La-Z-Boy Incorporated

Good morning everyone and welcome to the Lazy Boy Fiscal 2026 Third Quarter Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host Mark Becks, Director of Investor Relations and Corporate Development at Lazy Boy. Mark, the floor is yours.

Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2026 third quarter. Joining me on today's call are Melinda Whittington, Lazy Boy Incorporated's Board Chair, President and Chief Executive Officer, and Taylor Lubke, SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year. And a telephone replay of the call will be available for one week, beginning this afternoon. I would like to remind you that some statements made in today's call included forward-looking statements. about Lazy 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 filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website. and includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda.

Thanks, Mark. Good morning, everyone. Yesterday, following the close of market, we reported our strong January-ended third quarter results. These results are proof that we continue to strengthen our enterprise and increase the agility of our business. Highlights for our third quarter included total delivered sales of $542 million, up 4% versus prior year. In our retail segment, both written and delivered sales increased 11% versus prior year. And we opened four new company-owned stores during the quarter, bringing us to 16 new company-owned stores in the last 12 months and four closed. In our wholesale segment, delivered sales grew 1% versus prior year, and we made continued progress on our distribution and home delivery transformation project with the completion of our Western U.S. phase of the network. Our GAAP operating margin was 5.5%, and adjusted operating margin was 6.1%, coming in toward the high end of our guidance range. and we again generated strong operating cash flow of $89 million for the quarter, increasing 57% versus last year's comparable period. Amid the ongoing challenging consumer environment, we continue to create our own momentum, led by retail expansion. As I noted, Total written sales for our company-owned retail segment increased 11% versus last year's third quarter, driven by new and acquired stores. Written same-store sales, which exclude the benefit of new and acquired stores, decreased 4% for the quarter. Continued challenging traffic, consistent with our industry, was partially offset by strong in-store execution, including higher conversion rates, average ticket, and design sales. Within the quarter, same-store sales trends were strongest in January, turning positive versus a year ago, until widespread adverse weather slowed traffic in late January and continuing into early February across much of the United States. While we don't believe these weather events will impact overall furniture demand, we do expect some timing effects carrying into our fourth quarter deliveries. as consumers re-engage on planned purchases. Separately, for Joybird, total written sales for our third quarter decreased 13% compared to a year ago, as this consumer segment continues to be particularly volatile against the current macroeconomic backdrop. During the quarter, we also progressed our strategic initiatives. We successfully integrated our 15-store acquisition in the Southeast region of the United States, We formally announced the planned closure of our UK manufacturing facility, where production will cease by the end of the fiscal year. We completed the sale of our Kincaid upholstery business just after the close of our third quarter. And we signed a letter of intent for the sale of our non-core wholesale case goods businesses, American Drew and Kincaid, targeted to be complete by the fiscal year end. Stepping back, I'd like to spend a few more minutes highlighting some of the structural improvements our team has achieved through these current initiatives and highlight the progress made as we advance our Century Vision strategy for our next 100 years. We are pleased to have successfully integrated our acquisition of the 15-store network in the Southeast region. This transaction was our largest single retail acquisition in the company's history. adding 80 million in annualized retail sales and 40 million net to the total enterprise. The seamless integration into our company-owned network reflects the collective efforts of many internal stakeholders and the stores are performing well. Independent store acquisitions are an important part of our Century Vision strategy as they are immediately sales and profit accretive and provide ownership of a new market with potential white space opportunities. We will continue to pursue these types of acquisitions as they become available. Opening new Lazy Boy stores is also a key lever to growing our retail business and expanding our brand reach. In addition to completing our largest ever acquisition this quarter, we also are achieving the most significant period of new store expansion in our company's history. We opened four new company-owned stores in the quarter, And in the last 12 months, we opened 16 new stores while closing four. In total, we've added 29 net company-owned stores over the past year. Our total network of stores, including independently owned, has expanded to 374. And our current proportion of company-owned stores is now at an all-time high of 60% of the total network. We see opportunity to grow the Lazy Boy store network to over 400 stores as we broaden our brand reach and delight and inspire even more consumers. We expect to open 16 new stores in total for this fiscal and continue at a pace of opening roughly 10 stores a year for the next several years. Momentum in our wholesale segment also remains solid. as we delivered our seventh consecutive quarter of sales growth in our core North American Lazy Boy wholesale business. And we continue to grow our strategic compatible distribution with key partners like Slumberland and Rooms to Go. Wholesale customers value the strength of the Lazy Boy brand, the enduring quality, and the differentiated product functionality offered by our North American manufacturing capabilities. Our vertically integrated model, with approximately 90% of upholstered products produced in the United States, remains a key competitive advantage as we navigate the current challenging macroeconomic environment and has served as our foundation throughout our 99-year history. We're making meaningful progress on building an even more agile supply chain through our multi-year distribution and home delivery transformation project. During the third quarter, we completed the western US third of this project, serviced by our new Arizona centralized hub. And we recently broke ground on our new Dayton, Tennessee centralized hub, which will serve our eastern region. This transformation will improve an already strong consumer experience. ensure faster speed of delivery, and enable an expanded delivery reach. And in aggregate, we expect this project to deliver between 50 to 75 basis points of wholesale margin improvement, up to 50 basis points to the entire enterprise once completed. As part of our strategic roadmap to expand brand reach, leveraging our iconic brand, We are creating integrated strategies for our retail and marketing teams. These strategies have enabled more cohesive and focused plans for our store network, improving execution and reducing redundancy. As a result, we are better positioned to capture consumer demand, improve responsiveness, and navigate the volatile environment with greater discipline and agility. Our new brand identity continues to receive positive media attention. In December, Lazy Boy was cited by Ad Age as one of the top five rebrands of 2025. The mention went on to say, Lazy Boy's brand refresh felt like a full-bodied exhale designed to make comfort feel as intentional as its famously cushy chairs. We plan to continue building off this success and expanding brand relevance with new and innovative ways to delight and inspire our consumers. Lastly, during our third quarter, we drove further progress in optimizing our portfolio and enabling focus on our core vertically integrated North American upholstery business. We formally announced the planned closure of our UK manufacturing facility where we expect production will cease by the end of our fiscal 26. And we have solidified alternative sourcing for this business, leveraging our global supply chain network to ensure we are well positioned to grow with our new customer base. We also completed the sale of our Kincaid upholstery business just subsequent to our fiscal third quarter end. We were pleased to transition this business in full to its new owners who are former employees of the company. And finally, we signed a letter of intent for the sale of our non-core wholesale case good businesses, American Drew and Kincaid. Importantly, these changes will not impact our ability to offer case goods as part of beautiful whole home solutions for consumers in our Lazy Boy stores, comfort studios, and branded spaces. In fact, these changes will enhance our offerings in the future opening up broader sourcing, and driving efficiency in the process. We expect these final case goods initiatives to be substantially complete by our fiscal year end in April. And now, let me turn the call over to Taylor to review the financial results in more detail. Taylor?