Key TakeawaysMillerKnoll said demand for its furniture was "softer than expected," as it missed third-quarter sales estimates and current-quarter revenue and adjusted profit expectations.The company blamed rising borrowing costs, geopolitical issues, and a lagging U.S. housing market for a drop in sales.MillerKnoll warned that it anticipates the "generally tepid near-term macro-economic backdrop" will continue to negatively impact its business.
MillerKnoll (MLKN) shares plunged Thursday, a day after the furniture maker’s sales slumped and it warned of continued lack of demand in the current quarter.
The company reported third-quarter fiscal 2024 revenue dropped 11.4% to $872.3 million, short of forecasts. Adjusted earnings per share (EPS) of $0.45 was above estimates.
MillerKnoll noted that “overall demand patterns across much of our business have continued to be sluggish.” It blamed higher interest rates in major markets globally, continuing geopolitical concerns, and a lagging housing market in the U.S.
The company’s Americas Contract segment, which includes the Herman Miller, Geiger, Maharam, HAY, and NaughtOne brands, fell 9% to $441.1 million. MillerKnoll said demand was softer than expected because of “minimal improvement in the economic landscape.”
It added that while it is confident of a coming improvement, “the persistence of inflationary pressures and high interest rates continues to weigh on both business and consumer sentiment.” Sales dropped 10.4% to $217.3 million at its International Contract and Specialty unit, and dipped 17.0% to $213.9 million at the Global Retail division.
MillerKnoll explained that considering the “demand patterns we experienced in the third quarter and what remains a generally tepid near-term macro-economic backdrop,” it predicted current-quarter sales would be between $880 million and $920 million, with adjusted EPS in a range of $0.49 to $0.57. The company also sees full-year adjusted EPS at $1.90 to $1.98. All were less than analysts had anticipated.
Shares of MillerKnoll sank about 18% to under $25 per share as of around 11:40 a.m. ET Thursday to slip into negative territory for 2024.
