La-Z-Boy Announces Job Cuts, Store Closings

November 6, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on November 2008 In response to slumping sales, La-Z-Boy, Monroe, Mich., announced a series of cost-cutting moves Thursday that include cutting 850 jobs, shutting 15 to 20 La-Z-Boy Furniture Galleries stores and trimming 2009 capital expenditures by as much as $9 million.

President and CEO Kurt Darrow said declining consumer confidence, tightening credit and other economic factors have forced the company to move aggressively to bring costs in line with slumping orders.

“In the short-term, we will focus on managing the business for cash generation and ensuring the continued liquidity of our corporation,” he said. “Importantly, we have every confidence that both the strength of our brand and maintaining a strong financial position will allow us to weather the unprecedented storm that has had an adverse effect on our industry.”

Thursday’s announcement said employee headcount will be reduced by 10 percent, which will result in $1.5 million to $2.5 million in severance-related costs in the company’s third quarter. La-Z-Boy is slated to report second-quarter numbers on Nov. 19.

The closings of 15 to 20 mostly dealer-owned stores will take place over the next 90 to 120 days. But, while the company is cutting capital expenditures in 2009, it won’t curtail investments that are expected to deliver savings, such as a new cut-and-sew factory in Mexico that is set to open in January. The company is also continuing to move ahead with the consolidation of warehouses supporting its La-Z-Boy Furniture Galleries dealer base.