Herman Miller reports strong quarter, but industry faces flatter days ahead

ZEELAND — Furniture maker Herman Miller Inc. saw sales and profits grow in its fiscal second quarter, but the company is facing a slowdown in domestic demand amid softer government spending and overall economic uncertainty.

On Wednesday the company said it earned $23.7 million, or 41 cents per share, up from $17.9 million, or 26 cents per share, in the same period a year ago.

Sales of $445.6 million were up 8.1 percent from the year-ago period, driven by strong demand in the United Kingdom and Asia. North American sales of $321.7 million were up 4.6 percent from the prior year, but new orders of $306.2 million in the quarter were down 13 percent.

Non-North American sales of $87.5 million were up 20.4 percent from a year ago with new orders of $92.1 million representing a 25.4 percent year-over-year quarterly increase.
Specialty and consumer sales of $36.4 million were up 14.1 percent.

“There’s no question that our near-term business outlook is clouded by the tenuous health of the global economy,” CEO Brian Walker said in a news release. “Regardless of what challenges we may face in the coming months, our collective focus at Herman Miller remains on driving success over the long run.

“I feel very good about the progress we’re making on the building blocks of our strategy, and I’m as confident as ever in our ability to deliver long-term value to our customers, employees and shareholders.”

Gross margins of 34.1 percent were up slightly from a year ago. Price increases helped drive the margins, offsetting higher commodity prices.

“We are very pleased to report significantly improved gross margins from a year ago,” Chief Financial Officer Greg Bylsma said in a press release. “Our consolidated margin is the highest level we have achieved in more than three years. This is particularly encouraging in that it delivers on our commitment to leverage sales growth and capture benefit from our recent price increases.”

Holland-based industry analyst Michael Dunlap said Herman Miller had a strong quarter and continued to be the market leader with its enviable profit margins.

While Grand Rapids-based Steelcase reported sales 62 percent higher than Herman Miller, Herman Miller reported a larger profit.

Dunlap said Herman Miller’s lower North American order volume also reflects his expectations for a flat 2012 calendar year for the industry.

Prior to the earnings announcement Herman Miller shares closed at $21.81, up 21 cents. Its shares have traded between $15.63 and $28.94 over the past 52 weeks.

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