MillerKnoll Q2 Earnings Call Highlights

MillerKnoll (NASDAQ:MLKN) executives struck an upbeat tone on the company’s second-quarter fiscal 2026 earnings call, pointing to broad-based order growth, a strong retail holiday season, and improving demand signals in its contract businesses. Management said results exceeded expectations, aided by favorable mix, pricing realization, and continued progress on tariff mitigation.

Quarterly results and order momentum

Chief Financial Officer Kevin Veltman said adjusted earnings per share came in at $0.43, above expectations, “reflecting stronger-than-expected sales and gross margin performance.” Consolidated net sales were $955 million, down 1.6% year-over-year on a reported basis and down 2.5% organically. Veltman reiterated that the year-over-year decline was anticipated due to $55 million to $60 million of pull-ahead activity in North America contract sales that shifted revenue into the first quarter.

Orders were a bright spot. MillerKnoll posted quarterly orders of $973 million, up 5.5% as reported and 4.5% organically, with management emphasizing growth “across all three segments.” Veltman added that order growth was consistent across each month of the quarter and continued at a mid-single-digit pace in the early weeks of the third quarter.

Margins, tariffs, and cash flow

Second-quarter consolidated gross margin was 39%, including approximately $1 million of net tariff-related costs. Veltman said the company expects proactive mitigation actions—including pricing and surcharges—to fully offset tariff costs in the second half of the fiscal year, supporting gross margin and EPS resilience.

On the cash flow and balance sheet front, MillerKnoll generated $65 million in operating cash flow and ended the quarter with $548 million in liquidity. The company’s net debt-to-EBITDA ratio was 2.87x, which management said remained comfortably below covenant limits.

Veltman also discussed an operational efficiency initiative: the company recently announced the consolidation of its Muskegon, Michigan facility, with production transitioning to other plants. The move is expected to deliver $10 million in annual run-rate savings by fiscal 2028.

Segment performance: contract softness in sales, strength in orders

In North America contract, second-quarter net sales were $509 million, down 3.1% year-over-year, while orders rose to $507 million, up 4.8%. Operating margin was 8.7%, and adjusted operating margin was 9.7%, down 50 basis points due primarily to deleverage on lower sales.

During Q&A, President of North America Contract John Michael said markets that had been slower to recover, such as the Bay Area and Southern California, were “starting to really percolate,” while the Northeast Coast had been strong for months. By industry, he cited strength in energy, professional services, and legal, while noting public sector/federal government was “a little softer than normal” due to earlier DOGE-related work and a government shutdown. He added that pharma and banking were down slightly year-over-year, and that healthcare remained a growth driver.

International contract net sales were $171 million, down 6.3% reported and down 9.2% organically year-over-year. Orders increased to $162 million, up 6.6% reported and 3.4% organically, driven by strength in Europe, the U.K., China, and India, partially offset by lower orders in Korea and the Middle East. Adjusted operating margin was 9.7%, down 280 basis points, primarily due to deleverage and regional/product mix.

Retail growth: holiday strength, store expansion, and assortment gains

Chief Executive Officer Andi Owen highlighted momentum in the global retail segment, where second-quarter orders increased 6% year-over-year and sales rose 5%, with comparable sales up 3.5%. In North America retail specifically, she said orders were up 8% and comparable sales were up 8%, while promotions and marketing spend were held flat versus last year.

Owen said the company delivered record performance during the 12-day holiday cyber promotional period (from the Friday before Thanksgiving through Giving Tuesday), with orders up 12% year-over-year. She cited “multiple records” for the DWR brand, including highest orders in brand history in-store and online, and the most single-day web visits.

MillerKnoll opened four new retail locations in the quarter (DWR in Salt Lake City and Herman Miller stores in Nashville, El Segundo, and Walnut Creek) and relocated two stores (new DWR in Houston and new Herman Miller store in Berkeley). Management now expects to open 14 to 16 new U.S. stores in fiscal 2026, part of a longer-term plan to double the DWR and Herman Miller store footprint over several years.

Executives pointed to multiple drivers behind retail growth, including new stores, broader assortment, e-commerce acceleration, and brand awareness. President of Global Retail Debbie Propst noted assortment expansion, with “collection count up 22% year on year.” The team also emphasized supply chain advantages, with about 70% of North America retail cost of goods sourced from the U.S., which Owen said reduced tariff exposure versus competitors.

Guidance and key themes for the second half

For the fiscal third quarter, MillerKnoll guided to net sales of $923 million to $963 million, gross margin of 37.9% to 38.9%, and adjusted diluted earnings per share of $0.42 to $0.48. Adjusted operating expense is expected to be $300 million to $310 million, higher year-over-year due to variable selling and incentive expenses and new store costs. Veltman said the outlook reflects seasonal softness in contract as the calendar year closes, as well as the timing of the Chinese New Year holiday.

Management estimated $5 million to $6 million of incremental operating expense in Q3 from new retail locations, with a similar range expected in Q4. In Q&A, executives said they expect incremental operating income dollars from new store investments to begin showing by the beginning of next fiscal year as the company moves past what it described as a current “depth of investment” period.

On capital allocation, Veltman said the company’s priorities are funding growth investments and then paying down debt, with a “midterm target” to move leverage toward 2.0x to 2.5x from the current 2.87x. He added the company intends to maintain its dividend and continue periodic share repurchases to offset dilution.

Looking forward, Owen attributed improving demand conditions to accelerating return-to-office momentum, increased decision velocity among customers, and strength in higher-end commercial real estate as companies seek to elevate the office experience. She also described international markets as offering significant share-gain opportunities and said retail is benefiting from a resilient target consumer and growing awareness of the company’s brands.

About MillerKnoll (NASDAQ:MLKN)

MillerKnoll, Inc (NASDAQ: MLKN) is a global design and manufacturing company specializing in furniture, lighting, textiles, rugs and accessories for residential and commercial environments. The company’s portfolio features well-known brands such as Herman Miller, Knoll, Maharam, Geiger and Tuyama, offering solutions for office, healthcare, education, hospitality and home settings. Products span seating, workstations, tables, storage systems and outdoor furnishings, complemented by a range of services including space planning, ergonomic consulting and installation support.

Formed in July 2021 through the merger of Herman Miller and Knoll, MillerKnoll combines more than a century of design heritage with a modern portfolio of sustainable products and materials.