Leggett & Platt is implementing a restructuring plan primarily in its bedding products segment and to a lesser extent, in its furniture, flooring and textile products segment.
In response to evolving markets, the company is taking actions to improve manufacturing and distribution efficiency, advance its product strategy and further support customer needs. These actions are expected to generate $40 million to $50 million in EBIT benefit on an annualized run-rate basis when fully implemented in late 2025.
“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,” says company President and CEO Mitch Dolloff.” 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 and 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.”
The major bedding products initiatives that are part of the restructuring plan include:
- Refocusing strategy: The brand is continuing to reshape it bedding products business to focus on innovative, higher-value content, driven by customer and end-consumer needs. “We are proud of our long history of providing product solutions our customers value and see further opportunities to do so in both innerspring and specialty foam, from components to private label finished goods,” the company said in a release.
- Optimizing manufacturing and distribution footprint: The company plans to consolidate certain locations across the bedding products segment, reducing its manufacturing and distribution footprint of 50 facilities to approximately 30 to 35 facilities. “Creating 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,” it said. “These actions should allow us to integrate our specialty foam and innerspring capabilities while maintaining market- leading service and product quality levels and improving overall efficiency.”
The initiatives outlined above are expected to enable profitable growth through expanded product capabilities and increased content at attractive price points, reduce costs, and create shareholder value, according to the company.
In furniture, flooring and textile products the company 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.
In total, the initiatives are expected to reduce annual sales by approximately $100 million and generate $40 to $50 million in EBIT benefit on an annualized run-rate basis when fully implemented in late 2025, with some of the benefit starting to be realized in the second half of 2024. Additionally, L&P anticipate receiving approximately $60 to $80 million in net cash proceeds from the sale of real estate associated with the initiatives, with transactions largely complete by the end of 2025.
“We expect to incur restructuring and restructuring-related costs of $65 to $85 million, of which approximately half are anticipated to be incurred in 2024 and the remainder in 2025,” the company said. “This includes $30 to $40 million in cash costs, the majority of which are anticipated to be incurred in 2024. In the first half of 2024, we anticipate $20 to $25 million of restructuring and restructuring-related costs (approximately half in cash costs).”
