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Published in Manufacturing

After strong quarter, MillerKnoll forecasts slower sales and plans cost-cutting measures

BY Wednesday, September 28, 2022 05:51pm

ZEELAND — Despite strong sales in recent months, MillerKnoll Inc. executives forecast slower sales growth in the months ahead and are taking several measures to generate up to $35 million in cost savings.

The results indicate that the Zeeland-based furniture maker is beginning to experience the effects of a slowing economy following months of strong growth.

Andi Owen, MillerKnoll president and CEO. COURTESY OF MILLERKNOLL

“We are seeing some degree of uncertainty today in the end markets that we serve. As the first quarter progressed, we began to experience economic softening in various regions in which we operate,” President and CEO Andi Owen and Chief Financial Officer Jeff Stutz wrote in MillerKnoll’s report for the first quarter of fiscal year 2023.

Given the “current macroeconomic backdrop,” MillerKnoll executives are “proactively taking additional steps to improve our near-term profit and cash flow outlook,” Owen and Stutz wrote in the quarterly report released today. The pending actions should generate annualized cost savings of $30 million to $35 million.

“These include offering a voluntary retirement window, further optimizing our organizational structure, reductions in program spending, and rationalizing capital expenditures,” Owen and Stutz wrote.

Actions will also include price increases and “careful management of discretionary spending,” Owen said in a conference call to discuss quarterly results.

MillerKnoll’s competitor, Grand Rapids-based Steelcase Inc., last week reported strong sales for its most recent quarter but also a 20-percent decline in incoming orders for the present period. In response, Steelcase executives plan to cut up to 180 salaried positions, as MiBiz reported.

MillerKnoll (Nasdaq: MLKN) on Wednesday afternoon reported $1.07 billion in sales for the first quarter that ended Sept. 3, a 36.6-percent sales increase over the same period a year ago that had one less sales week.

Orders during the quarter grew 10.5 percent to $1.01 billion. MillerKnoll’s order backlog for the quarter increased 3.9 percent to $868.6 million.

The company reported $25.8 million net income, or 34 cents per diluted share. In the same period a year earlier, MillerKnoll lost $61.4 million, or 92 cents per diluted share.

MillerKnoll expects $1.02 billion to $1.06 billion in sales for the second quarter of FY 2023, a flat or nearly 4-percent growth rate, with 39 cents to 45 cents earnings per share.

“We march into fiscal 2023 with pragmatism around short-term market shifts and optimism for our long-term growth prospects. We will continue to focus on what we can control and manage the business diligently,” Owen and Stutz wrote in the quarterly report. “We have a capable and experienced management team to guide the business forward.”

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