Updated from 2:56 p.m. EDT

Earnings were sluggish at furniture maker La-Z-Boy ( LZB - Get Report) in the first quarter, the company said Friday, and will fall short of analysts' expectations.

The Monroe, Mich.-based company, a leading producer of home furniture with over $2 billion in annual sales, said first-quarter earnings will be between 17 cents and 21 cents, off 16% to 32% from the 25-cent-per-share Wall Street consensus, according to First Call/Thomson Financial. La-Z-Boy earned 25 cents a share in last year's first quarter.

La-Z-Boy ended Friday regular trading down 1/8, or 0.8%, at 15.

In a statement, the company attributed the shortfall to a general slowdown in the furniture market. Also impacting the quarter were higher expenses for amortization and higher interest payments on debts.

The company predicted revenue for the fiscal quarter ending July 29 at slightly over $490 million, up from $321.6 million in sales in the same period a year ago.

Joel Havard, an analyst who covers the furniture industry for BB&T Capital Markets/Scott & Stringfellow, said the furniture industry began a downturn in mid-May, precipitated by several interest rate hikes over the previous months. In late May, he noted, Furniture Brands International ( FBN), one of La-Z-Boy's strongest competitors, announced that second-quarter profits would fall below expectations.

Both La-Z-Boy and Furniture Brands International cater to middle- to lower-income Americans, the groups most likely to temper their spending habits in the face of higher interest rates, he explained.

In addition, the furniture industry is coming off two high-growth years, fueled by the general health of the economy. "It is in a de-throttling mode," he said. Havard noted, "1998 and 1999 were both great years for the furniture industry." Havard is maintaining his strong buy rating for La-Z-Boy, but lowered his 12-month target price for the company's stock to 20, from 25.