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Earnings call · Aug 2026 (Q1 FY27)

MILLERKNOLL Q1 FY27 earnings call MLKN

Sep 22, 2026 Source

Executive summary

MillerKnoll Q1 FY27 — Disciplined Execution Amidst Revenue Headwinds

MillerKnoll delivered solid margin performance and cash generation in Q1 FY27, driven by disciplined execution and cost management, despite softer-than-anticipated revenue in North America Contract and Global Retail. The company is focused on strategic priorities including operational discipline, rigorous cost control, and capital allocation to support debt reduction and growth investments, navigating dynamic market conditions and new tariff impacts.

Highlights

4

  • Adjusted earnings per share were $0.53, exceeding guidance range.

  • International Contract orders increased 17.9% organically year-over-year.

  • Global Retail achieved its eighth consecutive quarter of North America Retail order growth, up 7.5% year-over-year.

  • Global Retail adjusted operating margin improved 170 basis points year-over-year, excluding tariff benefits.

Concerns

5

  • Consolidated net sales were $923 million, down 3.4% year-over-year.

  • North America Contract sales declined 5.3% and orders were down 1.7% year-over-year.

  • International Contract net sales decreased 6.4% year-over-year.

  • Full-year net sales guidance reduced to $3.88 billion to $4.03 billion due to lower Q1 sales and orders.

  • Estimated $0.07 per share unfavorable impact from new U.S.-Canada tariff actions for the full year.

Guidance & targets

CategoryTargetConfidence
Q2 FY27 Net Sales
$972 million to $1.012 billion
high materiality
High
Q2 FY27 Gross Margin
38.3% to 39.3%
medium materiality
High
Q2 FY27 Adjusted Operating Expenses
$321 million to $331 million
medium materiality
High
Q2 FY27 Adjusted Diluted EPS
$0.43 to $0.49
high materiality
High
FY27 Net Sales
$3.88 billion to $4.03 billion
high materiality
Medium
FY27 Adjusted Earnings Per Share
$1.85 to $2.15
high materiality
High
FY27 Incremental New Store Expense
approximately $6 million per quarter
low materiality
High
FY27 New Store Openings
approximately 14 to 18 new store openings
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
North America Contract
Sales declined due to challenging prior year comparison associated with order pull-forward in Q4 FY25. Orders were softer than expected, with varied trends across sectors (strength in insurance, financial, business services; softness in healthcare, federal/state/U.S. local government). Adjusted operating margin down 70 bps YoY due to deleverage, lower sales, and inflationary costs, partially offset by pricing and tariff refunds.
Orders: $484 millionOrders growth: -1.7% reported, -1.6% organically
$506 million-5.3% reported, -5.2% organically—9.4% reported operating margin, 10.7% adjusted operating margin
International Contract
Sales declined due to difficult comparisons. Orders increased across most regions (Asia, Middle East, Europe, Latin America), with healthy demand from financial services, private office, healthcare, and technology. Adjusted operating margin down 390 bps YoY, reflecting deleverage on lower sales, showroom investments, timing of sales events, and higher incentive compensation. Product mix shift towards lower gross margin categories also contributed.
Orders: $181 millionOrders growth: +17.3% reported, +17.9% organicallyNotable project win: South Korea
$157 million-6.4% reported, -6.2% organically—2.4% reported operating margin, 4.6% adjusted operating margin
Global Retail
Achieved another quarter of sales and order growth, marking the eighth consecutive quarter of North America Retail order growth. Performance strengthened significantly in August after softer June and July. Adjusted operating margin up 580 bps YoY, including a 410 bps net benefit from tariff refunds; excluding this, margin improved 170 bps YoY due to pricing realization and cost savings, partially offset by planned investments in new store openings.
Comparable sales: flatNorth America comparable sales: +1.9%Orders: $249 millionOrders growth: +4.3% reported, +4.7% organicallyNorth America orders growth: +7.5%
$261 million+2.6% reported, +2.8% organically—6.1% reported operating margin, 7.0% adjusted operating margin

MLKN operating KPIs by quarter

MLKN operating KPIs stated on its earnings calls, by fiscal quarter
KPI May 2026 Q4 FY26This call Aug 2026 Q1 FY27Change vs prior quarter
Orders
$972M Orders at the consolidated level for the quarter were $972 million, down 6.3% as reported and 6.9% lower on an organic basis. Source transcript
$914M Consolidated orders for the quarter were $914 million, up 3.2 percent as reported and 3.5 percent on an organic basis. Source transcript
-6%
Backlog
$679M Our consolidated backlog was $679 million at quarter end, down 10.8% from a year ago, reflecting both the prior year order pull forward dynamic and the timing of shipments at year end. Source transcript
$669M Our consolidated backlog was $669 million at quarter end, down 3.1 percent from a year ago. Source transcript
-1.5%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Consolidated Backlog $669 million quarter end

-3.1% YoY

Product announcements

ProductTypeDetails
Concert line by Knolllaunch

Risks & headwinds

U.S.-Canada Tariff Actions FY27

estimated $0.07 per share unfavorable impact for full year FY27

Mitigation:Proactive measures include pulling component inventory ahead of implementation, optimizing customer order timing, working with suppliers on sharing arrangements, leveraging dual supply, and sourcing from outside tariff regime regions.

