La-Z-Boy lays off 6,800, slashes compensation, closes plants, stores
La-Z-Boy Inc. announced Sunday it will temporarily close all of its manufacturing plants, stores and regional distribution centers, and lay off about 6,800 employees amid the coronavirus crisis.
The furniture manufacturer, one of the top-60 employers in Michigan, also announced a 50% salary reduction for senior management and 25% for salaried employees, until further notice, the company said in a news release. The layoffs represent about 70% of its workforce.
Kurt L. Darrow, Chairman, president and CEO, said: "As we move through this unprecedented global pandemic, keeping our employees, customers and the communities in which we operate safe and healthy is of paramount importance.”
“Our leadership team has determined that more significant measures are necessary to protect the health and safety of our employees, and to assist in the national effort to combat the spread of COVID-19,” Darrow said.
“While the decisions made were extremely difficult and we deeply regret the impact they will have on those affected and their families, they are deemed necessary as we face one of the most challenging periods in our history.”
The board of directors will lose the cash portion of compensation, the company will freeze its 401(k) match, eliminate non-essential operating expenses and capital expenditures, and eliminate the June quarterly dividend and the share repurchasing program.
The company said all of the remedial measures are temporary.
But it called the end of the share repurchasing program “indefinite,” in an effort to provide financial flexibility.
In addition to about $200 million in capital on hand, “the company has proactively drawn $75 million under its $150 million revolving credit facility,” La-Z-Boy announced in the release.
“Throughout this period, La-Z-Boy has followed all government regulations and recommendations and implemented best-practice health and safety protocols,” Darrow said. “At this time, the company is not aware of any confirmed coronavirus cases across the enterprise and will continue our efforts to keep facilities clean and safe.”
The company will access the course of the pandemic “to determine the cadence to re-start operations and open stores,” he said.
“During this challenging time, we will focus on managing our business to preserve cash and to ensure the continued liquidity of the company," Darrow said. "Moving forward, with a strong financial foundation, the powerful La-Z-Boy brand, and our dedicated and hard-working people, I am confident the company will weather this storm.
“Although the path forward will likely be complex and unpredictable, we expect to return to full operations when the crisis lifts, and emerge with strength.”