Dive Brief:
- La-Z-Boy is “positioned relatively well” in terms of potential tariffs in 2025, President and CEO Melinda Whittington said on a Nov. 20 earnings call.
- Most of the company’s products are manufactured and assembled in the United States, according to Whittington. “Net versus competition, that puts us in a pretty good spot with some of the tariff expectations that are out there,” the CEO said.
- Although tariffs could impact goods from Mexico — where La-Z-Boy also has operations —the furniture company said it has previously mitigated duties by passing costs on to customers and then the end consumer through surcharges.
Dive Insight:
La-Z-Boy expressed confidence in its ability to handle tariffs before President-elect Donald Trump said he would levy a 25% tariff on imports from Canada and Mexico once in office. Trump also said he would implement an additional 10% tariff on China-made goods.
Although operations in Mexico may protect La-Z-Boy from the full brunt of tariffs on China-made goods, the retailer could be more vulnerable to duties placed on imports from the United States’ southern neighbor.
The company shifted upholstery production from Ramos Arizpe, Mexico, to other plants during fiscal 2024 as part of a supply chain consolidation effort.
A company spokesperson did not comment about how tariffs on Mexico-based goods would impact its outlook but reiterated that the company is well positioned due to its primarily U.S.-based production.
"[U.S.-based production] provides us with the ability for customization at scale with strong speed to market. We continue to work on our supply chain, as does the rest of the industry, to ensure we have a broad global sourcing base," the spokesperson said.
La-Z-Boy would still be impacted by additional tariffs on China-made goods as well. While the majority of its products are finished in North America, the company purchases more than half of its cover fabric from suppliers in countries such as China, the U.S. and Brazil, according to its 2024 annual report.
“We purchase the remainder of our cut and sewn leather and fabric kits from three main suppliers primarily from China and Vietnam,” the report says. “We use these suppliers primarily for their product design capabilities and to balance our mix of in-sourced and out-sourced production.”
