La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential
furniture, today announced initiatives designed to strengthen the
company and position it to thrive in the new external environment,
marked by COVID-19. Effective immediately, the company will
reduce its global workforce by about 10%, or approximately 850
employees, across its manufacturing, retail and corporate
locations, including the closure of its Newton, Mississippi
upholstery manufacturing facility. Production will be shifted
to available capacity at the company’s Dayton, Tennessee, Neosho,
Missouri, and Siloam Springs, Arkansas plants. These changes
are expected to leverage efficiencies across the business, improve
competitiveness and position the company to drive long-term value
for all stakeholders.
The company’s Newton upholstery plant, built in
1960, employs about 300 people, accounts for approximately 10% of
the La-Z-Boy branded business total upholstery production, and
manufactures La-Z-Boy recliners, motion sofas and classics
(high-leg recliners). The Newton-based integrated internal
supply functions will remain in operation. Approximately 170
individuals work across these areas and will remain with the
company.
Kurt L. Darrow, Chairman, President and Chief
Executive Officer of La-Z-Boy Incorporated, said: "The COVID-19
pandemic has had a far-reaching impact. We responded quickly
in March with our COVID-19 Action Plan to ensure the health, safety
and well-being of our employees, customers and the communities in
which we operate, while managing short-term liquidity. As a
result, we are confident we will emerge from the crisis with
strength and remain a leader in the industry. Since
restarting production at the majority of our plants at the end of
April, we have steadily increased production and continue to bring
back more employees to meet demand. As more states open and allow
our retail partners to re-engage with their customers, we
anticipate a stepped process of increasing production and bringing
additional employees back to work.”
Darrow added, “However, it is now appropriate to
leverage the efficiencies we have created across the company and
right size our business for the long term given the impact of
COVID-19 on the state of the economy, with wide-sweeping
unemployment levels and the uncertain timing of a full economic
recovery. With approximately 4.5 million square feet of remaining
highly productive manufacturing space across the La-Z-Boy
enterprise, we are confident we will continue to provide excellent
service to our dealers and their customers. Still, these are
difficult decisions to make and we deeply regret the impact they
will have on those employees who are affected. We greatly
appreciate the contribution of each employee and thank them for
their years of dedicated service.”
La-Z-Boy expects to incur approximately $5
million to $7 million in fiscal 2021 of one-time pre-tax charges
related to these moves, the majority of which will be realized in
the first quarter and will be excluded from Non-GAAP
results.
The company plans to release its fiscal 2020
fourth-quarter and full-year results after the close of market on
June 23, 2020.
Forward-looking Information
This news release contains, and oral statements
made from time to time by representatives of La‑Z‑Boy may contain,
“forward-looking statements.” With respect to all forward-looking
statements, the company claims the protection of the safe harbor
for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995.
Actual results could differ materially from
those we anticipate or project due to a number of factors,
including, but not limited to, potential risks and uncertainties
relating to the duration, severity and geographic spread of the
COVID-19 pandemic, actions that may be taken by governmental
authorities to contain the COVID-19 pandemic or to mitigate its
impact, the potential negative impact of COVID-19 on the global
economy, consumer demand and our supply chain, and the impact of
COVID-19 on the Company's financial condition, business operations
and liquidity. Other factors include: (a) changes in consumer
confidence and demographics; (b) the possibility of a recession;
(c) changes in the real estate and credit markets and their effects
on our customers, consumers and suppliers; (d) international
political unrest, terrorism or war; (e) volatility in energy and
other commodities prices; (f) the impact of logistics on imports
and exports; (g) tax rate, interest rate, and currency exchange
rate changes; (h) changes in the stock market impacting our
profitability and our effective tax rate; (i) operating factors,
such as supply, labor or distribution disruptions (e.g. port
strikes); (j) changes in legislation, including the tax code, or
changes in the domestic or international regulatory environment or
trade policies, including new or increased duties, tariffs,
retaliatory tariffs, trade limitations and termination or
renegotiation of bilateral and multilateral trade agreements
impacting our business; (k) adoption of new accounting principles;
(l) fires, severe weather or other natural events such as
hurricanes, earthquakes, flooding, tornadoes and tsunamis; (m) our
ability to procure, transport or import, or material increases to
the cost of transporting or importing, fabric rolls, leather hides
or cut-and-sewn fabric and leather sets domestically or abroad; (n)
information technology conversions or system failures and our
ability to recover from a system failure; (o) effects of our brand
awareness and marketing programs; (p) the discovery of defects in
our products resulting in delays in manufacturing, recall
campaigns, reputational damage, or increased warranty costs; (q)
litigation arising out of alleged defects in our products; (r)
unusual or significant litigation; (s) our ability to locate new
La-Z-Boy Furniture Galleries® stores (or store owners) and
negotiate favorable lease terms for new or existing locations; (t)
the ability to increase volume through our e-commerce initiatives;
(u) the impact of potential goodwill or intangible asset
impairments; and (v) those matters discussed in Item 1A of our
fiscal 2019 Annual Report on Form 10-K and other factors identified
from time to time in our reports filed with the Securities and
Exchange Commission (the “SEC”). We undertake no obligation
to update or revise any forward-looking statements, whether to
reflect new information or new developments or for any other
reason.
Additional Information
This news release is just one part of La-Z-Boy’s
financial disclosures and should be read in conjunction with other
information filed with the Securities and Exchange Commission,
which is available at:
https://lazboy.gcs-web.com/financial-information/sec-filings.
Investors and others wishing to be notified of future La-Z-Boy news
releases, SEC filings and quarterly investor conference calls may
sign up at: https://lazboy.gcs-web.com/.
Background Information
La-Z-Boy Incorporated is one of the world’s
leading residential furniture producers, marketing furniture for
every room of the home. The Upholstery segment companies are
England and La-Z-Boy. The Casegoods segment consists of three
brands: American Drew®, Hammary®, and Kincaid®. The
company-owned Retail segment includes 155 of the 355 La-Z-Boy
Furniture Galleries® stores. Joybird is an e-commerce
retailer and manufacturer of upholstered furniture.
The corporation’s branded distribution network
is dedicated to selling La-Z-Boy Incorporated products and brands,
and includes 355 stand-alone La-Z-Boy Furniture Galleries® stores
and 559 independent Comfort Studio® locations, in addition to
in-store gallery programs for the company’s Kincaid and England
operating units. Additional information is available at
http://www.la-z-boy.com/.
Contact: |
Kathy
Liebmann |
(734)
241-2438 |
kathy.liebmann@la-z-boy.com |
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