MillerKnoll Inc, the collective of dynamic design brands, has demonstrated its resilience and adaptability in navigating the complex landscape of the modern furniture and office design industry. With a rich history spanning over a century, the company has continuously evolved to meet the ever-changing needs of its diverse customer base, while maintaining a steadfast commitment to sustainability and innovation.
Business Overview and History
MillerKnoll's roots trace back to 1905 when it was founded as the Star Furniture Company in Zeeland, Michigan. In 1923, the company rebranded as the Michigan Star Furniture Company, shifting its focus to the production of high-quality office furniture. A significant milestone came in 1960 when the company officially adopted the name Herman Miller, Inc., solidifying its reputation for innovative and ergonomic office furniture design.
Over the following decades, Herman Miller expanded its product offerings and established a global presence, entering international markets and broadening its customer base. The company faced challenges in the early 2000s due to the dot-com bust and economic recession, which led to a slowdown in the office furniture market. In response, Herman Miller implemented cost-cutting measures and doubled down on new product development to weather the storm.
The COVID-19 pandemic presented another significant challenge for the company, as the shift to remote work dramatically impacted demand for office furniture. However, MillerKnoll's ability to adapt and innovate helped it navigate these turbulent times. The company's commitment to design, sustainability, and customer service has been instrumental in maintaining its position as a leading provider of office, healthcare, and educational furnishings worldwide.
Today, MillerKnoll's portfolio includes renowned brands such as Herman Miller, Knoll, Colebrook Bosson Saunders, Design Within Reach, and Maharam, among others. This diverse range of offerings has allowed the company to establish a strong presence in residential, commercial, healthcare, and educational markets. The company researches, designs, manufactures, sells, and distributes interior furnishings for various settings through independent dealers, direct to customers, owned and independent retailers, and ecommerce channels.
Financial Performance and Ratios
MillerKnoll's financial performance has been marked by both successes and challenges in recent years. As of the company's latest reported fiscal year (ended May 31, 2024), it generated revenue of $3.63 billion and a net income of $82.3 million. The company's gross profit margin stood at a healthy 39.1%, while its operating margin was 5.9%. Operating cash flow for fiscal 2024 was $352.3 million, with free cash flow of $273.9 million.
In the most recent quarter (Q2 2025), MillerKnoll reported revenue of $970.4 million, up 2.2% year-over-year, with net income of $34.1 million. The increase in revenue was driven by strength in the International Contract & Specialty and Americas Contract segments. The company maintained gross margins at 38.8% in the quarter.
The company's balance sheet reflects a moderately leveraged capital structure, with a debt-to-equity ratio of 1.40 as of November 30, 2024. MillerKnoll's liquidity position remains robust, with a current ratio of 1.60 and a quick ratio of 0.99, indicating the company's ability to meet its short-term obligations. As of November 30, 2024, the company had $221.1 million in cash and cash equivalents and $249.3 million available under its $725 million syndicated revolving credit facility.
In terms of returns, MillerKnoll's return on assets and return on equity stood at 1.6% and 4.8%, respectively, in fiscal 2024, highlighting the need for further operational improvements to enhance profitability and shareholder value.
Segmental Performance and Trends
MillerKnoll operates through three primary business segments: Americas Contract, International Contract Specialty, and Global Retail. Each segment has faced unique challenges and opportunities in the current market environment.
The Americas Contract segment, which accounts for the largest portion of the company's revenue, has shown resilience, with net sales increasing by 0.8% year-over-year in fiscal 2024. This was driven by the segment's strong order growth, particularly in the second half of the year, as customers sought to revitalize their office spaces. In the second quarter of fiscal 2025, this segment reported net sales of $504.2 million, up 5.9% compared to the prior year period. The increase was driven by a 6.2% organic increase in net sales, reflecting higher sales volumes of approximately $26 million and the impact of price increases, net of incremental discounting, of $4 million. Operating earnings for the Americas Contract segment were $47.5 million, an increase of 35.3% compared to the prior year period.
The International Contract Specialty segment experienced a 2.1% decrease in net sales in fiscal 2024, primarily due to ongoing macroeconomic uncertainty in certain regions and softness in the luxury and textile product lines. However, in the second quarter of fiscal 2025, this segment reported net sales of $246.3 million, an increase of 2.1% on a reported basis and 1.1% organically over the prior year period. The organic growth was driven by increased sales volumes of approximately $6 million, offset by the impact of incremental discounting, net of price increases, of $3 million. Operating earnings for the International Contract Specialty segment were $23.8 million, flat compared to the prior year period.
