FBI laying off 1,400
15% of U.S. workforce affected
By Furniture Today Staff -- Furniture Today, December 14, 2008
ST. LOUIS — Citing a soft retail market, Furniture Brands International said last week that it is eliminating about 1,400 management, professional and hourly positions, or about 15% of its domestic workforce.
“These reductions are an inevitable response to the recessionary environment and are necessary to strengthen Furniture Brands for the future,” said Ralph Scozzafava, chairman and CEO.
“By aligning our costs with anticipated lower sales volumes, we are positioning the company for 2009 and beyond. With the eventual return of historical consumer spending patterns, Furniture Brands will be well positioned to leverage our more efficient cost base into improved profitability,” he said.
No factories will close as a result of the announcement, said company spokesman John Hastings. He said the staff reductions take effect immediately.
Hastings said employees will get paid for all the time they put in with the company in addition to any vacation time they are owed. Individuals also will receive severance pay and are also eligible for COBRA health care coverage.
He declined to give a breakdown of the layoffs by brand. Furniture Brands is the parent of Broyhill, Lane, Thomasville, Henredon, Drexel Heritage and Maitland-Smith.
The company said severance costs associated with this reduction are expected to total between $8 million and $9 million, most of which will be reflected in the company's fourth quarter reported financial results.
The cash impact of the severance will be incurred in the first quarter of 2009. The elimination of management and professional positions not related to direct production costs is expected to result in annual, run-rate cost savings in excess of $20 million beginning in early 2009.
The elimination of direct production positions matches anticipated lower sales volumes stemming from soft market conditions and is expected to lessen the company's exposure to factory down days, the company said. Through the first nine months of 2008, factory down day costs totaled $14 million.
“We remain focused on managing our strong balance sheet during this challenging period,” said Scozzafava.
“As a result of our stringent efforts to manage cash, we are able to allocate resources between those strategic plan initiatives, capital spending projects, and debt repayment opportunities that provide the greatest benefit.”
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Furniture Brands to lay off 1,400
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