La-Z-Boy Incorporated FY 2025 10-K Review: Reclining into the Future

La-Z-Boy Incorporated (NYSE: LZB), a name synonymous with recliners and living-room comfort, has just released its Form 10-K for the fiscal year ended April 26, 2025. As a tenured investment consultant, I’ve combed through the Business Description, MD&A, Financial Statements, and Risk Factors to bring you a concise breakdown, a net profit statement, and an unbiased investment score.

Warren.AI 💰 6.5 / 10

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Table of Contents

1. Business & Strategy at a Glance
2. Segment Deep Dive
   • Wholesale (Manufacturing/Imports)
   • Retail (Company-Owned Stores)
   • Corporate & Other (Joybird & Licensing)
3. Key Financial Metrics
   • Sales & Profitability
   • Balance Sheet Strength
   • Cash Flow & Capital Allocation
4. Acquisitions & Store Expansion
5. Supply Chain & Cost Pressures
6. Risk Factors
7. Investment Score & Conclusion

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1. Business & Strategy at a Glance

• Founded in 1927; incorporated as La-Z-Boy Chair Company in 1941; renamed La-Z-Boy Incorporated in 1996.
• Core Brands: La-Z-Boy®, England®, Kincaid®, Joybird®.
• Global Footprint: Five U.S. plants, three in Mexico, U.K. manufacturing/wholesale, joint ventures in Thailand, 366 La-Z-Boy Furniture Galleries® stores, plus pop-ups and digital.
• Century Vision: Grow omnichannel La-Z-Boy & Joybird brands, expand Retail footprints, optimize operations, build enterprise capabilities.

2. Segment Deep Dive

Wholesale segment (>$1 billion sales)

• Manufactures/imports upholstery (recliners, sofas, sectionals) and casegoods (bed/dining sets).
• Serves La-Z-Boy Galleries®, Comfort Studios®, major dealers, independents.

Retail segment (~$900 million sales)

• 203 company-owned La-Z-Boy Furniture Galleries® stores.
• Offers customization, design services, omnichannel convenience.

Corporate & Other

• Joybird ecommerce & small stores; licensing revenue; corporate shared costs.

3. Key Financial Metrics (FY 2025 vs. FY 2024)

Sales

• Consolidated sales up 3% to $2.109 billion.
  • Wholesale net sales +2% to $1.057 billion.
  • Retail net sales +5% to $898 million.
  • Joybird net sales +5% to $146 million.

Profitability

• Gross profit: $926.4 million (+5%), gross margin 43.9% (+80 bps).
• SG&A: $770.0 million (+5%), SG&A margin 36.5% (+80 bps).
• Operating income: $135.8 million (–10%); operating margin 6.4% (–100 bps) including:
  • $20.6 million goodwill impairment (U.K.).
  • $2.1 million asset impairments.
  • $1.1 million severance in U.K.
• Net income: $99.6 million ($2.35 EPS diluted) vs. $122.6 million ($2.83 EPS) last year.

Balance Sheet & Liquidity

• Cash + equivalents: $328 million; no debt on $200 million revolver.
• Inventory: $255 million (down $8 million).
• Customer deposits: $73 million (down $16 million) as lead times improved.
• Deferred revenue & deposits: $105 million.

Cash Flow & Capital Allocation

• Operating cash flow: $187 million (+18%).
• CapEx: $74 million focusing on new stores, remodeling, distribution, manufacturing upgrades.
• Share repurchases: $77.9 million (2.0 million shares at ~$38.72 average).
• Dividends: $35 million (0.84/share).

4. Acquisitions & Store Expansion (FY 2025)

• Closed on 5 acquisitions: Lansing/Portage MI, Toledo OH, Melbourne/Cocoa FL, Davenport IA. Total consideration: $30 million.
• Added & remodeled 44 La-Z-Boy Furniture Galleries® stores; 15 new, 29 relocations/remodels.
• FY 2026 plans: Open 13–18 new stores, remodel/relocate 20–25, 80 Comfort Studios®, 300+ branded spaces.

5. Supply Chain & Cost Pressures

• Supply Chain Optimization: Closed cut-&-sew plant in Mexico; shifted production to U.S./other MX plants.
• Raw Materials: Cover from multiple global suppliers; foam from three U.S. suppliers; steel, lumber sensitive to inflation.
• Imports: Finished goods 6% of sales, 90% from Vietnam; ocean freight volatility persists.
• Tariffs: Minimal U.S. exposure due to USMCA compliance; casegoods tariffs stable.
• Seasonality: Q4 wholesale and Q3/Q4 retail peak; Q1 slowest.

6. Risk Factors to Watch

1. Cyclical consumer spending, housing market sensitivity, discretionary nature of furniture.
2. Competition from online, direct-to-consumer and big-box retailers.
3. Supply chain disruptions (tariffs, logistics, pandemics).
4. Cybersecurity threats.
5. Execution risks in international markets (e.g., U.K. impairment).

7. Investment Score & Conclusion

Investment Score: 6.5 / 10

La-Z-Boy remains a cash-flow generative, dividend-paying, brand-driven furniture leader. Recent Retail acquisitions and supply-chain streamlining are positive, but margin headwinds from tariffs and an international goodwill impairment dent near-term returns. We recommend a hold or moderate overweight for long-term investors focused on income and measured growth in durable consumer goods.