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Herman Miller reports flat fourth quarter, year-end earnings amid turbulent order environment

BY Friday, July 07, 2017 12:16pm

ZEELAND — Order volatility in the office furniture industry continued to affect sales for Herman Miller Inc.

The Zeeland-based office furniture manufacturer reported sales of $577.2 million in the fourth quarter of its 2017 fiscal year, which ended June 3. This quarter’s results mark a nearly 1 percent decline from the same period the year before. Meanwhile, new orders shrank 6.3 percent to $568.1 million compared to the same period last year.

Herman Miller (Nasdaq: MLHR) executives noted a recent 2-percent hike in prices affected order pacing between its third and fourth quarters. Executives believe the price increase resulted in $21 million in clients placing orders in the third quarter that normally would have been made during the fourth quarter.

At the same time, the company reported earnings of 55 cents per share, which compares to the 67 cents per share a year ago.

Sales in the company’s fourth quarter also were bolstered by double-digit sales growth in its consumer markets, an area Herman Miller has invested in and focused on in past years. The company reported its consumer business generated approximately $90 million in sales for the fourth quarter, a 16-percent increase from the previous year.

“On the North American Consumer front, positive consumer homebuilder sentiment point(s) in the right direction,” CEO Brian Walker said during a conference call with brokerage analysts. “Although existing home sales and new housing starts (dipped) recently, interest rates remain at historically low levels and there is a limited inventory of unsold homes.”

For its full fiscal year, Herman Miller reported sales of $2.28 billion, an increase of less than 1 percent compared to the previous year. Meanwhile, earnings reached $2.05 a share, which compares to $2.36 per share for the previous fiscal year.

All told, Walker attributes some of the company’s struggles to continued volatility in the North American contract furniture industry.

“In general, uncertainty has been the driving reality in the near-term,” Walker said. “Sales and orders for the North American contract industry remain choppy and as a consequence, price competition between industry participants remains intense.”

However, Walker noted that the larger economy, executive confidence, commercial construction activity and other factors point to a positive economic environment in the short term.

Going forward, Herman Miller expects to generate net sales between $570 million and $590 million during the present first quarter of its 2018 fiscal year. The company also expects to report earnings of between 55 cents and 59 cents per share.

By comparison, Herman Miller reported $598.6 million in sales and 60 cents per share during the first quarter of its 2017 fiscal year.

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