XML 32 R16.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

Goodwill and Other Intangible Assets | 12 Months Ended
--- | ---
Apr. 27, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We have goodwill on our consolidated balance sheet as follows:
Reportable Segment/Unit |  | Reporting Unit |  | Related Acquisition
Wholesale Segment |  | United Kingdom |  | Wholesale business in the United Kingdom and Ireland
Wholesale Segment |  | United Kingdom |  | La-Z-Boy United Kingdom Manufacturing (Furnico)
Retail Segment |  | Retail |  | La-Z-Boy Furniture Galleries® stores
Corporate and Other |  | Joybird |  | Joybird
We test goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that it may be impaired. Under US GAAP, we have the option to first assess qualitative factors in order to determine if it is more likely than not that the fair value of one of our reporting units is greater than its carrying value ("Step 0"). If the qualitative assessment leads to a determination that the reporting unit’s fair value is less than its carrying value, or if we elect to bypass the qualitative assessment altogether, we are required to perform a quantitative impairment test ("Step 1") by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value. Step 0 Assessment During our fiscal 2024 annual impairment test, we first assessed goodwill recoverability qualitatively using the Step 0 approach for each of our reporting units. For our qualitative assessment, we considered the most recent quantitative analysis, which was performed during the fourth quarter of fiscal 2023 for the United Kingdom and Joybird reporting units and during the fourth quarter of fiscal 2020 for the Retail reporting unit, including assumptions used, such as discount rates and tax rates, indicated fair values, and the amounts by which those fair values exceeded their carrying amounts. Further, we compared actual performance in fiscal 2024, along with future financial projections to the internal financial projections used in the prior quantitative analyses. Additionally, we considered various other factors including macroeconomic conditions, relevant industry and market trends, and factors specific to the Company that could indicate a potential change in the fair value of our reporting units. Lastly, we evaluated whether any events have occurred or any circumstances have changed since that time that would indicate that our goodwill may have become impaired since our last quantitative tests. Based on these qualitative assessments, we determined that it is more likely than not that the fair value of our Retail reporting unit exceeded its carrying value and as such, our goodwill for the Retail reporting unit was not considered impaired as of April 27, 2024 and the Step 1 quantitative goodwill impairment analysis was not necessary. However, for our United Kingdom and Joybird reporting units, we determined that the quantitative Step 1 goodwill impairment test was necessary as noted below. Step 1 Assessment United Kingdom Reporting Unit Due to a decline in the United Kingdom's financial performance in fiscal 2024, we deemed it necessary to perform the quantitative Step 1 goodwill impairment test for the United Kingdom reporting unit. To estimate the fair value of this reporting unit, we applied the income approach using discounted future cash flows. Sales and operating income projections were based on assumptions driven by the current economic conditions and assumed a 2.0% terminal growth rate. Other key assumptions used in the quantitative assessment of the reporting unit's goodwill were a discount rate of 10.0%, reflecting a market participant weighted average cost of capital, and a tax rate of 25.0%, which was specific to the United Kingdom reporting unit. Based on our testing, the fair value of the United Kingdom reporting unit exceeded its carrying value as of April 27, 2024 by approximately 28% and no impairment was recorded. Joybird Reporting Unit Due to a decline in Joybird's financial performance in fiscal 2024, we deemed it necessary to perform the quantitative Step 1 goodwill impairment test for the Joybird reporting unit. To estimate the fair value of this reporting unit, we applied a combination of the income approach and the market approach, weighted 75% and 25%, respectively. The income approach used discounted future cash flows in which sales and operating income projections were based on assumptions driven by current economic conditions and assumed a 2.0% terminal growth rate. Other key assumptions used in the discounted future cash flow model were a discount rate of 18.0%, reflecting a market participant weighted average cost of capital assuming Joybird would be sold as a stand-alone business, and a tax rate of 24.2%, which was specific to the Joybird reporting unit. The market approach used the guideline public company