CARTHAGE, Mo. – Diversified supplier Leggett & Platt plans to shave up to 15 facilities from its in its bedding operations production and distribution footprint and is looking to restructure its products strategy.
In addition to the bedding facilities, the company said it will consolidate a “small number of production facilities in home furniture and flooring products to better align capacity with regional demand and drive operating efficiencies.”
The company did not specify factory locations or the number of employees that would be impacted by the plan.
Leggett said it expects the restructuring to reduce annual sales by about $100 million and to generate between $40 million and $50 million earnings before interest and taxes on an annualized basis. The company said it also expects to receive between $60 million and $80 million in cash proceeds from the sale of facilities, with transactions largely complete by the end of 2025.
While specific details of the plants impacted and other changes weren’t outlined in the company’s announcement, Leggett’s most recent earnings report issued in October showed a 26% decline in net income, with an 17% drop in sales in the third quarter. Those results followed a second quarter report that showed bedding sales down 18% and net income drop 44% compared with the second quarter of 2022.
“We are taking actions to create a more focused, agile organization with a portfolio of products and operating footprint aligned with the markets we serve,” said Mitch Dolloff, Leggett & Platt president and CEO. “The bedding market has experienced unprecedented change in recent years, and the competitive landscape has continued to evolve. Reshaping our Bedding Products strategy is expected to better position us for long-term success as the leading provider of bedding solutions across the value chain.
“In addition, optimizing our operating footprint in both Bedding Products and Furniture, Flooring & Textile Products will reduce complexity and enhance the efficiency of our business. Looking forward, we expect to advance key product growth, improve profitability, and drive enhanced value for customers and shareholders.”
Leggett said it is reshaping its bedding products business “to focus on innovative, higher-value content, driven by customer and end-consumer needs.” The company said it is implementing a “restructuring plan” in its “bedding and to a lesser extent, in its furniture, flooring and textile products segment.”
The factory consolidation will create “a new and more efficient regional distribution network will support our ability to maintain sufficient manufacturing capacity in fewer, higher-output facilities to effectively serve our customers and better align with anticipated future market demand,” the company said.
Along with the restructuring plan, the company said it is withdrawing its previously outlined shareholder return goal of between 11% and 14%, along with financial targets. Revised targets will be issued later, the company said.
Leggett is scheduled to issue its fourth quarter and 2023 year-end financial results Feb. 8.
See also: Leggett & Platt turns to this inside executive as new chief financial officer