Problems with corporate sales and profits continue to mount in northwest Ohio and southeast Michigan yesterday as two more firms slashed quarterly forecasts and then watched their stock prices go on a roller coaster ride.
Furniture maker La-Z-Boy, Inc., Monroe, which originally expected sales to drop slightly from the $534 million a year earlier, is now predicting a fall of at least 10 percent in its fiscal second quarter.
Also, the nation's second-largest furniture maker anticipates red ink of 17 to 21 cents a share for the period ending Oct. 29.
Cooper Tire & Rubber Co., Findlay, signaled that profits will be lower than expected but didn't indicate by how much. The firm in late August forecast 10 to 14 cents a share.
The dual announcements follow similar warnings in recent days at auto industry supplier Dana Corp., bottle-maker Owens-Illinois Inc., and tableware manufacturer Libbey, Inc., all of Toledo.
"There is a considerable amount of caution being observed right now," said Randy Leffler, a spokesman for the Ohio Manufacturers' Association. He blamed the expected impact this winter of Gulf Coast hurricanes on energy prices and problems in the auto industry.
As word of the announcement by La-Z-Boy spread, its shares fell nearly 7 percent, or 77 cents to $10.28 on the New York Stock Exchange before bargain- hunters drove the stock to $11.29, which was 24 cents higher than the closing price Monday. Nearly 2.5 million shares, or four times the usual volume, exchanged hands.
Trading was also heavy on the exchange in shares of Cooper Tire, which is part of the volatile auto industry sector. About 1.6 million shares, or more than twice the usual number, were bought and sold. The stock ended the day at $13.60, down 7 percent, or 95 cents.
In explaining the withdrawal of earlier profit estimate, Cooper Tire executives cited declining demand for replacement tires in North America and increases in cost of transportation, energy, and raw materials.
Both Cooper Tire and La-Z-Boy have struggled in recent weeks with the after-effects of hurricanes on the Gulf Coast.
The Findlay firm trimmed tire production by 30,000 in early October at two factories in Texarkana, Ark., and Tupelo, Miss., when it was unable to get sufficient quantities of chemical ingredients due to damage experienced by suppliers.
A shortage of a key chemical used in the production of foam cushions for chairs and sofas curtailed furniture production at La-Z-Boy when Gulf Coast suppliers of the ingredient cut deliveries to the company by half.
Additionally, Chief Executive Kurt Darrow said La-Z-Boy has been hurt by declining consumer confidence following Hurricanes Katrina and Rita.
Other U.S. furniture manufacturers are experiencing similar problems, said Keith Hughes, an analyst with SunTrust Robinson Humphrey Capital Markets in Atlanta.
The industry continues to struggle to adjust to inexpensive foreign imports -initially just dining room sets and other wood furniture but now sofas and upholstered products as well.
The domestic manufacturers are now faced with the fallout of declining consumer confidence, said Mr. Hughes, who is familiar with the industry but doesn't cover La-Z-Boy.
"Furniture is a very delayable purchase," he said. "You can put off buying this product if you feel uncertain about your financial situation."
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