really happy with the team at our agility.

Speaker Change: We are well positioned heading into quarter one of this fiscal year.

Speaker Change: Yes.

Speaker Change: Understood, Okay, and then lastly.

Melinda Whittington: And then lastly, for Joybird, Melinda, you talked about the divergence for your written business between online versus the stores. So I know you said that you will open, I believe, three to four this year, Joybird stores. But longer term, are you perhaps maybe thinking of going maybe beyond that 25 store goal that you had previously talked about? Or just how are you thinking about longer term for Joybird in terms of the stores? Yeah, we still feel really good about Joybird, and it is still a young business, and particularly given that it services a more urban and generally a little bit younger consumer as well, a little more challenged here in the near term.

Speaker Change: For Joy bird.

Speaker Change: Melinda you talked about the divergence.

Speaker Change: Written business between online grocery stores. So I know you said that you will open I believe three to four this year.

Speaker Change: Joined those stores, but longer term.

Speaker Change: Are you, perhaps may be thinking of going maybe beyond that 25 store goal that you had previously talked about or.

Speaker Change: How are you guys thinking about longer term for joy burden in terms of the stores.

Speaker Change: Yes.

Speaker Change: We still feel really good about <unk> and it is still a young business and so and particularly given that it is.

Speaker Change: Services, a more urban and generally a little bit younger consumer as well a little more challenged here in the near term and as you pointed out Anthony we're really pleased with the store base that we have now got one more opened here Justin just in this last month or so.

Melinda Whittington: And as you pointed out, Anthony, we're really pleased with the store base that we have now. Got one more open here just in this last month or so, and that those are really servicing our consumer well, even in a more challenged time for that consumer. You know, we've caught out to 25, and we still see a path to that. We like this pace of three to four new stores, and do I think we have the potential to go beyond 25 over the long term? Yeah, absolutely. But given just, you know, Joybird is still a fairly new brand, and we want to make sure that we grow prudently, particularly in this kind of challenging time for our industry.

Speaker Change: And those are really servicing our consumer well even in a more challenged time for that consumer.

Speaker Change: We've called out the 25, and we still see a path to that we like this pace of three to four new stores and do I think we have the potential to go beyond 25 over the long term, yes, absolutely, but given just.

Speaker Change: Joy burden is still a fairly new brand and we want to make sure that we grow prudently, particularly in this kind of a challenging time for our industry. So we're going to continue to optimize the brand optimize that consumer experience and grow in a prudent way.

Anthony Lebiedzinski: So we're going to continue to optimize the brand, optimize that consumer experience, and grow in a prudent way. Understood. Well, thank you very much and best of luck. Thank you very much.

Speaker Change: Understood well, thank you very much and best of luck.

Speaker Change: Alright. Thanks.

Speaker Change: Thank you very much. Our next question is coming from Brad Thomas of Keybanc capital markets. Brad Your line is live.

Brad Thomas: Our next question is coming from Brad Thomas of Key Banks.

Brad Thomas: Brat, you're li- Hi, good morning. Thanks for taking the questions. Melinda, good morning. I wanted to start off with with sort of a big picture question, considering the environment that we're in. I was wondering if you could just help us put into context. Given tariffs coming through, how are you thinking about La-Z-Boy's relative price point and consumer offering? And so can you help us sort of put into context what you're seeing out there from a competitive standpoint? in terms of promotions and pricing and what La-Z-Boy is doing relative to that. Yeah, thanks, Brad. I think, you know, obviously, we are positioned extremely well in this environment, as I mentioned, 90% of our product.

Brad Thomas: Hi, good morning, Thanks for taking the questions.

Speaker Change: Melinda.

Speaker Change: Good morning, I wanted to start off with sort of a big picture question, considering the environment that we're in I was wondering if you could just help us put into context.

Speaker Change: Given tariffs coming through.

Speaker Change: Thinking about lazy boys relative price points and consumer offering.

Speaker Change: And so can you help us sort of put into context, what youre seeing out there from a competitive standpoint.

Speaker Change: In terms of promotions and pricing and what lazy boys doing.

Speaker Change: Relative to that.

Brad Thomas: Yes, Thanks, Brad I think.

Speaker Change: Obviously, we are positioned extremely well.

Speaker Change: In this environment as I mentioned, 90% of our products. So let me step back a little bit about 90% of our business is in the United States, even though we're still in a single digit share. So obviously lots of opportunity to grow.

Melinda Whittington: So let me step back a little bit about 90% of our business is in the United States, even though we're still kind of single digit share. So obviously, lots of opportunity to grow. And then within that, we service the vast majority of that with our, you know, our manufacturing footprint in the United States. So broadly, it should be a real, you know, a real strength for La-Z-Boy to have this manufacturing footprint here in the United States. And of course, our target is to provide consumers with personalized furniture with speed to market. So I feel really good about where we're positioned from that standpoint.

Speaker Change: And then within that we service the vast majority of that with our our manufacturing footprint in the United States. So broadly it should be a real.

Speaker Change: A real strength for lazy boy to have this manufacturing footprint here in the United States and of course, our target is to provide consumers with personalized furniture with speed to market. So I feel I feel really good about where we're positioned from that standpoint.

