MillerKnoll, Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Leadership Changes: John Hoke to succeed Mike Volkema as board chair, Jeff Stutz promoted to Chief Operating Officer, Kevin Veltman as interim CFO.
• Q1 Results: Consolidated net sales grew almost 11% and adjusted EPS increased 25%. Strong contract business with growth momentum, office leasing activity robust, and preorder metrics up. Product innovations like electrostatic discharge Aeron chair launched.
• Global Retail: North America net sales up 7%, orders up over 5%, web traffic up 17%. Opened 4 stores in Q1, expect 4 more in Q2, total 12-15 for fiscal year. Launched 50% more new products than prior year.

Segment Performance

• North America Contract: Net sales for the quarter were $534 million, up 12% from the same quarter a year ago. New orders in the period were $492 million, down 8% from last year. First quarter operating margin was 10.7% compared to 3.4% in the prior year; adjusted operating margin improved to 11.4%.
• International Contract: Net sales in the first quarter improved to $168 million, up 14.4% on a reported basis and up 11.3% on an organic basis year over year. New orders during the quarter were $155 million, 6.5% lower than prior year on a reported basis, and 9.2% lower organically. Reported operating margin for the International segment was 8.1%, compared to 6.5% in the prior year; adjusted segment operating margin was 8.5%.
• Global Retail: Net sales in the first quarter were $254 million, up 6.4% on a reported basis and up 4.9% organically. New orders in the quarter improved to $239 million, up 1.7% to last year on a reported basis and up 0.3% on an organic basis compared to last year. Operating margin in the Retail segment was 0.6% in the quarter compared to 2.2% last year; adjusted operating margin was 1.2%.

Guidance

• 2026 net sales expected to range between $926 million to $966 million (midpoint $946 million), implying ~3.8% growth at midpoint.
• Gross margin expected to range between 37.6% and 38.6%.
• Adjusted operating expense expected to range $300 million to $310 million; adjusted diluted earnings expected to range between $0.38 and $0.44 per share.
• Tariffs expected to reduce Q2 gross margin $2 million to $4 million before tax; mitigation expected in H2. New store expenses to impact operating margin in Q1-Q3, with revenue from new stores offsetting in H2.

Risks

• Tariffs impacting gross margin in the short term.
• New store opening costs affecting retail operating margin.
• Slower recovery in international wholesale markets due to post-COVID inventory issues.

Question and Answer

Q: Reuben Garner asked about normalization of Americas growth, price vs volume, discounting, and retail profitability.

A: Normalized NAC growth at 3.3% over two quarters, volume was key driver, discounting stable. Retail margin drag from new store expenses, tariffs, and freight.

Q: Greg Burns asked about consolidation, M&A, and international markets.

A: Consolidation is positive, M&A opportunistic. International markets slower to recover but seeing green shoots.

Q: Doug Lane asked about tariffs impact and adjusted operating profit.

A: Tariffs had $8M net impact in Q1, expected lower in Q2, mitigation in H2. Uncertainty on full-year adjusted operating profit margins.