The Zacks Furniture industry is laying the groundwork for long-term growth through innovation, digital expansion and product evolution. Companies are increasingly leveraging e-commerce, AI-driven personalization, and augmented reality (AR)/virtual reality (VR) tools to enhance customer engagement, while demand for multifunctional furniture—especially from millennials and Gen Z—is supporting new product development. Strategic acquisitions, partnerships and selective opportunities in the public sector further ...

Financial Performance - Net earnings for the six months ended November 29, 2025, increased to $46.3 million, up from $34.7 million in the same period last year, representing a growth of 33.6%[9] - For the six months ended November 30, 2024, MillerKnoll reported a net loss of $1.2 million, compared to net earnings of $34.1 million for the same period in the previous year[11] - The company reported net earnings of $46.3 million for the six months ended November 29, 2025, compared to $34.7 million for the same period in the previous year, representing a 33.6% increase[9] - For the three months ended November 29, 2025, net earnings attributable to MillerKnoll, Inc. were $24.2 million, compared to $34.1 million for the same period in 2024, representing a decrease of 29.1%[47] Revenue and Sales - Total revenue for the six months ended November 30, 2024, was $1,910.9 million, representing an increase of 4.3% from $1,831.9 million in the prior year[28] - Total net sales for the three months ended November 29, 2025, were $955.2 million, a decrease of 1.3% compared to $970.4 million for the same period in 2024[30] - North America Contract revenue for the six months ended November 30, 2024, was $1,042.4 million, up from $1,000.9 million, reflecting a growth of 4.1%[28] - The North America Contract segment reported net sales of $508.5 million, down 3.3% from $524.7 million in the prior year[93] - The International Contract segment reported net sales of $170.9 million for the three months ended November 29, 2025, compared to $182.4 million in the same period of 2024, a decline of 6.5%[93] - The Global Retail segment achieved net sales of $275.8 million for the three months ended November 29, 2025, an increase from $263.3 million in the prior year, reflecting a growth of 4.8%[93] Assets and Liabilities - Total current assets as of November 29, 2025, were $1,118.4 million, slightly up from $1,108.7 million as of May 31, 2025[8] - Total liabilities decreased to $2,583.6 million as of November 29, 2025, from $2,615.1 million as of May 31, 2025, a reduction of 1.2%[8] - The carrying value of the Company's long-term debt as of November 29, 2025, is $1,350.2 million, with a fair value of $1,295.6 million[52] - The company reported a decrease in accounts receivable, net of allowance, to $325.3 million as of November 29, 2025, from $350.2 million as of May 31, 2025[8] Cash Flow and Expenditures - Cash and cash equivalents decreased to $180.4 million as of November 29, 2025, from $193.7 million at the beginning of the period, a decline of 6.8%[9] - The company reported a net cash provided by operating activities of $74.0 million for the six months ended November 29, 2025, compared to $76.4 million for the same period last year[9] - Capital expenditures for the six months ended November 29, 2025, were $61.3 million, up from $44.9 million in the prior year, indicating a 36.5% increase[9] - Capital expenditures for the total segments were $30.6 million for the three months ended November 29, 2025, compared to $22.3 million for the same period in 2024, an increase of 37.0%[95] Stockholders' Equity and Dividends - Stockholders' equity increased to $1,299.7 million as of November 29, 2025, from $1,275.8 million as of May 31, 2025, reflecting a growth of 1.9%[10] - The company declared dividends of $0.1875 per share, totaling $13.1 million for the six months ended November 29, 2025[10] - Total stockholders' equity decreased to $1,310.8 million as of November 30, 2024, down from $1,332.5 million at the end of the previous period[11] Impairments and Charges - The Company recognized a total non-cash goodwill impairment charge of $92.3 million during the third quarter of fiscal year 2025, primarily due to reduced sales and profitability projections[36] - The Company recognized $37.7 million in non-cash impairment charges related to indefinite-lived trade names during the third quarter of fiscal year 2025[43] - Goodwill impairment charges of $30.1 million and $62.2 million were recognized in the Global Retail and Holly Hunt reporting units, respectively, due to reduced sales and profitability projections[36] Tax and Compensation - The effective tax rate for the six months ended November 29, 2025, was 24.3%, up from 20.0% for the same period in 2024, reflecting an increase of 21.5%[50] - Stock-based compensation expense for the six months ended November 29, 2025, was $9.3 million, compared to $9.1 million for the same period in the previous year[10][11] - The total stock-based compensation expense for the six months ended November 29, 2025, was $15.1 million, down from $17.9 million in the prior year, a decrease of 15.6%[48] Restructuring and Integration - The company incurred restructuring costs of $1.5 million in North America for the three months ended November 29, 2025, and $2.0 million for the six months ended November 29, 2025[107] - The company has recorded a total of $144.4 million in pre-tax integration expenses related to the Knoll Integration plan, with no future costs expected[98] - The company incurred $28.3 million in costs related to the Knoll Integration for the six months ended November 30, 2024, which included $25.8 million of exit and disposal costs[99] Market and Segment Performance - The company operates under a collective of globally recognized design brands, enhancing its market presence and brand equity[14] - The company’s performance seating category focuses on ergonomic seating solutions, which are essential for productivity across diverse settings[24][26] - The workplace category emphasizes the development of products that enhance functionality and productivity in work environments[24][25]

