MillerKnoll Inc. reported adjusted earnings of $0.43 per share for the second quarter of fiscal 2026, beating the consensus estimate of $0.41 by $0.02. Revenue, however, fell short of expectations, coming in at $955.2 million against a widely cited consensus of $962.0 million, a miss of roughly $6.8 million. The company’s earnings beat was driven by disciplined cost management and a favorable mix of high‑margin contract work, while the revenue shortfall reflected a decline in North America contract sales and modest growth in retail.
Revenue for the quarter was down 1.6% year‑over‑year, driven by a 3.1% decline in North America contract net sales to $509 million and a 4.7% increase in Global Retail net sales to $276 million. Orders rose 5.5% year‑over‑year, suggesting that the revenue dip may be temporary as the company’s order book continues to grow. The mix shift toward higher‑margin contract work helped offset the weaker retail performance, but the overall top‑line softness indicates a slowdown in demand for the company’s core furniture products.
Operating margins reflected the company’s focus on cost control. The North America Contract segment posted an operating margin of 8.7% (adjusted 9.7%), down 50 basis points from the prior year, while the Global Retail segment’s margin fell to 1.5% (adjusted 2.1%), a decline of 170 basis points. Despite the margin compression, the company’s overall adjusted operating margin remained at 5.9%, only slightly below the 7.1% reported in the same quarter a year earlier, underscoring the impact of higher distribution and store‑expansion costs on retail profitability.
Management raised its third‑quarter guidance, projecting adjusted earnings per share of $0.42 to $0.48 and revenue of $923 million to $963 million. The upward revision signals confidence in the recovery of contract orders and a gradual improvement in retail margins. The guidance range is above the consensus estimates of $909.6 million to $922.4 million for revenue and $0.41 for EPS, indicating that the company expects to outperform analyst expectations in the next quarter.
Headwinds for the company include tariff costs, integration challenges from recent acquisitions, and the capital intensity of new store openings. Tailwinds include strong demand in commercial real estate and healthcare sectors, as well as the company’s proactive pricing strategy to offset tariff impacts. The company’s facility consolidation in Muskegon, Michigan, is expected to deliver $10 million in annual savings by fiscal 2028, further supporting cost discipline.
"As industry trends continue to improve, we are well positioned to build on this momentum and drive long‑term value for our customers and shareholders through ongoing innovation and operational excellence," said CEO Andi Owen. CFO Kevin Veltman added, "The quarter’s adjusted earnings beat expectations, reflecting stronger‑than‑expected sales and gross margin performance. The raised guidance reflects our confidence in the continued strength of our contract business and the gradual recovery of retail margins."
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.