method, which derives a valuation from market multiples based on revenue for comparable public companies and was adjusted for a control premium based on recent merger and acquisition transaction data of target companies similar to the Joybird reporting unit. Based on our testing, the fair value of the Joybird reporting unit exceeded its carrying value as of April 27, 2024 by approximately 6% and no impairment was recorded. Further, a sensitivity analysis was performed on key assumptions used in the valuation, primarily the discount rate and terminal growth rate, and using a range of reasonable inputs, the fair value of the Joybird reporting unit either exceeded its carrying value or did not exceed its carrying value by an immaterial amount, for each of the various scenarios analyzed. However, changes to other valuation inputs or failure to meet our forecasts, in particular our sales and operating income projections, could reduce the fair value of the Joybird reporting unit and thus increase the possibility that our goodwill may be impaired in the future. The following table summarizes changes in the carrying amount of our goodwill by reportable segment:
(Amounts in thousands) |  | Wholesale Segment |  | Retail Segment |  | Corporate and Other |  | Total Goodwill |  |
Balance at April 30, 2022 (1) |  | $ | 20,207 |  |  | $ | 118,951 |  |  | $ | 55,446 |  |  | $ | 194,604 |  |  |
Acquisitions |  | — |  |  | 10,598 |  |  | — |  |  | 10,598 |  |  |
Translation adjustment |  | (5) |  |  | (189) |  |  | — |  |  | (194) |  |  |
Balance at April 29, 2023 (1) |  | 20,202 |  |  | 129,360 |  |  | 55,446 |  |  | 205,008 |  |  |
Acquisitions |  | — |  |  | 9,593 |  |  | — |  |  | 9,593 |  |  |
Translation adjustment |  | (117) |  |  | (31) |  |  | — |  |  | (148) |  |  |
Balance at April 27, 2024 (1) |  | $ | 20,085 |  |  | $ | 138,922 |  |  | $ | 55,446 |  |  | $ | 214,453 |  |  |
(1)Includes $26.9 million of accumulated impairment losses in Corporate and Other. We have intangible assets on our consolidated balance sheet as follows:
Reportable Segment |  | Intangible Asset |  | Useful Life
Wholesale Segment |  | Customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland |  | Amortizable over 15 year useful life
Wholesale Segment |  | American Drew® trade name |  | Indefinite-lived
Retail Segment |  | Reacquired rights to own and operate La-Z-Boy Furniture Galleries® stores |  | Indefinite-lived
Corporate and Other |  | Joybird® trade name |  | Amortizable over eight-year useful life
We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired. We test indefinite-lived intangible assets for impairment on an annual basis in the fourth quarter of our fiscal year, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Similar to our goodwill testing, we used the qualitative Step 0 approach to assess if it was more likely than not that the fair values of our indefinite-lived intangible assets were greater than their carrying values. Based on the same qualitative factors outlined above, we determined that it is more likely than not that the fair value of each of our indefinite-lived intangible assets exceeded their respective carrying value and as such, our indefinite-lived intangible assets were not considered impaired as of April 27, 2024, and the Step 1 quantitative impairment analysis was not necessary. The following summarizes changes in our intangible assets:
(Amounts in thousands) |  | Indefinite-Lived Trade Names |  | Finite-Lived Trade Name |  | Indefinite-Lived Reacquired Rights |  | Other Intangible Assets |  | Total Intangible Assets
Balance at April 30, 2022 |  | $ | 1,155 |  |  | $ | 3,392 |  |  | $ | 27,319 |  |  | $ | 2,105 |  |  | $ | 33,971 |
Acquisitions |  | — |  |  | — |  |  | 6,562 |  |  | — |  |  | 6,562 |
Amortization |  | — |  |  | (798) |  |  | — |  |  | (208) |  |  | (1,006) |
Translation adjustment |  | — |  |  | — |  |  | (142) |  |  | (10) |  |  | (152) |
Balance at April 29, 2023 |  | $ | 1,155 |  |  | $ | 2,594 |  |  | $ | 33,739 |  |  | $ | 1,887 |  |  | $ | 39,375 |
Acquisitions |  | — |  |  | — |  |  | 8,924 |  |  | — |  |  | 8,924 |
Amortization |  | — |  |  | (798) |  |  | — |  |  | (218) |  |  | (1,016) |
Translation adjustment |  | — |  |  | — |  |  | (23) |  |  | (9) |  |  | (32) |
Balance at April 27, 2024 |  | $ | 1,155 |  |  | $ | 1,796 |  |  | $ | 42,640 |  |  | $ | 1,660 |  |  | $ | 47,251 |
For our intangible assets recorded as of April 27, 2024, we estimate annual amortization expense to be $1.0 million for each of the two succeeding fiscal years, $0.4 million in the third succeeding fiscal year, and $0.2 million in the fourth and fifth succeeding fiscal years.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 350 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//350/tableOfContent + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration