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Supply Chain Uncertainty Prevents Busy La-Z-Boy From Getting Too Comfortable

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Furniture icon La-Z-Boy reported strong results for its most recent quarter and its leadership praised the work of its supply chain team during a difficult year. Like other companies, however, La-Z-Boy is uncertain of what surprises the future might bring.

CEO and Chairman Kurt L. Darrow this week reported that the company had produced a double-digit consolidated operating margin for the quarter ended Oct. 24, with all of its operating companies “posting excellent results.” Darrow said the Monroe, Mich.-based company enjoyed “record” demand driving consolidated sales of $459.1 million, thanks to homebound consumers focusing on home furnishings.

“In this stronger-than-expected demand environment,” Darrow noted, “our supply chain team is demonstrating agility and flexibility to significantly increase production capacity on both an opportunistic and permanent basis.” 

“It is all dependent on the global supply chain. And maybe … the foam is just the tip of the spear.”

However, La-Z-Boy also reported “record-level backlog” in the quarter. It explained that it “continues to increase manufacturing production capacity to meet demand, but a temporary supply shortage of polyurethane foam led to lower unit volume.”

Foam continues to be in short supply, and in an earnings call yesterday the CEO acknowledged that shortages could put a damper on La-Z-Boy’s manufacturing performance in the new quarter. “It is all dependent on the global supply chain,” Darrow said. “And maybe we don’t know, but maybe the foam is just the tip of the spear. Lots of challenges right now with containers, lots of costs going up. There is going to be huge pressure on demand from Christmas to Chinese New Year.

“And so what we are capable of and what we will be able to do [are] based on how all of our partners support us, which they have been great so far, and we haven’t had any hiccups to date other than the poly issue. But there is still some uncertainty, and there could be something. So we just don’t want to get over our skis here and assume everything is going to be perfect.”

This article from the Home Furnishings Association has background on the supply chain challenges facing La-Z-Boy and its industry peers.

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