Softer Revenue in North America Contract and Global Retail Q1 FY27

Q1 sales down 3.4% YoY consolidated

Mitigation:Focus on operational discipline, cost management, and strategic investments. NAC internal funnel metrics remain positive, suggesting timing issues rather than structural slowdown. Global Retail saw strong August performance after June/July softness.

Inflationary Cost Pressure Q2 FY27

Q2 FY27 price-cost expected to be a slight headwind of 20-30 bps YoY

Mitigation:Implementing pricing actions (e.g., 4% average surcharge for International Contract), supply management efforts, and evaluating manufacturing capacity to reduce cost of goods sold.

Increased Digital Advertising Costs ongoing

Increased digital advertising costs

Mitigation:Leaning more heavily into direct mail distribution, evolving digital product roadmap, and brand marketing strategies to optimize results from AI search and other channels.

Inventory Issues due to PFAS Regulations June and July (Q1 FY27)

Missing some inventory

Mitigation:Inventory position is now much better, contributing to strong August performance in Global Retail.

What to watch in Q2 FY27

North America Contract growth

next quarter and beyond
Current Q1 sales down 5.3% YoY, orders down 1.7% YoY
Target Growth for the balance of the year

Why it matters

NAC is the largest segment, and its recovery is crucial for overall company performance and achieving full-year sales guidance.

We do. Yeah, the forecast for the balance of the year shows growth, but obviously we're a little bit behind after the first quarter, but the teams are working hard to catch that up.

Q&A highlights

Why did positive internal funnel metrics and constructive market dynamics not translate to stronger Q1 performance in NAC?

Management reiterated that internal indicators remain positive, but Q1 softness was due to resilient sectors having a down quarter, which can happen in a project-driven business. Customers are taking longer to convert awarded projects to orders, particularly in state/local government (midterm uncertainty), federal government (slower return post-downsizing), and healthcare (project timing).

“I think our issue is more of some of the resilient sectors that we've seen strengthened, just had a down quarter, and that happens in a project-driven business.”

asked by Gregory Burns · answered by Jeff Stutz

2 min read 6 chapters

Detailed narrative

Operational Discipline and Resource Allocation

MillerKnoll is elevating operational discipline by concentrating resources on initiatives with the greatest value creation potential. In North America Contract, this means focusing selling efforts on global and national account opportunities. International Contract is leveraging new products like the Concert line by Knoll and expanding distribution in Asia-Pacific. Global Retail is optimizing its store growth strategy with an emphasis on smaller format Herman Miller stores and refining marketing investments.

Cost Discipline and Expense Alignment

The company is maintaining rigorous cost discipline, aligning expenses with revenue levels. Early progress was demonstrated by Q1 earnings performance, excluding tariff refunds. Efforts include evaluating manufacturing capacity, with two plants already closed and a third in West Michigan in process. Workforce reductions and reorganization within the Holly Hunt brand also contributed to cost savings.

Capital Allocation and Balance Sheet Strength

A sharpened focus on capital allocation, cash flow, and balance sheet strength aims to support debt reduction during FY27 while preserving capacity for growth investments. The net debt to EBITDA ratio improved to 2.75 times from 2.8 times in the prior quarter, reflecting progress in deleveraging. The company continues to prioritize investing in growth opportunities that generate strong returns.

North America Contract Market Dynamics

Despite Q1 sales and order softness, internal forward demand indicators for North America Contract remain healthy, with project funnel and awarded contracts up year-over-year. Management attributes the Q1 softness to timing issues rather than a structural slowdown, citing continued strength in Class A leasing and corporate profitability. Sectoral variations saw strength in insurance and financial services, offset by softness in healthcare and government.

International Contract Growth Opportunities

International Contract orders increased significantly across most regions, including Asia, the Middle East, Europe, and Latin America, driven by strong demand from financial services, private office, healthcare, and technology customers. The company is actively expanding and strengthening its international dealer network and improving alignment to capitalize on these growth opportunities, as evidenced by a recent dealer event in Jakarta.

Global Retail Performance and Strategy

Global Retail delivered another quarter of sales and order growth, marking its eighth consecutive quarter of North America Retail order growth. Performance strengthened significantly in August after softer June and July sales, which were partly impacted by inventory issues related to PFAS regulations. The segment continues its store growth strategy, planning 14-18 new openings in FY27, and is adapting to increased digital advertising costs by leaning into direct mail distribution.

AI-generated summary of the company's earnings call. Not investment advice.