June 18, 2019 / 8:54 PM / a month ago

Furniture retailer La-Z-Boy says more U.S. tariffs may lead to price hikes

(Reuters) - American furnishing retailer La-Z-Boy Inc said on Tuesday a further rise in U.S. tariffs on Chinese imports would lead to higher raw material costs in fiscal 2020 and may likely force it to raise product prices.

The United States has threatened tariffs on another $300 billion worth of Chinese goods, after hiking levies on $200 billion worth of imports last month, including on furniture.

The company, whose shares fell 9% after reporting lower-than-expected quarterly sales, said it currently gets almost all of its leather cut-and-sewn sets and fabrics as well as 25% of its casegoods (wood furniture) products from China.

“We expect that certain raw materials and parts may be subject to higher duties and tariffs in fiscal 2020,” the company said in a regulatory filing, adding that it was working to shift sourcing out of China.

“In response to these increases, we may increase our selling prices to our customers or assess a material or duty surcharge during periods...”

La-Z-Boy’s sales in the fourth quarter rose 8% to $453.8 million, but missed analysts’ average estimate of $456.8 million, mainly due to weaker demand in its wholesale upholstery and casegoods segments.

“With the hangover of tariffs and geopolitical uncertainty, it is unclear if these business conditions will continue further into our fiscal 2020,” Chief Executive Officer Kurt Darrow said in a statement.

Last week, home furnishing retailer RH unveiled steps to offset the impact of tariffs, including selective price hikes and moving certain productions out of China.

Reporting by Soundarya J in Bengaluru; Editing by Arun Koyyur

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