After hitting 52-week lows, MillerKnoll (MLKN, Financial) shares jumped 9% today despite missing Q3 revenue estimates and issuing below-consensus Q4 guidance. This positive response comes even as the company's results lagged behind peer Steelcase (SCS, Financial), which also reported its February quarter numbers. Although MLKN's stock has underperformed SCS over the past year, it is experiencing a more favorable price movement today despite bearish guidance and weak demand across most regions.
Several macroeconomic challenges, including inflation, interest rates, and tariffs, have impacted MLKN's Q3 performance. The company managed to beat earnings expectations, but profits still fell 2% year-over-year to $0.44 per share. Revenue remained flat, increasing just 0.4% to $876.2 million, marking the third time in four quarters it missed estimates. SCS faced similar market conditions, highlighting the ongoing uncertainty.
- MLKN saw strong adjusted order growth in Global Retail, especially in North America, where orders rose 14% compared to a 4% overall increase.
- However, order growth in North America Contract and International Contract segments declined by 1.8% and 1.6%, respectively.
- Order trends in North America Contract deteriorated in January amid tariffs and economic uncertainty, but improved in February and early March, with orders up over 30% year-over-year. International Contract also showed signs of stabilization with a 2% increase in March.
Despite positive order trends, MLKN's Q4 guidance falls short of analyst expectations, projecting adjusted EPS of $0.46-0.52 and revenues of $910-950 million. CEO Andrea Owen attributed this to heightened uncertainty, partly due to tariffs. The company plans a 4.5% price increase effective June 2 to mitigate tariff impacts and will leverage its supply chain flexibility to manage costs.
Investors were encouraged by MLKN's Q3 performance, suggesting the market might expect a Q4 beat supported by rising order trends. However, caution remains due to high interest rates and slower-than-expected economic improvements, which could hinder a more robust rally in the near term.
