La-Z-Boy Cuts 240 Jobs

Rhea County's largest employer cut hundreds of jobs today and now a number of families are trying to figure out how to survive.

We spoke with a number of La-Z-Boy employees who told us they showed up to work today thinking this was just a normal day, but several hours later they found out that 240 employees lost their jobs and now they're just trying to figure out what to do next.

At first glance it seems like business as usual outside of the La-Z-Boy plant in Dayton, but inside 240 employees, including Steve Mow, lost their jobs today.

"Came in and worked an hour, they called us into the break room, all the people that was going to lose their job, basically asked if we had our badge and to turn it in," Mow says.

Mow says he turned his badge in along with his brother and a number of his friends.

"I don't know what i'm going to do now, I just signed a lease on my new place I've got, I've got a car and a weekly payment and all this other stuff," Mow's brother, Joseph, says.

"They always talked about not to worry if we heard any laid off but they didn't say that today," Jesus Rosario, Mow's friend, says.

And now Mow and longtime employees like Josh Rhodes are worrying.

"We'll lose everything we own, it's plain and simple and I hope this is on the news, I hope they see how this is affecting people," Rhodes says.

"I got three children at home to feed, family and a bunch of bills, need a job," Mow says.

We spoke with one La-Z-Boy employee who told me he's worked here for fourteen years and when he showed up to work today he found out he was fired and he told us he would have gone on camera but told us that La-Z-Boy threatened to take away his severance if he spoke with us.

But the Vice President of Dayton's La-Z-Boy tells us that's not true. He declined to go on camera but says these cuts came after a major decrease in demand for luxury chairs...chairs that Mow won't be making anymore leaving his future up in the air.

"Uh, a little nervous, anxiety, basically I need a good job," Mow says.

Earlier this year the CEO of La-Z-Boy issued a statement that said they would be shutting down all domestic cutting and sewing operations and would be sending those jobs to a plant in Mexico. But today the Vice President of Rhea County's plant told me that these cuts have nothing to do with that announcement.

A news release from its corporate headquarters La-Z-Boy says it will:

• Immediately reduce its headcount by about 10%, or approximately 850 employees, across all levels of the company;
• Close 15 to 20 La-Z-Boy Furniture Galleries® stores, primarily dealer owned, over the next 90 to 120 days, due to the overall tightening of the credit markets;
• Significantly reduce its planned fiscal 2009 capital expenditures from approximately $27 million to approximately $18 million to $20 million; and
• Aggressively reduce its overall operating expenses and inventories to be in alignment with today's volumes.

Kurt Darrow, La-Z-Boy's President and Chief Executive Officer, said, "Given the turmoil in the global financial markets coupled with declining consumer confidence and tightening credit, the furniture industry is in the midst of an unprecedented downward spiral as the consumer reacts to these events by postponing home furnishings and other discretionary purchases. Based on the magnitude of the change in our incoming order rates, we are taking immediate action to aggressively reshape our business so that our costs and inventories more accurately reflect the reality of the current operating climate. While these decisions are difficult to make and we regret the impact they will have on those affected and their families, they are necessary to structure our company to operate more efficiently in what has rapidly turned in recent weeks into a much weaker demand environment. In the short-term, we will focus on managing the business for cash generation and ensuring the continued liquidity of our corporation."

La-Z-Boy stock closed today at $5.03... down 2.9% from yesterday's close of $5.18. See La-Z-Boy Stock Info HERE.

Darrow added, "Although we are making these significant changes and curtailing our expenditures on a number of projects that do not contribute immediately to the bottom line, we are continuing to move forward with our investment in several major initiatives that are key to our profitable growth. These include our new cut-and-sew facility in Mexico, which is scheduled to open in January of 2009, and the continued warehouse consolidation process of the La-Z-Boy Furniture Galleries® dealer base. Importantly, we have every confidence that both the strength of our brand and maintaining a strong financial position will allow us to weather the unprecedented storm that has had an adverse effect on our industry."

Severance and other benefit costs will result in an approximate $1.5 million to $2.5 million pre-tax charge, the majority of which will be incurred in the third quarter of the company's 2009 fiscal year.