Core Viewpoint - MillerKnoll Inc. reported stronger-than-expected adjusted earnings for Q2 fiscal 2026, leading to a significant increase in share price [1] Financial Performance - The company posted adjusted earnings of $0.43 per share, surpassing the consensus estimate of $0.41 [2] - Revenue for the quarter was $955.2 million, slightly below analyst expectations of $962.47 million, and represented a year-over-year decline of 1.6% [2] - On an organic basis, sales decreased by 2.5% compared to the previous year [2] Future Outlook - For Q3, MillerKnoll forecasts revenue between $923 million and $963 million, exceeding the consensus estimate of $909.6 million [3] - Adjusted earnings for Q3 are projected to be between $0.42 and $0.48 per share, above the $0.41 expected by analysts [3] Operational Metrics - Despite the revenue decline, the company experienced order growth of 5.5%, totaling $972.5 million, with increases across all business segments [4] - Gross margin improved by 20 basis points to 39.0%, while adjusted operating margin decreased to 5.9% from 7.1% in the prior-year quarter [4]

Core Insights - MillerKnoll, Inc. (MLKN) reported its fiscal Q2 '26 earnings, indicating signs of a potential turnaround, prompting a rating change from Hold to a more favorable position [1] Financial Performance - The earnings report for fiscal Q2 '26 suggests improvements in the company's financial health, which may attract long-term investors [1] Investment Strategy - The company is viewed as a mix of growth, value, and dividend-paying stocks, with a particular emphasis on value investing [1]

Company Performance - MillerKnoll Inc reported quarterly adjusted earnings of 43 cents per share, exceeding the analyst estimate of 41 cents [1] - Quarterly sales reached $955.2 million, surpassing the Street estimate of $943.13 million [1] - The company's shares rose 8.8% to $19.07 in pre-market trading following the earnings report [2] Market Reactions - Other stocks also experienced significant movements in pre-market trading, with Sable Offshore Corp surging 44.5% to $7.63 after federal confirmation of interstate pipeline classification [5] - Micron Technology Inc gained 9.4% to $247.20 after reporting better-than-expected earnings for the first quarter of fiscal 2026 [5] - Conversely, Mega Fortune Co Ltd fell 53.5% to $6.07 after a previous jump of 144% [5]

Core Insights - U.S. stock futures are trading mixed, with several companies expected to report earnings that may attract investor attention [1] Company Summaries - **Accenture Plc (NYSE:ACN)**: Expected to report quarterly earnings of $3.75 per share on revenue of $18.52 billion. Shares gained 0.2% to $274.27 in after-hours trading [1] - **Micron Technology Inc. (NASDAQ:MU)**: Reported first-quarter revenue of $13.64 billion, exceeding analyst estimates of $12.83 billion. Adjusted earnings were $4.78 per share, surpassing estimates of $3.95 per share. Shares climbed 8% to $243.74 in after-hours trading [1] - **FedEx Corp. (NYSE:FDX)**: Analysts expect quarterly earnings of $4.10 per share on revenue of $22.79 billion, with earnings to be released after market close. Shares rose 0.4% to $283.21 in after-hours trading [1] - **MillerKnoll, Inc. (NASDAQ:MLKN)**: Posted better-than-expected earnings for the second quarter and provided a strong forecast for the current quarter. Shares surged 9.2% to $19.14 in after-hours trading [1] - **Nike Inc. (NYSE:NKE)**: Expected to report quarterly earnings of 38 cents per share on revenue of $12.22 billion after market close. Shares rose 0.3% to $65.88 in after-hours trading [1]

