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ZEELAND, Mich. – Like its competitor Steelcase last week, office and contract furniture giant MillerKnoll saw its shares soar 17% yesterday after it reported better-than-expected first quarter numbers.
The company reported sales of $917 million for the quarter, a decline of nearly 15% from last year. Gross margin however, expanded in each of the company’s segments, while profits and organic orders improved in the Americas Contract segment. Operating expenses fell by nearly $4 million.
“Our teams around the world delivered great results for the first quarter of the new fiscal year,” the company wrote in an earnings report. “We exceeded our July earnings guidance for the quarter through a combination of strong sales, on the high end of our guidance and gross margin expansion in each of our business segments.
“We are off to a very good start to our new fiscal year and are encouraged by the momentum from our ongoing integration efforts and the broader implementation of our strategic vision.
“Having said this, as a global enterprise we are currently facing challenges arising from specific macroeconomic factors impacting certain sectors of our business,” it continued. “While the specter of economic recession in North America appears to be fading, the housing market remains under pressure. Additionally, we are facing difficult macroeconomic conditions in both China and Europe. However, we believe our first-quarter financial results demonstrate the power of our diversified business model in leveraging areas of strength as an offset to regional challenges.”
Orders in the quarter of $913.7 million were 9.8% lower on a reported basis and 1.3% lower organically year-over-year. The relative decline in organic orders is, however, an improvement compared with the 7.8% year-over year organic decline posted in the fourth quarter of fiscal year 2023, the company said.
Gross margin in the quarter was 39.0%, 450 basis points higher than the same time last year. The year-over-year increase in gross margin the company attributed to the realization of price optimization strategies, moderating input costs and ongoing integration efforts. This is the third consecutive quarter of consolidated year-over-year adjusted gross margin expansion.
Steelcase’s earnings report was similar in a few ways. Steelcase reported $854.6 million in revenue, a small decline from last year’s $863 million. Both companies reported strong gains in gross margin, and both attributed some of their success to higher pricing.
Both have increased their outlooks for fiscal 2024.
“While economic uncertainty persists in parts of our business, we maintain a generally optimistic outlook,” said MillerKnoll. “For full year fiscal 2024, we are increasing our guidance and expect to generate adjusted diluted earnings in the range of $1.85 and $2.15 per share.”
