MillerKnoll (MLKN) Q2 2026 Earnings Transcript

Core Insights - The company has shown strong customer engagement and positive responses to its strategic initiatives, particularly in North America, where the return to office trend is boosting demand for commercial real estate and contract furniture [1][4][42] - The company is expanding its retail footprint, with plans to open 14 to 16 new stores in the fiscal year, driven by new store openings, product assortment expansion, e-commerce acceleration, and increased brand awareness [2][14][39] - Orders in North America retail increased by 8%, with comparable sales growth also up 8%, indicating strong performance during peak shopping periods [3][10] Financial Performance - In Q2, adjusted earnings per share were $0.43, exceeding expectations, while consolidated net sales were $955 million, down 1.6% year over year [9][10] - For the first half of the fiscal year, consolidated net sales reached $1.9 billion, up 4% year over year, with orders growing to $973 million, up 5.5% [10][11] - The second quarter gross margin was reported at 39%, with proactive measures expected to offset tariff-related costs in the second half of the fiscal year [10][16] Segment Performance - North America Contract segment net sales were $509 million, down 3.1% year over year, while international contract segment net sales were $171 million, down 6.3% [12][13] - The Global Retail segment saw net sales of $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [13][14] - The healthcare sector remains a growth driver, with total healthcare orders up 5% year to date [5][42] Strategic Initiatives - The company is focused on expanding its dealer network and enhancing its global showroom footprint, with new showrooms introduced in key international markets [5][6] - The strategy includes leveraging operational efficiency and optimizing production capabilities, with a consolidation plan expected to deliver $10 million in annual savings by fiscal 2028 [11][12] - The company is optimistic about future growth, driven by innovation initiatives and strong partnerships [6][44] Market Trends - The return to office trend is positively impacting demand, with organizations prioritizing workspace refreshes [1][42] - There is a noted increase in orders and dealer sentiment, indicating a favorable market environment for the company [1][4] - The competitive landscape remains promotional, but the company has maintained marketing spend levels while achieving strong sales growth [33][36]