Core Insights - MillerKnoll reported quarterly earnings of $0.43 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, but down from $0.55 per share a year ago, indicating an earnings surprise of +2.38% [1] - The company achieved revenues of $955.2 million for the quarter, surpassing the Zacks Consensus Estimate by 1.18%, although this is a decrease from $970.4 million in the same quarter last year [2] - MillerKnoll has outperformed consensus EPS estimates three times in the last four quarters, but the stock has underperformed the market, losing about 26.1% year-to-date compared to the S&P 500's gain of 15.6% [3][4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.41 on revenues of $922.4 million, and for the current fiscal year, it is $1.86 on revenues of $3.8 billion [7] - The trend of estimate revisions for MillerKnoll was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Furniture industry, to which MillerKnoll belongs, is currently ranked in the top 29% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year on a reported basis and 2.5% lower organically [13] - Consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million [14] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, with orders increasing to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the US for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging supply chain strength, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on solid order growth across all segments and encouraging signals in the market [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management highlighted the importance of innovation and partnerships in driving future growth [11] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - The company is focused on maintaining a strong balance sheet while balancing investments and growth [15] Q&A Session Summary Question: Insights on second quarter performance and expectations - Management noted that gross margin exceeded expectations due to channel and product mix, along with effective pricing realization [22][23] Question: Order trends and pipeline insights - Orders were consistent across all businesses, with mid-single-digit growth observed in the first weeks of the new quarter [24][25] Question: Geographic and industry strength - Strong demand was noted in the Bay Area, Southern California, and the Northeast Coast, with energy and professional services industries being particularly active [27] Question: Impact of AI on demand - Management indicated that while the impact of AI on workspaces is still minimal, future productivity gains are anticipated [29] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with expectations of continued mid-single-digit growth [34] Question: Retail growth drivers - Brand awareness and store openings were highlighted as key factors driving retail growth, with marketing spend remaining consistent year over year [39][40] Question: Roadmap for doubling store count - Plans to open 14-16 stores annually were confirmed, with expectations of improved operating income from new store investments in the upcoming fiscal year [49][50]

Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year-over-year on a reported basis and 2.5% lower organically [13] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year-over-year [13] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million and a net debt-to-EBITDA ratio of 2.87x [15] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year-over-year, while orders increased to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year-over-year [17][18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year-to-date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the U.S. for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging a strong supply chain, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management noted that the impact of AI on workspace design is still minimal but is being considered for future planning [30] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - Management emphasized the importance of operational excellence and scaling innovation as part of their strategic priorities [66] Q&A Session Summary Question: Insights on second quarter performance and expectations - The gross margin exceeded expectations due to channel and product mix, along with effective tariff mitigation strategies [23] Question: Order trends during the quarter - Orders were consistent across all businesses, with organic growth of 4.5% [25] Question: Geographic and industry strength - Strong performance noted in the Bay Area, Southern California, and the Northeast Coast, with healthcare as a growth driver [27] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with a positive outlook for the second half of the year [35] Question: Retail growth dynamics - Brand awareness and assortment expansion contributed to strong retail performance, with average order value increasing year-on-year [47] Question: Capital allocation and leverage targets - The company aims to reduce its leverage ratio to the 2 to 2.5 range while maintaining dividends and share repurchases [62]

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q2 2026 were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [10] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year, with a 2.5% organic decline [10] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year over year [10] - Orders for the quarter grew to $973 million, up 5.5% as reported and 4.5% higher on an organic basis [10] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [11] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, while orders increased to $507 million, up 4.8% [12] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [13] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [13] Market Data and Key Metrics Changes - North America retail orders increased 8%, with comparable sales growth also up 8% [4] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [5] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [7] Company Strategy and Development Direction - The company aims to double its DWR and Herman Miller store footprint over the next several years, anticipating the opening of 14-16 new stores in the US for the full fiscal year [5] - The strategy focuses on expanding retail footprint, delivering innovative products, and deepening customer engagement globally [4] - The company is optimistic about growth through enhanced innovation initiatives and expanding dealer networks [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in an improving demand environment and the ability to execute growth strategies [10] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [6] - Management remains optimistic based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [8] Other Important Information - The company generated $65 million in operating cash flow and ended the quarter with $548 million in liquidity [11] - The net debt-to-EBITDA ratio was 2.87 times, reflecting a disciplined approach to capital allocation [11] - The company announced the consolidation of its Muskegon facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [11] Q&A Session Summary Question: Can you discuss the drivers behind the better-than-expected gross margin and operating expenses? - Management indicated that the better gross margin was due to channel and product mix, along with effective pricing realization and tariff mitigation efforts [18] Question: How did order rates fluctuate during the quarter, particularly in the Americas contract segment? - Orders were consistent across all three months of the quarter, with mid-single-digit growth observed [20] Question: What specific geographies or industries are showing strength in the contract business? - Strength was noted in the Bay Area, Southern California, and the Northeast Coast, with active demand in energy, professional services, and legal sectors [22] Question: What are the expectations for the contract business in the third quarter? - Orders in North America contract were up about 5% on an organic basis, with expectations for continued mid-single-digit growth [30] Question: How is the retail growth being driven, and what are the dynamics within customer segments? - The growth is attributed to increased brand awareness, new store openings, and a 22% year-on-year increase in product assortment [42][43] Question: What is the roadmap for doubling the store count, and what is the expected margin profile? - The company plans to open 14-16 stores annually, with expectations for improved operating income as new stores begin to contribute revenue [45][47] Question: What macro trends are contributing to the improved order momentum? - The return to office trend is driving demand, with organizations becoming more serious about workspace decisions [54]