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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 29, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
COMMISSION FILE NUMBER 1-9656
LA-Z-BOY INCORPORATED
(Exact name of registrant as specified in its charter)
Michigan
38-0751137
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One La-Z-Boy Drive,Monroe,Michigan48162-5138
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (734) 242-1444
None
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading  Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 Par ValueLZBNew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☒  No  ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes  ☒   No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
                     Yes     No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassOutstanding at November 23, 2022
Common Stock, $1.00 Par Value43,136,048


LA-Z-BOY INCORPORATED
FORM 10-Q SECOND QUARTER OF FISCAL 2023
TABLE OF CONTENTS
Page
Number
2

PART I - FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
Quarter EndedSix Months Ended
(Unaudited, amounts in thousands, except per share data)10/29/202210/23/202110/29/202210/23/2021
Sales$611,332 $575,889 $1,215,423 $1,100,672 
Cost of sales350,596 352,594 713,227 675,295 
Gross profit260,736 223,295 502,196 425,377 
Selling, general and administrative expense198,853 169,182 387,670 336,893 
Operating income 61,883 54,113 114,526 88,484 
Interest expense(119)(242)(278)(553)
Interest income1,138 106 1,612 223 
Other income (expense), net183 1,031 228 938 
Income before income taxes63,085 55,008 116,088 89,092 
Income tax expense16,306 14,650 30,369 23,468 
Net income46,779 40,358 85,719 65,624 
Net income attributable to noncontrolling interests(702)(842)(1,154)(1,542)
Net income attributable to La-Z-Boy Incorporated$46,077 $39,516 $84,565 $64,082 
Basic weighted average common shares43,104 44,251 43,098 44,662 
Basic net income attributable to La-Z-Boy Incorporated per share$1.07 $0.89 $1.96 $1.43 
Diluted weighted average common shares43,182 44,423 43,174 44,915 
Diluted net income attributable to La-Z-Boy Incorporated per share$1.07 $0.89 $1.96 $1.43 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter EndedSix Months Ended
(Unaudited, amounts in thousands)10/29/202210/23/202110/29/202210/23/2021
Net income$46,779 $40,358 $85,719 $65,624 
Other comprehensive income (loss)
Currency translation adjustment(3,353)(9)(5,513)(1,251)
Net unrealized loss on marketable securities, net of tax(289)(498)(203)(50)
Net pension amortization, net of tax37 57 73 119 
Total other comprehensive income (loss)(3,605)(450)(5,643)(1,182)
Total comprehensive income before noncontrolling interests43,174 39,908 80,076 64,442 
Comprehensive (income) loss attributable to noncontrolling interests(298)(722)(231)(992)
Comprehensive income attributable to La-Z-Boy Incorporated$42,876 $39,186 $79,845 $63,450 
                        
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4

LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Unaudited, amounts in thousands, except par value)10/29/20224/30/2022
Current assets
Cash and equivalents$204,626 $245,589 
Restricted cash3,268 3,267 
Receivables, net of allowance of $3,946 at 10/29/2022 and $3,406 at 4/30/2022
160,035 183,747 
Inventories, net342,728 303,191 
Other current assets146,656 215,982 
Total current assets857,313 951,776 
Property, plant and equipment, net269,240 253,144 
Goodwill203,459 194,604 
Other intangible assets, net38,640 33,971 
Deferred income taxes – long-term10,633 10,632 
Right of use lease assets404,495 405,755 
Other long-term assets, net73,760 82,207 
Total assets$1,857,540 $1,932,089 
Current liabilities
Accounts payable$106,614 $104,025 
Lease liabilities, short-term77,100 75,271 
Accrued expenses and other current liabilities367,008 496,393 
Total current liabilities550,722 675,689 
Lease liabilities, long-term353,444 354,843 
Other long-term liabilities69,588 81,935 
Shareholders' equity
Preferred shares – 5,000 authorized; none issued
  
Common shares, $1.00 par value – 150,000 authorized; 43,136 outstanding at 10/29/22 and 43,089 outstanding at 4/30/22
43,136 43,089 
Capital in excess of par value347,036 342,252 
Retained earnings495,003 431,181 
Accumulated other comprehensive loss(10,517)(5,797)
Total La-Z-Boy Incorporated shareholders' equity874,658 810,725 
Noncontrolling interests9,128 8,897 
Total equity883,786 819,622 
Total liabilities and equity$1,857,540 $1,932,089 