The Global Retail segment, which includes the company's direct-to-consumer and e-commerce operations, has faced the most significant headwinds, with a 4.2% decline in net sales in fiscal 2024. This was largely attributed to pandemic-related disruptions, supply chain challenges, and a shift in consumer spending patterns. In the second quarter of fiscal 2025, this segment reported net sales of $219.9 million, a decrease of 5.3% on a reported basis and 4.0% organically compared to the prior year. The sales decline was driven by a decrease in sales volume of approximately $13 million, primarily due to a shift in the timing of the holiday cyber promotional period, as well as the $5 million impact from the closure of the HAY eCommerce channel in North America. Operating earnings for the Global Retail segment were $8.7 million, a decrease of 40.8% compared to the prior year.
Navigating Industry Challenges
MillerKnoll's leadership team has demonstrated its ability to navigate the complex and ever-evolving industry landscape. The company has actively addressed the impact of the COVID-19 pandemic, which disrupted its operations and customer demand, by implementing cost-saving measures, optimizing its supply chain, and enhancing its digital capabilities to better serve its clients.
Additionally, the company has proactively addressed the challenges posed by geopolitical tensions and trade policy changes, such as the imposition of tariffs. MillerKnoll has diversified its manufacturing footprint, identified alternative sourcing options, and explored pricing strategies to mitigate the impact of these external factors on its profitability.
Sustainability and Innovation
Sustainability has long been a core tenet of MillerKnoll's business philosophy. In 2024, the company received validation from the Science Based Targets initiative (SBTi) for its near-term science-based emissions reduction targets, further solidifying its commitment to environmental stewardship. The company has also made strides in eliminating the use of PFAS (per- and polyfluoroalkyl substances) from its North American product portfolio by 2025 and globally by 2027, positioning itself as an industry leader in the pursuit of sustainable manufacturing practices.
Alongside its sustainability initiatives, MillerKnoll has remained at the forefront of design innovation. The company's recent launch of the refreshed Mirra 2 Chair, featuring increased recycled content and a lower carbon footprint, exemplifies its ability to deliver high-performance, eco-friendly solutions that cater to the evolving needs of its customers.
Outlook and Guidance
For the fiscal year 2025, MillerKnoll has provided guidance that reflects the company's cautious optimism amidst the ongoing market challenges. The company has narrowed its adjusted earnings per share guidance to between $2.11 and $2.17, lowering the midpoint to accommodate the expectation of a softer Q3. Despite this adjustment, MillerKnoll reiterated its expectation of full-year sales and EPS growth over fiscal 2024.
For the third quarter of fiscal 2025, MillerKnoll expects net sales between $903 million and $943 million, with adjusted diluted earnings between $0.41 and $0.47 per share. The company noted that order rates during Q2 FY2025 developed slower than initially expected, leading to the narrowed full-year EPS guidance range. However, MillerKnoll expressed confidence that the business is poised for growth in the second half of the fiscal year based on improving leading indicators across its segments.
The company's leadership has highlighted the importance of continuing to manage costs prudently, optimize its supply chain, and leverage its diverse brand portfolio to capitalize on emerging opportunities in the market. MillerKnoll's ability to navigate these complexities and execute its strategic initiatives will be crucial in driving long-term sustainable growth and enhancing shareholder value.
Geographic Performance
While MillerKnoll does not break out performance by specific geographic markets, the company maintains a strong global footprint with operations and sales across the Americas, Europe, Middle East, Africa, and Asia-Pacific regions. This diversified geographical presence has helped the company navigate macroeconomic pressures and capitalize on growth opportunities in various markets.
Conclusion
MillerKnoll's legacy as a design innovator, coupled with its focus on sustainability and adaptability, positions the company for continued success in the evolving furniture and office design industry. While navigating the challenging market environment, the company has demonstrated its resilience and its commitment to delivering high-quality products and solutions that meet the ever-changing needs of its diverse customer base. As MillerKnoll continues to integrate its recent acquisitions, optimize its operations, and invest in sustainable and innovative initiatives, the company is well-positioned to capitalize on the opportunities that lie ahead and solidify its position as a global leader in the design and furnishing industry.