Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MillerKnoll Inc (NASDAQ:MLKN) reported consolidated net sales of $876 million, marking an increase over the previous year.
• Global retail orders were up nearly 15%, with North America showing particularly strong demand.
• The company is expanding its retail footprint, with plans to open 10 to 15 new locations in fiscal 2026.
• MillerKnoll Inc (NASDAQ:MLKN) has a strong new product pipeline, with launches up over 65% compared to the previous year.
• The company has a robust balance sheet, allowing it to invest in profitable growth opportunities despite macroeconomic uncertainties.

Negative Points

• North American contract orders were lower than expected, reflecting caution in the current economic environment.
• The company reported a loss per share of $0.19 for the quarter, compared to earnings per share of $0.30 in the prior year.
• Special charges related to intangible amortization, impairment, and restructuring amounted to $140 million.
• The international contract segment saw a decline in net sales and orders, impacted by global trade policy and macroeconomic challenges.
• Tariff-related uncertainties are expected to impact costs, with potential price surcharges being considered to manage volatility.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with MLKN.

Q: Can you explain the impairment charges in the global retail segment despite strong performance, especially in North America? A: Jeff Stutz, CFO, explained that the impairment charges were due to a quarterly evaluation required under US GAAP, triggered by the segment's profitability lagging expectations and the re-segmentation of the business. This led to a full review and valuation, which typically occurs in the fourth quarter but was pulled ahead due to these factors.

Q: Regarding the new store locations, how will the 10 to 15 new locations be distributed over the fiscal year 2026? A: Debbie Probst, President of Global Retail, stated that the new locations will be paced evenly quarter by quarter, with two additional locations planned for the current quarter and a steady rollout throughout the next year.

Q: With the fluid tariff situation, do you expect to fully offset the $5 to $7 million impact in future quarters? A: Jeff Stutz, CFO, mentioned that while the situation is dynamic, the company believes it can offset the impact through pricing and other mitigation efforts, although the outcome depends on potential changes in tariffs.

Q: How do you reconcile the higher backlog and improved order growth with the revenue guidance of 4 to 5% growth? A: Andy Owen, CEO, noted that the business is experiencing a lumpy nature between Q3 and Q4. While there is optimism about the start of Q4, the company is being prudent in its guidance due to macroeconomic uncertainties.

Q: What are you seeing in terms of demand from consumers on the direct-to-consumer side of the business? A: Andy Owen, CEO, and Debbie Probst, President of Global Retail, highlighted that orders are up 10% so far this quarter, driven by new product assortments and store locations. The North America retail business, which is largely direct-to-consumer, showed strong performance, indicating robust demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.