The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
(Unaudited, amounts in thousands)10/29/202210/23/2021
Cash flows from operating activities
Net income$85,719 $65,624 
Adjustments to reconcile net income to cash provided by operating activities
(Gain)/loss on disposal of assets1 (3,151)
(Gain)/loss on sale of investments77 (218)
Provision for doubtful accounts694 (944)
Depreciation and amortization19,258 17,785 
Amortization of right-of-use lease assets38,580 34,368 
Equity-based compensation expense5,079 6,354 
Change in deferred taxes27 170 
Change in receivables19,550 (33,937)
Change in inventories(36,771)(59,336)
Change in other assets4,890 (20,666)
Change in payables8,027 22,683 
Change in lease liabilities(39,380)(34,598)
Change in other liabilities(74,797)21,300 
Net cash provided by operating activities30,954 15,434 
Cash flows from investing activities
Proceeds from disposals of assets63 3,998 
Capital expenditures(40,442)(33,314)
Purchases of investments(4,714)(21,426)
Proceeds from sales of investments12,660 22,666 
Acquisitions(11,705)(4,396)
Net cash used for investing activities(44,138)(32,472)
Cash flows from financing activities
Payments on debt and finance lease liabilities(61)(60)
Holdback payments for acquisition purchases(5,000)(13,500)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes(1,711)(1,870)
Repurchases of common stock(5,004)(50,640)
Dividends paid to shareholders(14,161)(13,398)
Dividends paid to minority interest joint venture partners (1)
 (1,260)
Net cash used for financing activities(25,937)(80,728)
Effect of exchange rate changes on cash and equivalents(1,841)(330)
Change in cash, cash equivalents and restricted cash(40,962)(98,096)
Cash, cash equivalents and restricted cash at beginning of period248,856 394,703 
Cash, cash equivalents and restricted cash at end of period$207,894 $296,607 
Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables$4,251 $7,900 
(1)Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited, amounts in thousands)Common
Shares
Capital in Excess of
Par Value
Retained
Earnings
Accumulated Other
Comprehensive
Loss
Non-Controlling
Interests
Total
At April 30, 2022$43,089 $342,252 $431,181 $(5,797)$8,897 $819,622 
Net income— — 38,488 — 452 38,940 
Other comprehensive loss— — — (1,519)(519)(2,038)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax151 (194)(1,660)— — (1,703)
Repurchases of 204 shares of common stock
(204) (4,800)— — (5,004)
Stock option and restricted stock expense— 1,417 — — — 1,417 
Dividends declared and paid ($0.165/share)
— — (7,097)— — (7,097)
Dividends declared not paid ($0.165/share)
— — (45)— — (45)
At July 30, 2022$43,036 $343,475 $456,067 $(7,316)$8,830 $844,092 
Net income— — 46,077 — 702 46,779 
Other comprehensive loss— — — (3,201)(404)(3,605)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax100 (101)(7)— — (8)
Stock option and restricted stock expense— 3,662 — — — 3,662 
Dividends declared and paid ($0.165/share)
— — (7,064)— — (7,064)
Dividends declared not paid ($0.165/share)
— — (70)— — (70)
At October 29, 2022$43,136 $347,036 $495,003 $(10,517)$9,128 $883,786 
                                

(Unaudited, amounts in thousands)Common
Shares
Capital in Excess of
Par Value
Retained
Earnings
Accumulated Other
Comprehensive
Income (Loss)
Non-Controlling
Interests
Total
At April 24, 2021$45,361 $330,648 $399,010 $(1,521)$8,648 $782,146 
Net income— — 24,566 — 700 25,266 
Other comprehensive loss— — — (302)(430)(732)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax181 291 (2,700)— — (2,228)
Repurchases of 919 shares of common stock
(919)(530)(34,191)— — (35,640)
Stock option and restricted stock expense— 2,460 — — — 2,460 
Dividends declared and paid ($0.15/share)
— — (6,777)— — (6,777)
Dividends declared not paid ($0.15/share)
— — (46)— — (46)
At July 24, 2021$44,623 $332,869 $379,862 $(1,823)$8,918 $764,449 
Net income— — 39,516 — 842 40,358 
Other comprehensive income— — — (330)(120)(450)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax11 353 (6)— — 358 
Purchases of 434 shares of common stock
(434)(196)(14,370)— — (15,000)
Stock option and restricted stock expense— 3,894 — — — 3,894 
Dividends declared and paid ($0.15/share) (1)
— — (6,621)— (1,260)(7,881)
Dividends declared not paid ($0.15/share)
— — (46)— — (46)
At October 23, 2021$44,200 $336,920 $398,335 $(2,153)$8,380 $785,682 
    
(1)Non-controlling interests include dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7

LA-Z-BOY INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries (collectively, the "Company"). We derived the April 30, 2022 balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles, which we applied on a basis consistent with those reflected in our fiscal 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), but the information does not include all of the disclosures required by generally accepted accounting principles. In management’s opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April 29, 2023.

