La-Z-Boy Incorporated

Greetings. Welcome to the Lazy Boy fiscal 2026 fourth quarter conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Mark Beck, Director of Investor Relations and Corporate Development of Lazy Boy Incorporated. You may begin.

Thank you, Holly. Good morning, everyone, and thanks for joining us to discuss our fiscal 2026 fourth 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 in 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 include 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 filing. Our earnings release is available under the News and Events tab on the Investor Relations page of our website, and includes reconciliations with certain adjusted measures, which are also included as 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 April-ended fourth quarter and fiscal year results, demonstrating strong execution and and continued progress on our strategic initiatives. Highlights for our fourth quarter included our retail segment delivered sales increasing 9%, led by acquisitions in new stores, and we opened four new stores during the quarter, bringing the total to 230 company-owned. On top, adjusted operating margin for our retail segment strengthened versus prior year, coming in at almost 14% for the quarter. And in our wholesale segment, delivered sales decreased slightly, but adjusted operating margin improved versus prior year. Highlights for our total fiscal year included total consolidated delivered sales of $2.1 billion up versus prior year, with retail segment delivered sales increasing 6% versus prior year, And during the year, we opened a total of 15 net new stores, the highest number of annual net new stores in our company history. And we completed our largest ever 15-store independent Lazy Boy acquisition. In our wholesale segment, delivered sales were flat versus the prior year, and adjusted operating margin strengthened. We generated $204 million in operating cash flow, up 9% versus prior year, We returned $85 million to shareholders through share repurchase and dividends, including our fifth consecutive year of increasing the quarterly dividend by 10%. And finally, we continue to maintain a strong balance sheet with just over $300 million in cash and no external debt. I'm proud of the strong finish to this fiscal year. as our performance delivered on expectations even against an uneven backdrop. We are focused on driving our own momentum, led by our retail business expansion through new stores, acquisitions, and strong in-store execution. Now, turning towards consumer trends, as reflected in our retail written sales, During the fourth quarter, total written sales for our company-owned retail segment increased 11% versus last year's fourth quarter, driven by acquired and new stores. Written same-store sales, which exclude the benefit of new and acquired stores, decreased 2% for the quarter, which is a sequential improvement versus the third quarter. And same-store sales trends were strongest late in the fourth quarter, with April delivering positive comps versus prior year. And this strength continued through May with positive comps and a solid Memorial Day holiday. We continue to drive our own momentum despite softness across the category, with industry data reported by the U.S. Census Bureau indicating the market declined in the low to mid single digits during the quarter. We remain focused on retail growth. where we can control the entire end-to-end consumer experience and gain share in the large and heavily fragmented furniture and home furnishings industry, regardless of market conditions. We are leveraging the strength of our iconic brand, our agile U.S.-centered supply chain, consumer-led insights, quality products, and excellent in-store execution to delight and inspire consumers across our network. And in our Joybird business, total written sales increased 2% in the quarter, driven by new stores. We continue to expand Joybird distribution with new stores and compatible wholesale partners and opened our 16th dedicated Joybird store in Dallas, Texas last month. Focusing on our broader strategic ambitions, I'd like to recap the progress we have made in our Century Vision objectives over the course of fiscal 26, our 99th year. Recall, Century Vision is our strategy to grow sales and market share through our consumer brands at a rate double the industry over the long term and sustainably expand our operating margin well beyond our centennial anniversary in 2027. We have significantly expanded Lazy Boy's brand reach over the past year with the largest number of new store openings and the most independent Lazy Boy store acquisitions in one year in our company's history. As I mentioned, during the year we added 15 new company-owned stores, acquired 15 independent Lazy Boy stores, and ended the year with 230 company-owned locations. The company-owned footprint now represents 61% of our total network. Our total Lazy Boy store network, including company-owned and independently-owned stores, now stands at nearly 380 stores across North America. We see runway to growing the Lazy Boy footprint to 450 locations, driven primarily by expansion of company-owned stores. We expect to open approximately 10 new stores each fiscal year going forward. and we will also continue to pursue independent store acquisitions as they become available. As a reminder, these acquisitions are one of the best uses of our cash as they are immediately sales and profit accretive and provide ownership to new markets with potential white space opportunities. We are delighted to have recently signed an agreement to acquire another three-store network across Florida and Alabama, which we expect to close at the end of June. we are committed to growing our direct-to-consumer business where we are able to offer best-in-class consumer experiences. In wholesale, we continue to add new compatible distribution and grow existing distribution with partners that value the strength of the Lazy Boy brand, our enduring quality, and differentiated product functionality supported by our vertically integrated manufacturing capabilities. During the year, we added 30 new dealers and 100 new doors, including our new partnership with Living Spaces. There