DETROIT — La-Z-Boy Inc. plans to close three plants, consolidate three others into one facility and eliminate 500
jobs, or 4.4 percent of its overall work force, in a restructuring plan that the furniture company says will eventually save $11 million a year.
The company plans to close upholstery manufacturing facilities in Lincolnton, N.C., and Iuka, Miss., and a rough mill lumber operation in North Wilkesboro, N.C.
The Lincolnton plant employs 250 people. The Iuka facility, which produces sofas, love seats and upholstered chairs, has 150 workers.
The Monroe-based company said it would consolidate its North Wilkesboro operation into its Hudson, N.C., facility and consolidate three operations into one at its Taylorsville, N.C., site. Those moves, combined with changes in its corporate structure, will cut about 100 jobs, the company said.
La-Z-Boy has 11,300 employees, including 8,000 employees in its North American upholstery manufacturing facilities.
Laura Champine, an analyst with Memphis, Tenn.-based Morgan Keegan and Co. Inc., said Thursday’s announcement was necessary and not unexpected. La-Z-Boy has been shutting down plants as sales have declined for several years _ as have its competitors’.
“They’re in an industry where factories are shutting down just about every day, with continued overexpansion in Asia where there’s so much competition on prices in particular,” she said. “Producers have to very aggressive in pricing. It’s just not effective to keep making furniture in these small domestic plants.”
The slow housing market, along with a drop in mortgages and home-equity loans, also may accelerate the trend of closing plants, Champine said.
Kurt Darrow, La-Z-Boy’s president and chief executive officer, said in a statement he regretted the effect of Thursday’s actions on employees and their families but the moves are necessary for the company to remain competitive. La-Z-Boy will provide outplacement assistance to affected employees, he said.
The company expects to take a pretax charge of $9 million to $10 million, or 11 cents to cents 12 per share, mainly in its fourth fiscal quarter which ends in April.
La-Z-Boy reported a loss of 15 cents a share in its fiscal third quarter that ended Jan. 27. Sales totaled $403.9 million, down 9.6 percent from the same period a year earlier.
Shares rose 46 cents, or 3.4 percent, to close at $14.01 on the New York Stock Exchange. The stock has ranged from $11.25 to $17.25 over the past year.