At October 29, 2022, we owned investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes. Each of these companies is a variable interest entity and we have not consolidated their results in our financial statements because we do not have the power to direct those activities that most significantly impact their economic performance and, therefore, are not the primary beneficiary.

Accounting pronouncements adopted in fiscal 2023

We did not adopt any Accounting Standards Updates ("ASUs") in fiscal 2023.

Accounting pronouncements not yet adopted
The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASUDescriptionAdoption Date
ASU 2021-08Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities From Contracts With CustomersFiscal 2024

Note 2: Acquisitions

None of the below acquisitions were significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented. All of our provisional purchase accounting estimates for the acquisitions completed in fiscal 2023 are based on the information and data available to us as of the time of the issuance of these financial statements, and in accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within the first 12 months following the acquisition as we gain additional data.

Each of the following Retail acquisitions completed in fiscal 2023 and 2022 reflect a core component of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) in suitable geographic markets, alongside the existing La-Z-Boy Furniture Galleries® network.

Spokane, Washington acquisition

On September 26, 2022, we completed our acquisition of the Spokane, Washington business that operates one independently owned La-Z-Boy Furniture Galleries® store and one distribution center for $4.7 million, subject to customary adjustments. We paid total cash of $4.0 million during the second quarter of fiscal 2023 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in the Spokane, Washington market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived
8

intangible asset of $1.2 million related to these reacquired rights. We also recognized $3.0 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

Denver, Colorado acquisition

On July 18, 2022, we completed our acquisition of the Denver, Colorado business that operates five independently owned La-Z-Boy Furniture Galleries® stores and one distribution center for $10.1 million, subject to customary adjustments. We paid total cash of $7.7 million in the first and second quarters of fiscal 2023 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in the Denver, Colorado market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $4.3 million related to these reacquired rights. We also recognized $7.6 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

Prior Year Acquisitions

On August 16, 2021, we completed our acquisition of the Long Island, New York business that operates three independently owned La-Z-Boy Furniture Galleries® stores for $4.5 million, subject to customary adjustments. We paid $4.4 million of cash during the second quarter of fiscal 2022 and the remaining consideration includes forgiveness of accounts receivable and payments based on working capital adjustments.

Prior to this acquisition, we licensed to the counterparty the exclusive right to own and operate La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in the Long Island, New York market, and we reacquired these rights when we consummated the transaction. The reacquired rights are indefinite-lived because our Retailer Agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. We recorded an indefinite-lived intangible asset of $0.8 million related to these reacquired rights. We also recognized $4.4 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies. For federal income tax purposes, we will amortize and appropriately deduct all of the indefinite-lived intangible assets and goodwill assets over 15 years.

Note 3: Cash and Restricted Cash

We have restricted cash on deposit with a bank as collateral for certain letters of credit. All our letters of credit have maturity dates within the next twelve months, but we expect to renew some of these letters of credit when they mature.

(Unaudited, amounts in thousands)10/29/202210/23/2021
Cash and cash equivalents$204,626 $293,341 
Restricted cash3,268 3,266 
Total cash, cash equivalents and restricted cash$207,894 $296,607 
9

Note 4: Inventories

A summary of inventories is as follows:

(Unaudited, amounts in thousands)10/29/20224/30/2022
Raw materials$149,788 $146,896 
Work in process28,550 36,834 
Finished goods223,215 185,870 
FIFO inventories401,553 369,600 
Excess of FIFO over LIFO(58,825)(66,409)
Total inventories$342,728 $303,191 

Note 5: Goodwill and Other Intangible Assets

We have goodwill on our consolidated balance sheet as follows:

Reportable Segment/UnitReporting UnitRelated Acquisition
Wholesale SegmentLa-Z-Boy United KingdomWholesale business in the United Kingdom and Ireland
Wholesale SegmentLa-Z-Boy United Kingdom ManufacturingLa-Z-Boy United Kingdom Manufacturing (Furnico)
Retail SegmentRetail
La-Z-Boy Furniture Galleries® stores
Corporate & Other JoybirdJoybird

The following table summarizes changes in the carrying amount of our goodwill by reportable segment:

