Manufacturing Renaissance: Good News, Bad News For Office Furniture

Herman Miller Inc. reported net sales in the Zeeland company’s second quarter of $441.8 million; a decrease of 0.9% from the same quarter last fiscal year. New orders in the second quarter of $475.8 million were 8.1% higher than the prior year. Sequentially, net sales in the quarter decreased 1.8% from the first quarter of this fiscal year, while orders were up 5.3% over the same period.

Brian Walker, Chief Executive Officer, stated, "While the quarter's sales came in below our expectations, we see progress and momentum in our strategy, evidenced by solid growth in consolidated orders and backlog,” CEO Brian Walker said in a statement issued along with the second-quarter earnings report.

“A combination of factors contributed to lower than anticipated sales in the quarter, including long-leadtime orders, disruption caused by the East Coast storm, and further weakening of demand in Europe,” he also said. “However, we're encouraged by the increased order activity reported by each of our segments and by the particular strength of our key growth initiatives."

Let’s flashback to 11 months ago, when Crain’s reported that the air was leaking out of the West Michigan office furniture industry’s ball that was bouncing higher in 2011. As Walker said in his earnings statement, new orders are there, the air is being pumped back in, but still the ball…for now…is laying flat on the floor.

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Steelcase Inc. reported third quarter revenue of $727.2 million and net income of $23.6 million, or $0.19 per share. Excluding restructuring costs, adjusted earnings were $0.22 per share. Revenue and earnings per share were in-line with company estimates. Steelcase reported $719.4 million of revenue and earnings of $0.17 per share in the third quarter of the prior year, including restructuring costs of approximately $0.02 per share.

Organic revenue growth in the third quarter was 1 percent after adjusting for $8.2 million of unfavorable currency translation effects and a favorable impact of $6.0 million from recent dealer acquisitions. The Americas posted 3 percent organic growth over the prior year while EMEA experienced a 1 percent organic decline. Revenue continued to include a higher mix of project business from some of the company's largest corporate customers as compared to prior year.

"We were pleased that the Americas expanded their adjusted operating margin by 110 basis points in the third quarter compared to the prior year, despite modest revenue growth," said James P. Hackett, president and CEO. "While growth rates have moderated, we expect the fourth quarter will mark the twelfth consecutive quarter of organic revenue growth in the Americas."

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