remains a considerable opportunity in growing with our strategic partners, and we will be particularly focused on driving organic growth within our existing base going forward. Additionally, we will continue to invest in our comfort studios and branded spaces that offer unique store-within-a-store branding at our larger independent retailers. We ended the fiscal year with nearly 1,400 Lazy Boy comfort studio and branded space locations, each fully dedicated to our Lazy Boy branded products. Relevant brand messaging is another core pillar of our Century Vision growth strategy, and I'll spend a few moments highlighting some of the wins we achieved throughout the year and how we are capitalizing on this momentum. Recall, we launched a new brand identity last August, rooted in comfort and quality, to enable the brand to reach a broader audience. The campaign has been positively received by our consumers, customers, media, and analysts alike, noting that our new look and feel just seems more comfortable. And this is recognized in the advertising industry as well, as we were named by Ad Age as one of the top five rebrands of 2025, and recently by the Shorty Awards, an international award honoring outstanding work across social and digital media as a gold winner under the brand redesign category. I would also note that during the fourth quarter, Lazy Boy was named to America's Best Stores list for 2026 by USA Today. This award is based on independent survey data and underscores our brand relevance and strong in-store execution. We are also building momentum in product innovation. This spring at High Point Furniture Market, our introductions included AudioLux and Comfort Essentials. AudioLux is our market-leading premium audio furniture line that leverages Lazy Boy's in-house consumer-led insights to drive relevant innovation. The product line combines an integrated audio experience, partnering with Klipsch, and offering the comfort and quality for which Lazy Boy is known. Look for it in stores this fall. We also introduced our comfort essentials, an opening price point offering within our stationary assortment, designed to meet the needs of value-focused consumers. We know that younger shoppers are looking for more accessible options to begin their journey with the Lazy Boy brand, and we are innovating to meet that need. Through continued investment in brand evolution, retail expansion, digital transformation, innovation, and consumer insights, we are unlocking the powerful Lazy Boy flywheel. Another core pillar of Century Vision is to optimize the Joybird brand to growth and profitability. Joybird complements our broader core strategy of branded, customized upholstery manufactured in North America and and has a significant long-term opportunity to grow share. Although Joybird's core consumer has been particularly volatile in the current economic environment, we remain committed to disciplined investments in the business to position the brand for sustainable long-term success. We opened three new stores in fiscal 26 and plan to open three to four in fiscal 27. We also recently introduced a Joybird wholesale program with select strategic partners that has been very well received and helps expand Joybird's brand reach. We continue to monitor performance and are taking the appropriate steps to improve growth and profitability, including redesigning our enterprise supply chain to more efficiently support Joybird, as I'll touch on shortly. The final pillar of Century Vision's strategy is strengthening our foundational capabilities and agility across our supply chain, technology, and people. A vertically integrated model with approximately 90% of upholstered products manufactured in the U.S. is a differentiated competitive advantage, enabling personalized furniture delivered to consumers' homes in as little as four to six weeks. And it is vital to our enterprise success and navigating the current geopolitical landscape. We are establishing an even more agile supply chain, with our multi-year distribution and home delivery transformation project. During the past year, we completed the western third of this project with our new Arizona centralized hub, and we are well on track with our midwestern and eastern phases. As a reminder, this multi-year transformation will improve an already strong consumer experience and help drive stronger wholesale operating margins through operational efficiencies. During the year, we also made meaningful advances in streamlining our operations and honing our focus on our core business. We finalized our UK supply chain restructuring in April, and we completed the final step of our portfolio optimization in case goods with the sale of the American Drew and Kincaid wholesale case goods businesses in May. And our strategic and agile adjustment to our supply chain continue. as we look forward. We recently initiated projects to streamline our two smallest upholstery plants into our larger U.S. plant network. This will include fully consolidating Joybird Manufacturing into our long-standing Lazy Boy plants during fiscal 27 to more efficiently support this business. We expect both of these small plant transitions to be largely completed by the end of our fiscal year. Given the ongoing efficiency gains across our supply chain, we have ample capacity within our existing U.S. manufacturing operations to support future growth and view these changes as another key step in our century vision goal of building a more agile supply chain and continuing to improve operating margins and adjust to an ever-changing macro environment. As we begin fiscal 27, we are focused on controlling the controllables and confident in our ability to drive our own momentum and outperform the market. While the timing of a return to growth for our industry is uncertain, we have discrete leverage to drive growth in our business and strengthen our foundation across our Century Vision pillars. And looking forward, we remain optimistic about an eventual rebound in housing fundamentals and in the furniture and home furnishings industry, which has historically grown at a healthy 3% to 4% growth rate. And now, let me turn the call over to Taylor to review our financial results in more detail.