Published in Manufacturing
Steelcase Inc. headquarters in Grand Rapids. (COURTESY PHOTO) Steelcase Inc. headquarters in Grand Rapids. (COURTESY PHOTO)

Steelcase to slash 180 salaried positions, citing current slump in new orders

BY Wednesday, September 21, 2022 05:17pm

GRAND RAPIDS — Citing a 20-percent decline in incoming orders during the first few weeks of its current quarter, Steelcase Inc. plans to cut up to 180 salaried positions and has reduced its quarterly dividend.

The job cuts are part of Steelcase’s plan to generate about $20 million in cost savings in response to higher costs. The cuts also come as the contract furniture company reported a 19-percent increase in global sales for the three-month period that ended Aug. 26, albeit with lower earnings.

“In response to inflation and supply chain challenges throughout this year, we have been pulling back on our planned level of incremental spending while staying invested in our most critical strategic initiatives,” Steelcase Senior Vice President and CFO Dave Sylvester said in a Wednesday afternoon quarterly earnings statement. “Due to the recent volume decline in our incoming orders and lower than expected return-to-office trends in the Americas, we are planning to implement additional actions in the third quarter which target further reduction of our planned level of spending. These actions target approximately $20 million of annualized spending and are expected to include the elimination of up to 180 salaried positions across the Americas core business and corporate functions.”

Wednesday’s earnings statement did not provide further details of the planned job cuts. The company employs more than 11,000 people globally. Executives will host a conference call Thursday morning to discuss the quarterly results.

Steelcase (NYSE: SCS) also reduced its quarterly dividend to 10 cents per share from the prior 14.5 cents per share.

“Based on the recent order and return-to-office trends, we adjusted our dividend this quarter to strengthen our liquidity profile and support a higher allocation of capital to reinvestment in the business and pursuit of our longer-term strategy,” Sylvester said.

The company reported global sales of $863.3 million for the second quarter of its 2023 fiscal year. That compares to $724.8 million for the same period a year earlier. Quarterly sales for the Americas division that accounts for three-quarters of total revenue grew 25 percent to $651.6 million.

The corporation recorded $19.6 million in quarterly net income, or 17 cents per share, versus $24.7 million, or 21 cents per share, in the second quarter of the prior fiscal year.

Midway through the fiscal year, Steelcase’s net income totaled $1.6 billion, a 30-percent increase from the first six months of the prior fiscal year, with $8.2 million in income.

Pointing to the lower order volumes at the start the current period, Steelcase expects sales for the present third quarter of its fiscal year to range from $825 million to $850 million, a 12-percent to 15-percent increase from a year ago that will include the benefits of prior price increases, with 8 cents to 12 cents in per-share net income.

“Inflation continues to be significant and has aggregated to approximately $270 million over the last six quarters, but for the first time since fiscal 2021, our year-over-year pricing benefits exceeded inflation this quarter,” Sylvester said in the quarterly earnings statement. “Over the coming quarters, although inflationary pressure is expected to remain, we anticipate the benefits from our pricing actions will continue to accumulate and more fully offset the cumulative inflationary costs we’ve incurred.”

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