La-Z-Boy to Restructure Casegoods to Import Model
April 17, 2014,
MONROE, Mich.-La-Z-Boy will restructure its casegoods business, which represents approximately 10 percent of its revenue, by transitioning to an all-import model for its wood furniture.
During the second quarter of fiscal 2015, La-Z-Boy will discontinue casegoods production at its Hudson, N.C., facility. That facility currently produces bedroom furniture collections for the Kincaid and American Drew lines, which account for approximately 12 percent of the company's wood furniture business. The company will also exit the hospitality business as that furniture is also manufactured at the Hudson facility.
The company said it will market for sale its youth furniture business, Lea Industries, as it does not align with the company's long-term strategic objectives.
Kurt L. Darrow, chairman and CEO of La-Z-Boy, said, "We determined we cannot generate enough domestic volume to support the size facility we operate in North Carolina and believe this move will strengthen our positioning and performance in the segment. With strong manufacturing partners and a global supply chain team on the ground in Asia managing quality and logistics, we will seamlessly transition our remaining domestic bedroom product offerings."
As a result of the restructuring, La-Z-Boy will take pretax charges in the range of $13 million to $15 million, or $0.15 to $0.17 per share after tax, of which approximately 75 percent is expected to be non-cash. These charges will be principally for the impairment of certain long-lived assets and inventory and will also include severance, benefits and other associated costs. The majority of these charges will be incurred in the fourth quarter of the company's 2014 fiscal year, and the remainder will be taken in the first half of fiscal 2015. In addition, the Lea business will be reported as discontinued operations commencing with the fourth quarter of fiscal 2014.