(Unaudited, 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(1,540)(203) (1,743)
Balance at October 29, 2022 (1)
$18,667 $129,346 $55,446 $203,459 
(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/UnitIntangible AssetUseful Life
Wholesale SegmentPrimarily acquired customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland
Amortizable over useful lives that do not exceed 15 years
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 & Other
Joybird® trade name
Amortizable over eight-year useful life

10

The following summarizes changes in our intangible assets:

(Unaudited, 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  5,480  5,480 
Amortization (399) (103)(502)
Translation adjustment  (152)(157)(309)
Balance at October 29, 2022$1,155 $2,993 $32,647 $1,845 $38,640 

We test indefinite-lived intangibles and 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 an asset might be impaired. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired.

Note 6: Investments
We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan. We also hold investments of two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes (refer to Note 15, Fair Value Measurements). Our short-term investments are included in other current assets and our long-term investments are included in other long-term assets on our consolidated balance sheet.

The following summarizes our investments:

(Unaudited, amounts in thousands)10/29/20224/30/2022
Short-term investments:
Marketable securities$10,740 $16,022 
Held-to-maturity investments1,213 1,337 
Total short-term investments11,953 17,359 
Long-term investments:
Marketable securities22,662 26,599 
Cost basis investments7,579 7,579 
Total long-term investments30,241 34,178 
Total investments$42,194 $51,537 
Investments to enhance returns on cash$18,997 $27,239 
Investments to fund compensation/retirement plans13,118 14,219 
Other investments10,079 10,079 
Total investments$42,194 $51,537 

The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type:

10/29/20224/30/2022
(Unaudited, amounts in thousands)Gross
Unrealized 
Gains
Gross
Unrealized 
Losses
Fair ValueGross
Unrealized 
Gains
Gross
Unrealized 
Losses
Fair Value
Equity securities$1,105 $(94)$13,669 $1,448 $(86)$13,905 
Fixed income22 (1,072)24,584 28 (809)33,521 
Other1,210  3,941 1,250  4,111 
Total securities$2,337 $(1,166)$42,194 $2,726 $(895)$51,537 
11

The following table summarizes sales of marketable securities:
Quarter EndedSix Months Ended
(Unaudited, amounts in thousands)10/29/202210/23/202110/29/202210/23/2021
Proceeds from sales$8,418 $11,938 $12,664 $21,653 
Gross realized gains22 287 49 554 
Gross realized losses(70)(325)(126)(336)

The following is a summary of the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity:
(Unaudited, amounts in thousands)10/29/2022
Within one year$10,736 
Within two to five years11,336 
Within six to ten years586 
Thereafter1,926 
Total $24,584 

Note 7: Accrued Expenses and Other Current Liabilities
(Unaudited, amounts in thousands)10/29/20224/30/2022
Payroll and other compensation$50,793 $62,373 
Accrued product warranty, current portion17,814 16,436 
Customer deposits137,157 183,233 
Deferred revenue72,587 139,006 
Other current liabilities88,657 95,345 
Accrued expenses and other current liabilities$367,008 $496,393 
The decrease in customer deposits and deferred revenue during the first six months of fiscal 2023 was primarily a result of working down the significant backlog built up in prior periods back to pre-pandemic levels.

Note 8: Product Warranties

We accrue an estimated liability for product warranties when we recognize revenue on the sale of warrantied products. We estimate future warranty claims on product sales based on our historical claims experience and periodically adjust the provision to reflect changes in actual experience. We incorporate repair costs into our liability estimates, including materials, labor and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product to our customers. Over 90% of our warranty liability relates to our Wholesale reportable segment as we generally warrant our products against defects for one to three years on fabric and leather, from one to ten years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames, unless otherwise noted in the warranty. Additionally, our Wholesale segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty against defects on a majority of Joybird products, which are a part of our Corporate and Other results. For all our manufacturer warranties, the warranty period begins when the consumer receives our product. We use considerable judgment in making our estimates, and we record differences between our actual and estimated costs when the differences are known.

A reconciliation of the changes in our product warranty liability is as follows:
Quarter EndedSix Months Ended
(Unaudited, amounts in thousands)
10/29/2022
10/23/202110/29/2022 (1)10/23/2021
Balance as of the beginning of the period$27,516 $24,433 $27,036 $23,636 
Accruals during the period8,453 6,673 16,279 13,887 
Settlements during the period(7,612)(6,038)(14,958)(12,455)
Balance as of the end of the period$28,357 $25,068 $