La-Z-Boy to close 3 plants, convert 2 to support imports
By Furniture Today Staff -- Furniture Today, November 4, 2001
MONROE, Mich. — As its use of imported goods and components rises, La-Z-Boy will close three U.S. plants and convert two others to support distribution and import programs.
The move reduces domestic plant space by 1.25 million square feet and eliminates 570 jobs.
As a result, the company will take a charge of 13 cents per share in its second fiscal quarter ended Oct. 27, mostly to cover employee termination costs and writedowns of fixed assets and inventories. La-Z-Boy anticipates the plant closings and restructurings will generate $10 million in annual savings.
The company also raised its second-quarter earnings estimates, excluding the restructuring charge, from 22-27 cents per share to the low 30s. In the same quarter a year ago, the company earned 48 cents per share.
Two of the plants to be closed are case goods facilities: American Drew's Plant 12 in North Wilkesboro, N.C., and a Lea Inds. plant in Waynesville, N.C. The third is a La-Z-Boy upholstery plant in Florence, S.C., although the fabric-processing center there will continue to operate.
Two other case goods plants — another American Drew facility in North Wilkesboro and the Pennsylvania House plant in White Deer, Pa. — will cease production and convert to warehousing, sub-assembly and import-service operations.
"As our case goods companies continue to increase the ratio of imported components and finished products, our manufacturing space requirements can be reduced," said Jerry Kiser, La-Z-Boy president and chief executive officer. "The remaining domestic production of our case goods brands will be reallocated to our best, most efficient manufacturing facilities."
While La-Z-Boy's upholstery business continues to grow, Kiser said investment in new technology and increased productivity allowed the company to reduce its upholstery manufacturing space requirements without losing the ability to meet current and future demand.
The improved estimate for second-quarter operating income resulted from higher-than-anticipated sales in La-Z-Boy's higher-margin upholstery segment.
"In addition, our efforts to streamline the business, coupled with other cost-cutting efforts to date are providing further earnings improvement," Kiser said.
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