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Friday, 08 December 2017 14:43

Steelcase sales underperform expectations for third quarter

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Preliminary figures show Steelcase Inc.’s sales dipped 2 percent from a year earlier for the most recent quarter.

Grand Rapids-based Steelcase (NYSE: SCS) this week reported preliminary sales of $772 million for its third quarter of the 2018 fiscal year. That compares with sales of $787 million for the same three-month period a year earlier, and with the company’s expectations for sales of $785 million to $810 million.

In announcing the preliminary results, Steelcase said sales a year ago included $11 million in favorable currency translation that was partially offset by $4 million from divestitures.

Sales for the period included a 4-percent decline in both the Americas and the Europe-Middle East-Africa (EMEA) divisions.

Orders were down as well for Steelcase, falling 6 percent for the quarter, as were backlogged orders, which declined 7 percent at the end of the quarter from a year earlier. A divestiture in the quarter, and a large project a year earlier, negatively affected year-to-year order comparisons, company CFO Dave Sylvester said.

“Adjusted for those impacts, orders in the Americas declined by approximately 3 percent driven by declines in our traditional furniture applications, partially offset by continued strong growth in our new products and solutions,” Sylvester said in a statement.

Steelcase also reported preliminary earnings of 22 cents per share, which compares with 34 cents per share a year earlier that included a one-time benefit of 3 cents per share from a favorable tax audit of the EMEA division. The preliminary net income is within Steelcase’s prior guidance of 21 cents to 25 cents per share for the quarter.

Strong controls on operating expenses and higher than expected gross margins offset much of the effects from lower revenues, President and CEO Jim Keane said. Orders from large customers did improve during November following what Keane called “significant declines earlier in the quarter.”

“We’re feeling increasingly confident about upcoming large project opportunities from this customer group. In addition, customer and dealer reactions to our new product introductions, partnership offerings and the pending acquisition of AMQ Solutions have been very positive.” Keane said in a statement.

Steelcase late last month announced plan to buy AMQ Solutions, a California-based maker of height adjustable desking, benching and seating for workstations.

Steelcase reports final quarterly results Dec. 19. The consensus expectations of brokerage analysts prior to the release this week of preliminary results was for sales of $799.8 million and 23 cents per share in net income, according to Yahoofinance.com.

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