Loading...
01/10 18:21
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company's strong financial performance, including a 10.9% increase in net sales and a 25% rise in EPS, is a positive indicator. Despite some challenges like tariffs and new store costs, management's effective pricing actions and optimistic guidance for reduced impacts in the future are promising. The absence of increased discounting and stable demand further supports a positive sentiment. Although the lack of full-year guidance introduces some uncertainty, the overall outlook, including market expansion and strategic growth initiatives, suggests a positive stock price movement in the near term.
Consolidated Net Sales $956 million, up 10.9% year-over-year on a reported basis and up 10% organically, driven by strength in all segments of the business.
Adjusted Earnings Per Share (EPS) $0.45, up 25% year-over-year, driven by better-than-expected sales and strong gross margin performance.
North America Contract Segment Net Sales $534 million, up 12% year-over-year, driven by higher sales volumes.
North America Contract Segment Operating Margin 10.7%, up from 3.4% in the prior year. Adjusted operating margin improved by 200 basis points to 11.4%, benefiting from fixed expense leverage from higher sales volumes.
International Contract Segment Net Sales $168 million, up 14.4% year-over-year on a reported basis and up 11.3% organically, driven by higher sales in Europe and the U.K.
International Contract Segment Operating Margin 8.1%, up from 6.5% in the prior year. Adjusted operating margin was 8.5%, down 60 basis points due to regional and product mix of sales.
Global Retail Segment Net Sales $254 million, up 6.4% year-over-year on a reported basis and up 4.9% organically, driven by new store openings and product assortment expansion.
Global Retail Segment Operating Margin 0.6%, down from 2.2% in the prior year. Adjusted operating margin was 1.2%, down 190 basis points due to new store opening costs, increased freight expense, and higher net tariff-related impact.
Consolidated Gross Margin 38.5%, including approximately $8 million in net tariff-related impacts.
New Orders $885 million, down 5.4% year-over-year on a reported basis and 6.2% organically, impacted by $55 million to $60 million in pull-forward activity in the prior quarter due to tariff surcharge and price increase.
Consolidated Backlog $691 million, decreased by $67 million due to the pull-forward activity in the prior quarter.
Cash Flow from Operations $9 million, with liquidity of $481 million at the end of the quarter.
Electrostatic Discharge Aeron Chair: Launched a new version of the Aeron chair designed for data center clean room environments, showing strong global interest.
Healthcare and Workspace Solutions: Introduced healthcare solutions from Herman Miller, private office solutions from Geiger and DatesWeiser, and new workspace solutions from Knoll.
Retail Product Expansion: Launching 50% more new products compared to fiscal 2025, with new product orders growing over 20% in the quarter.
North America Retail Growth: Net sales in North America retail were up 7%, with orders increasing over 5% and web traffic up 17%.
Store Expansion: Opened four new stores in Q1 and plans to open 12-15 new stores in the U.S. during fiscal 2026.
International Contract Growth: Net sales in the International Contract segment grew 14.4% year-over-year, with strong performance in Europe and the U.K.
Revenue and Profitability: Consolidated net sales grew 10.9% to $956 million, and adjusted EPS increased 25%.
Gross Margin: Achieved a gross margin of 38.5%, despite $8 million in net tariff-related impacts.
Cost Management: Focused on prudent cost management and leveraging fixed expenses for higher sales volumes.
Leadership Changes: Jeff Stutz promoted to Chief Operating Officer, and Kevin Veltman appointed as Interim CFO.
Geographic and Channel Expansion: Implemented plans to expand geographically and across channels, leveraging the combined strengths of Herman Miller and Knoll.
Long-term Strategy: Focused on accelerated product creation, consistent execution, and investing for profitable growth.
Tariff-related impacts: Margins are negatively impacted by tariffs currently in place, with an estimated $2 million to $4 million reduction in gross margin in Q2. This is expected to persist through the first half of the fiscal year.
Order pull-forward dynamics: Lower orders in Q1 due to $55 million to $60 million in pull-forward activity in Q4 of fiscal '25, impacting consolidated backlog and new orders.
New store opening costs: Incremental operating expenses tied to new store openings are expected to continue, with $4 million to $5 million in additional costs in Q2 and similar expenses in subsequent quarters.
Regional and product mix challenges: Operating margin in the International segment was negatively impacted by regional and product mix of sales, particularly in APMEA and Latin America.
Freight and operational costs: Higher freight expenses and operational costs, including those related to new store openings, are pressuring margins in the Global Retail segment.
Accelerated product creation and innovation: The company is focusing on accelerated product creation and innovation as part of its strategic initiatives for fiscal 2026.
Geographic and channel expansion plans: The company is implementing geographic and channel expansion plans to capitalize on market opportunities.
Retail assortment expansion: The company is launching 50% more new products compared to fiscal 2025, with new product order growth of over 20% in the quarter.
Store openings: The company plans to open 12 to 15 new stores in the U.S. during fiscal 2026, including four additional stores in the second quarter.
Revenue expectations for Q2 FY26: Net sales are expected to range between $926 million to $966 million, down 2.5% versus prior year at the midpoint of $946 million.
Gross margin outlook for Q2 FY26: Gross margin is expected to range between 37.6% and 38.6%.
Adjusted operating expense for Q2 FY26: Adjusted operating expense is expected to range from $300 million to $310 million.
Adjusted diluted earnings per share for Q2 FY26: Adjusted diluted earnings are expected to range between $0.38 and $0.44 per share.
Tariff-related impacts: Net tariff-related impacts are expected to reduce gross margin in Q2 FY26 by $2 million to $4 million before tax, or $0.02 to $0.04 per share after tax. Mitigation actions are expected to offset these costs in the second half of the fiscal year.
New store opening costs: Incremental operating expenses tied to new store openings are estimated to be $4 million to $5 million in Q2 FY26, with similar expenses expected in each quarter of fiscal 2026.
The selected topic was not discussed during the call.
The earnings call presents mixed signals: while there are positive developments like order growth and retail expansion, challenges such as declining margins, revenue expectations, and tariff impacts offset these gains. The Q&A reveals cautious optimism but lacks concrete guidance, especially regarding AI's impact. Given the company's mid-sized market cap, the stock is likely to experience a neutral reaction, with minor fluctuations expected as investors weigh the positive growth strategies against financial uncertainties and mixed performance across segments.
The company's strong financial performance, including a 10.9% increase in net sales and a 25% rise in EPS, is a positive indicator. Despite some challenges like tariffs and new store costs, management's effective pricing actions and optimistic guidance for reduced impacts in the future are promising. The absence of increased discounting and stable demand further supports a positive sentiment. Although the lack of full-year guidance introduces some uncertainty, the overall outlook, including market expansion and strategic growth initiatives, suggests a positive stock price movement in the near term.
The earnings call reflects a negative sentiment due to a reported loss per share, significant operational margin declines, and a negative operating margin in the Retail segment. Despite some positive aspects like increased sales and share repurchases, the Q&A revealed management's cautious outlook and avoidance of direct answers regarding future earnings and tariff impacts. The company's financial performance risks and operational challenges, combined with a cautious revenue guidance, suggest a negative stock price movement in the short term.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
