By Liz White, UT staffMonroe, Michigan-Following recent announcements regarding supply chain issues and their impact to earnings, two furniture firms have updated their predictions of the effects of these events. La-Z-Boy Inc. announced 16 Nov that sales for the second quarter, ending 29 Oct 2005, are expected to be down in the low teen-digit range versus last year’s Q2 and lower than the low single-digit range decrease originally forecast. La-Z-Boy expects to post a per share loss in the range of $0.17 to $0.21. This includes $0.09 to $0.10 per share of a previously announced restructuring charge for closing its Waterloo, Ontario plant.Factors affecting the firm’s results include an industry-wide supply chain issue primarily relating to the allocation of polyurethane foam,” said La-Z-Boy president and ceo Kurt Darrow. This limits La-Z-Boy’s production efficiency, increases raw materials costs, and constrains its ability to meet customer demand, he added. Darrow also listed a substantial drop in consumer confidence following Hurricanes Katrina and Rita as well as continued interest rate increases and high energy prices as contributing to the group’s forecast sales decline.”The supply chain issues are due to the shortage of polyurethane foam after our main supplier put its customers on 50-percent allocation due to the industry-wide shortage of TDI (toluene diisocyanate), a key component of foam,” Darrow continued. Noting that all four US TDI plants are back in operation following surrounding-area hurricane damage, Darrow said they will begin producing at full capacity shortly. In the meantime, he said, we continue to work diligently with our foam suppliers to source the greatest amount possible.” Darrow concluded that the TDI situation, remains fluid but appears to be stabilizing, … we should see weekly improvement in the supply of polyurethane allowing us to gradually increase our production.” “
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