Image source: Herman Miller.
What happened
Shares of Herman Miller, Inc. (MLKN -1.44%) were slipping after the office furniture supplier posted a disappointing first-quarter results last night. As of 11:20 a.m. EDT, the stock was down 10.2%.
So what
Herman Miller's slide followed weak reports from two other peers this week, Steelcase and HNI, Inc., indicating a broader slowdown in the office furniture industry. Herman Miller shares were down 8.5% Tuesday, following weak guidance from HNI, meaning the stock is now down about 20% this week.
For the quarter past, Herman Miller posted earnings per share of $0.60, up from $0.56 a year ago but short of estimates at $0.62. Sales increased 5.9% to $598.6 million. CEO Brian Walker was optimistic in spite of the headwinds, saying, "Despite uncertainty in the global macro-economic environment, we were pleased that our ELA, Specialty and Consumer businesses each delivered strong organic order growth for the quarter." Still, he acknowledged that North American orders were softer than expected.
Now what
Guidance was also weaker than expected as the company sees sales of $580 million-$600 million for the current quarter, short of estimates of $601.1 million and indicating adjusted sales growth of 2.5% at the midpoint. On the bottom line, management expects EPS of $0.52-$0.56, below estimates of $0.60 as well as last year's figure at $0.57.
Office supply retailers like Staples and Office Depot have seen sales steadily fall as the American work environment changes. While office furniture isn't threatened by digitization the way paper and printers are, the increase in telecommuting and other workplace shifts may be a long-term headwind for companies like Herman Miller. Still, the company delivers solid profits and is cheap at a valuation of 12. After this week's 20% drop, I'd expect shares to be close to a near-term bottom.
