Shares of Herman Miller (MLHR) gained 2.2% in extended trade on Wednesday after the company reported higher-than-expected sales for the fiscal first quarter ended August 28. Furthermore, the shares were up 1.5%, at the time of writing, in early trade on Thursday.
Based out of Michigan, the company engages in the research, design, production and sale of interior furnishings for use in the office, healthcare, educational and residential settings, among others. Its products include the Aeron chair, Equa chair, Marshmallow sofa, Noguchi table and the Eames Lounge Chair.
Net sales grew 26% year-over-year to $789.7 million, beating the Street’s estimates of $654.47 million. However, adjusted earnings per share (EPS) declined 60.5% year-over-year to $0.49, missing analysts’ expectations of $0.56.
Orders were up 64.8% year-over-year, while gross margin fell 480 basis points to 35.1%. Operating margin was negative 6.7%, compared to 15.2% in the prior-year period.
Global Retail business sales and orders were up 30.7% and 22.2% year-over-year on the back of strong demand for Design Within Reach, HAY and Herman Miller categories.
Sales for the Americas decreased 12.1% year-over-year due to labor and supply disruptions. Orders for the quarter increased 43.4% on improved demand.
International sales jumped 5.3% year-over-year, while orders grew 34.7% as a result of strong order rates in Southeast Asia, Greater China, Australia, South Korea, the U.K. and India.
Knoll segment’s orders rose 29.3% year-over-year as workplace orders in North America benefitted from customers’ return to work plans. (See Herman Miller stock chart on TipRanks)
The company said, “We had a strong start to fiscal 2022, as we experienced robust demand across our business while also successfully completing our acquisition of Knoll. Going forward, we are pleased to share that we will operate under the name MillerKnoll…The integration is progressing smoothly as we bring together the best of both organizations, and we are confident in our ability to deliver on our previously outlined cost synergy targets.”
For the second quarter, the company expects sales to range between $1.025 billion and $1.065 billion. Adjusted EPS is anticipated to range from $0.55 to $0.61.
Recently, Benchmark Co. analyst Reuben Garner reiterated a Buy rating on the stock but lowered the price target to $55 from $61 (37.1% upside potential).
Overall, the stock has a Moderate Buy consensus rating based on 1 Buy. The average Herman Miller price target of $55 implies 37.1% upside potential. Shares have gained 33% over the past year.
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