Soft North American contract furniture market drags Herman Miller sales lower

BY Jayson Bussa Thursday, March 18, 2021 01:37pm

ZEELAND — Office furniture maker Herman Miller Inc. continues to feel the sting as office workers stay home because of the COVID-19 pandemic.

In reporting its 2021 fiscal year results for its third quarter that ended Feb. 27, the company said it generated $590.5 million in sales for the three-month period, down 11.3 percent from the same time last year.

Herman Miller (Nasdaq: MLHR) reported $566.1 million in new orders, a 13.1-percent decrease from a year ago. The company attributed the falloff to demand pressures in the North American contract furniture market, where sales were off 35 percent and orders dipped 38 percent.

However, the company pointed to growing vaccination efforts, a drop in hospitalization rates and the fact that many of its clients are preparing to return to the office as reasons for optimism in the segment.

Herman Miller’s international contract segment held steady for the most part, with net sales up 1 percent and order volumes down 5 percent.

“Our global footprint also provides reasons for optimism,” the company said in a statement. “In regions where the impact of the pandemic has already lessened, our customers are resuming their workplace investments, giving us confidence that we will see similar rebounds in other regions as the pandemic retreats.”

The company reported quarterly earnings of $43.3 million, or 70 cents per diluted share, which compared to earnings of $37.3 million, or 64 cents per diluted share, a year ago.  

Herman Miller also reined in operating expenses, which were down $13.9 million from last year, excluding restructuring expenses. 

As a result of cost reductions and a planned price increase, the company also said it reinstated employer retirement contributions, which it had suspended for the first three quarters of its 2021 fiscal year.

As has been the case with other contract furniture manufacturers, Herman Miller said its retail segment has been strong. Retail sales shot up by 63 percent compared to last year, while order growth accelerated 81 percent. The company reported that these increases were spread fairly evenly across Design Within Reach and Hay, both brands owned by Herman Miller, and other Herman Miller retail brands.

Continued demand for home office furniture was the driver in that growth, with order growth in the category exceeding 326 percent, according to Herman Miller’s report.

Through the first nine months of its 2021 fiscal year, Herman Miller generated $1.84 billion in sales, down 8.3 percent from the previous year. Net earnings through three quarters were up 3.4 percent at $169.5 million.

In its outlook, Herman Miller said it was “encouraged by positive signs in each of our businesses,” but cited ongoing uncertainty about global demand and the pace of recovery. 

“From a demand perspective, our contract sales funnel is pointing to increased demand in the back half of calendar 2021. From a cost perspective, like other industries, we are experiencing commodity pressures, especially associated with steel prices,” the company said in a statement. “We are ready to capitalize on the increased demand expected as the global contract market begins to recover. We believe that recovery, along with our expectation for sustained momentum in our Retail business and our global, multi-channel distribution model, puts us in a strong position to drive growth in our business as we reach the other side of the global pandemic.”

https://mibiz.com/sections/manufacturing/soft-north-american-contract-furniture-market-drags-herman-miller-sales-lower