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Published in Manufacturing

Herman Miller retail orders help offset declining quarterly sales

BY Thursday, December 17, 2020 05:05pm

ZEELAND — Retail orders helped anchor Herman Miller Inc. amid declining sales, the international furniture manufacturer reported Wednesday in its second quarter fiscal 2021 earnings.

Zeeland-based Herman Miller (Nasdaq:MLHR) reported a 7.1 percent drop in net sales for the quarter. The company generated $626.3 million in its second quarter versus $674.2 million in the same period last year.

The office furniture maker slashed operating expenses by $18.1 million to $170.8 million in the quarter. Gross margins ticked up 110 basis points to 39 percent for the quarter.

Herman Miller reported quarterly net earnings of $51.3 million or $0.87 per diluted share, a 34.1 percent year-over-year decrease.

The company’s North America contract segment continues to struggle to find its footing, resulting in a 33 percent year-over-year decline in orders for the quarter. In a statement, the company revealed that North America contract customers are still hesitant about making decisions concerning their post-COVID workplaces as the virus continues to linger around and affect the economy.

Retail operations, specifically in the home office category, boomed to help offset the demand pressures of the North America contract segment.

Herman Miller reported a 41-percent increase in quarterly orders when compared to the same time last year. Home office led in demand and rocketed up 270 percent compared to last year.

The retail segment was significantly profitable as well, with operating margins of 16.7 percent. 

In a call with investors on Thursday, Herman Miller Retail President Debbie Propst was unable to break down retail sales at a brand level but did say e-commerce was popular in the quarter.

“We continue to see really strong performance from our e-commerce — 220 percent to last year — but we’re also really pleased with the performance we saw in the quarter from our studio,” Propst said.

Herman Miller’s international contract segment was also a bright spot, with orders up a reported 40 percent from last year. The Asia-Pacific and mainland Europe regions offered year-over-year growth while COVID-19 continued to drag down sales in Mexico and the United Kingdom.

In May, Herman Miller laid off 300 employees from its global workforce. At the time, it projected that the staff reduction would save it $32 million in annual expenses.

The company said given the ongoing market uncertainty, it would continue to suspend offering earnings guidance in both the short and long terms. 

“While the revenue picture for fiscal 2022 remains uncertain, we are encouraged by global progress relative to COVID-19 vaccines, which we believe will help release pent-up demand for office spaces,” the company said in its earnings release. “We expect to see many organizations make decisions about investments in their workplaces in the coming months, as they begin planning for employees to return to their offices. Of course, the magnitude and timing of this demand remains dependent on vaccine distribution and ongoing pandemic recovery efforts.”

Read 3986 times Last modified on Friday, 18 December 2020 08:38
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