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Published: 5/29/2003

La-Z-Boy weighs plant cuts

BY JULIE M. McKINNON
BLADE BUSINESS WRITER

MONROE - La-Z-Boy Inc., whose profits fell last fiscal year, may close some of its 12 wood-furniture plants as the industry is pressured by Asian-made bedroom, dining room, and other sets and the Monroe firm shifts to importing those products.

Further, slow sales may prompt La-Z-Boy to extend summer shutdowns at its 41 factories, which typically are idled for a week or two in July. Another week could be added this year, said Mark Stegeman, company treasurer. The company, with 17,000 employees, has no manufacturing facilities in northwest Ohio or southeast Michigan.

The unpleasant news was part of the Michigan furniture maker's report yesterday on its earnings for the fiscal year ending April 26. Its profit fell 41 percent to $36.3 million, or 64 cents a share, after it took a $60 million charge for new accounting standards. Profits were $61.8 million, or $1.02 cents a share, in the previous fiscal year.

In the last couple of years, 11 of La-Z-Boy's wood-furniture plants have been closed or converted to warehouses for imports where workers can perform tasks such as stripping furniture to match stains, Mr. Stegeman said.

“We're in the process right now of kind of evaluating where we are capacity-wise,” he said. The firm is to talk with industry analysts this morning, but gave no indication yesterday how many jobs might be cut.

The firm's stock wasn't affected during regular trading yesterday because the earnings report was issued after the 4 p.m. close of $20.38 a share on the New York Stock Exchange.

La-Z-Boy said its annual revenues were more than $2.1 billion, down 2 percent from less than $2.2 billion the year earlier. Sales would have been virtually flat, however, if a divestiture, some acquisitions, and other moves were taken into account, the company said.

One of the nation's largest furniture makers, La-Z-Boy warned that its sales and profits for the current quarter might be down “significantly.” Sales appeared to pick up last fall, but have faltered since then, Mr. Stegeman said.

“It's so unpredictable right now,” he said. “At this point, we find it very difficult to really forecast the demand.”

The company's fourth-quarter sales were down 9 percent from the same period a year ago, to $540.3 million. Yet fourth-quarter profits were up 1 percent to $25.1 million.

Severe winter weather and weak consumer confidence affected fourth-quarter results, which were compared with a strong quarter a year ago, the company said.

For the year, La-Z-Boy said it repurchased 5.5 million shares, or about 9 percent of outstanding shares, for $130 million.



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