Melinda Whittington: At the same time, we need to navigate the challenges for the consumer. So, you know, we are, again, working to play offense. We are positioned well in our ability to keep our pricing, you know, responsible. We're not broadly seeing really crazy, you know, competitive moves out there to your question. more than a half of our competition is. At the same time, you have a strapped consumer. So to the extent that we can continue to deliver an incredible product at a competitive price, I think we're very well-positioned even to navigate through a fairly challenging time. And that's very helpful.

Speaker Change: At the same time, we need to navigate the challenges for the consumer.

Speaker Change: And just in general.

Speaker Change: We see pent up demand for furniture, we know that our industry has been in a bit of a malaise for a number of years.

Speaker Change: But if the consumer is overall more strapped because of the broader macroeconomic trends they will tend to stretch out their furniture purchases.

Speaker Change: <unk>.

Speaker Change: We are again working to play offense, we are positioned well in our ability to keep our pricing and.

Speaker Change: And a responsible we're not broadly seeing really crazy.

Speaker Change: Yeah.

Speaker Change: <unk> move us out there to your question and I think that's because the input costs input costs are going up for the industry rate, even if particularly if youre an importer, which.

Speaker Change: More than more than half of our competition is at the same time you have a strapped consumer so to the extent that we can continue to deliver an incredible product at a at a competitive price I think we're very well positioned even to navigate through a fairly challenging time.

Speaker Change: And that's very helpful.

Melinda Whittington: But to be clear, Melinda, as we think about La-Z-Boy's pricing strategy going forward, are you needing to push through more price? And what does the timing look like for that over the quarters ahead? Yeah, Taylor mentioned some nominal pricing put into place in the last quarter, and that has been sufficient to manage what we're going through. Obviously, we need to stay agile, and we look for a variety of ways to respond to increased input costs from broader sourcing, how we manage timing of buys, and so forth. But we've had a little bit of nominal pricing in, but at this stage, I don't have any big concerns about anything big coming down the pike.

Speaker Change: To be clear mind, as we think about lazy boys pricing strategy going forward.

Speaker Change: Are you needing to push through more price in what does the timing look like for that over the quarters ahead.

Speaker Change: Yes.

Speaker Change: Taylor mentioned, some nominal pricing put into place in the last quarter and that that has been sufficient to manage what we're going to obviously, we need to stay agile and we look for.

Speaker Change: A variety of ways to respond to increased input costs from broader sourcing, how we manage timing of buys and so forth, but we've had a little bit of nominal pricing and but at this stage I don't I don't have any big concerns about anything big coming down the Pike.

Melinda Whittington: That's great to hear.

Speaker Change: That's great to hear.

Taylor Luebke: And maybe a question for Taylor, just as we think about operating margin, I know you're not going to guide the full fiscal year, you've given us the quarter ahead here, but maybe in broad strokes, can you help us think about the major puts and takes here for the fiscal year ahead? Good question, Brad. Yeah, and we don't guide to the full year, but, you know, as we look out, a lot of it depends, again, to the health of the industry and the consumer, which right now is pretty uncertain, so what we've stated and what we believe is whatever the industry does will outperform, so if the industry looking ahead for our fiscal is flat, we'll grow.

Speaker Change: And maybe a question for Taylor just as we think about operating margin I know youre not going to guide to full fiscal year, you've given us the quarter ahead here, but maybe in broad strokes can you help us think about the major puts and takes here for the fiscal year ahead.

Speaker Change: Yes.

Speaker Change: Good question, Bryan, We don't guide to the full year, but as we worked out a lot of it depends again to the health.

Speaker Change: The industry and the consumer which right now is pretty uncertain. So what we've stated and what we believe is whatever the industry does we will outperform the industry working ahead for our physical is flat we'll grow.

Taylor Luebke: And if we grow, we should expect some margin expansion. If the industry is down, then we will be less down. But our goal going into every year is to obviously expand our margins. Now, we're in a very uncertain and volatile time, so it's tougher than when you've got all the industry or housing, call it, tailwinds behind you. But a lot of it depends on what the industry does. So we're being incredibly agile. We're making our own momentum. They can control what we control quarter over quarter and being very prudent in light of all the external factors.

Speaker Change: If we grow we should expect some margin expansion.

Speaker Change: History is down there will be less down, but our goal going into every year is to obviously.

Speaker Change: To expand our margins now we're in a very uncertain and volatile times, so its tougher than when you've got all the industry, all warehousing and call it tailwind behind you.

Speaker Change: But a lot of it depends on what the industry. So we're being incredibly agile.

Speaker Change: We're making our own momentum make controlling what we control quarter over quarter and being very prudent.

Speaker Change: In light of all the external factors around us.

Brad Thomas: That's helpful. Thank you so much. Thanks, Fred. Thank you very much.

Speaker Change: That's helpful. Thank you so much.

Brad Thomas: Thanks, Brad.

Speaker Change: Thank you very much while we appear to have reached the end of our question and answer session. I will now turn the call back over to the management team for their closing remarks.

Mark Becks: Well, we appear to have reached the end of our question and answer session. I will now turn the call back over to the management team for their closing remarks. Thanks, Jenny. Melinda, Taylor, and I will be in our offices for the rest of the day to answer any follow-up questions. Thanks, and have a great day. Thank you very much everyone, this does conclude today's webinar. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

Melinda Taylor: Thanks, Jenny Melinda Taylor and I will be in our offices for the rest of the day to answer any follow up questions. Thanks and have a great day.

Speaker Change: Thank you very much everyone. This does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful rest of the day. We thank you for your participation.