MillerKnoll stock tumbles as demand for its furniture falls short of expectations. The company attributes the drop in sales to rising borrowing costs, geopolitical issues, and a sluggish U.S. housing market. MillerKnoll warns of continued negative impact on its business due to the overall tepid macro-economic backdrop.
Consolidated net sales for the third quarter were $872.3 million, reflecting a decrease of 11.4% on a reported basis and a decrease of 10.1% organically compared to the same period last year. Orders in the quarter of $830.3 million were 6.2% lower on a reported basis and 4.7% lower organically compared to the prior year.
In Q3 2024, MillerKnoll's Americas Contract segment reported net sales of $441.1 million and new orders of $420.1 million, both down 9.0% year-over-year. Economic conditions and inflationary pressures have affected demand, but indicators suggest potential improvement. The segment's adjusted operating margin was 8.1%, a decrease of 70 basis points year-over-year, mainly due to lower sales, partially offset by favorable price/cost dynamics and synergy benefits.
MillerKnoll's International Contract and Specialty segment reported a decrease in net sales to $217.3 million in the third quarter, a 10.4% drop year-over-year. However, new orders increased by 8.3% year-over-year to $227.6 million. Demand patterns fluctuated but saw growth in December and February, particularly in mainland Europe, South Korea, India, China, Australia, and the Middle East. Over 40% of the international network now offers the MillerKnoll product portfolio, with more transitions planned.
In Q3 2024, MillerKnoll, Inc.'s Global Retail segment reported net sales of $213.9 million, a 17.0% decline from the same quarter last year, and new orders totaling $182.6 million, a 14.6% decrease. This is mainly due to soft housing-related demand. Despite macro-economic challenges, the company is focusing on enhancing in-store experiences, expanding product assortment, and boosting brand awareness to mitigate the impact of external economic factors.