La-Z-Boy closing Newton upholstery plant permanently

Published: Jun. 4, 2020 at 3:56 PM CDT
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Effective immediately, La-Z-Boy is closing its Newton, Miss., upholstery plant, which has been open for 60 years.

The company made the announcement Thursday. Since layoffs were announced in March, La-Z-Boy had helped the community by making face masks. But it says the COVID-19 pandemic hurt its bottom line and

the realignment is necessary to survive.

The company is reducing its global workforce by about 10%, or approximately 850 employees, across its manufacturing, retail and corporate locations, including the closure of its upholstery manufacturing facility in Newton.

Production will be shifted to available capacity at the company’s Dayton, Tenn., Neosho, Mo., and Siloam Springs, Ark., plants.

The company’s Newton upholstery plant, built in 1960, employs about 300 people, accounts for approximately 10% of the La-Z-Boy branded business total upholstery production, and manufactures La-Z-Boy recliners, motion sofas and classics (high-leg recliners).

The Newton-based integrated internal supply functions will remain in operation. Approximately 170 individuals work across these areas and will remain with the company.

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy Incorporated, said: "The COVID-19 pandemic has had a far-reaching impact. We responded quickly in March with our COVID-19 Action Plan to ensure the health, safety and well-being of our employees, customers and the communities in which we operate, while managing short-term liquidity. As a result, we are confident we will emerge from the crisis with strength and remain a leader in the industry. Since restarting production at the majority of our plants at the end of April, we have steadily increased production and continue to bring back more employees to meet demand. As more states open and allow our retail partners to re-engage with their customers, we anticipate a stepped process of increasing production and bringing additional employees back to work.”

Darrow added, “However, it is now appropriate to leverage the efficiencies we have created across the company and right size our business for the long term given the impact of COVID-19 on the state of the economy, with wide-sweeping unemployment levels and the uncertain timing of a full economic recovery. With approximately 4.5 million square feet of remaining highly productive manufacturing space across the La-Z-Boy enterprise, we are confident we will continue to provide excellent service to our dealers and their customers. Still, these are difficult decisions to make and we deeply regret the impact they will have on those employees who are affected. We greatly appreciate the contribution of each employee and thank them for their years of dedicated service.”

La-Z-Boy expects to incur approximately $5 million to $7 million in fiscal 2021 of one-time pre-tax charges related to these moves, the majority of which it says will be realized in the first quarter and will be excluded from Non-GAAP results.

The company plans to release its fiscal 2020 fourth-quarter and full-year results after the close of market on June 23, 2020.