MillerKnoll (NASDAQ:MLKN) reported first-quarter fiscal 2027 sales and orders that reflected uneven demand across its businesses, as strong International Contract and Global Retail order trends were offset by softer-than-expected North America Contract activity.
For the quarter ended Aug. 29, 2026, consolidated net sales totaled $923 million, down 3.4% from a year earlier, while consolidated orders increased 3.2% to $914 million. Adjusted diluted earnings per share were $0.53, including an approximately $0.11 per-share net benefit from refunds of previously expensed IEPA tariffs. Excluding that benefit, adjusted EPS was $0.42, above the company’s guidance range, according to Interim Chief Executive Officer Jeff Stutz.
Margins, Cash Flow and Capital Priorities
Reported gross margin rose 320 basis points year over year to 41.7%, while adjusted gross margin was 41.8%. The company recognized $16.5 million in U.S. government refunds related to previously expensed IEPA tariffs, contributing 180 basis points to the year-over-year gross-margin increase.
Excluding the tariff-refund benefit, adjusted gross margin improved 150 basis points, driven primarily by pricing realization and partly offset by inflationary pressure, Chief Financial Officer Kevin Veltman said.
MillerKnoll generated $49 million in operating cash flow and spent $33 million on capital expenditures during the quarter. It ended the period with $580 million in available liquidity, while net debt to EBITDA stood at 2.75 times under its lending agreement.
The company’s board declared a quarterly cash dividend of $0.1875 per share, payable Oct. 15 to shareholders of record as of Aug. 29.
Management said its capital-allocation priorities remain investing in growth opportunities with strong returns, reducing debt, maintaining the dividend and being opportunistic with share repurchases. Veltman said the company’s shift toward smaller-format Herman Miller stores is an example of its focus on investment returns.
North America Contract Sees Softer Orders, but Pipeline Remains Constructive
North America Contract sales fell 5.3% to $506 million, while orders declined 1.7% to $484 million. The company attributed the sales comparison partly to $55 million to $60 million in orders that were pulled forward from the first quarter of fiscal 2026 into the fourth quarter of fiscal 2025 ahead of tariff-related pricing actions.
Adjusted operating margin in the segment was 10.7%, down 70 basis points year over year, as lower sales volume and inflationary costs more than offset pricing realization and tariff refunds.
Stutz said demand trends varied by customer sector. The company continued to see strength in insurance, financial services and business services, while healthcare and federal, state and local government activity was softer.
John Michael, president of North America Contract, said customers appear to be taking longer to convert awarded projects into orders. He pointed to public-sector uncertainty, slower activity at certain federal agencies and the timing of healthcare projects. Still, he said the company expects North America Contract to grow over the balance of fiscal 2027.
Management said internal indicators, including project funnels, funnel additions and awarded contracts, increased year over year. Veltman added that August produced year-over-year order growth for North America Contract and the company overall, while orders were up 9% year over year through the first three weeks of September across all three segments.
MillerKnoll also estimated that new U.S.-Canada tariff actions would create an approximately $0.07-per-share cost impact for the full year. The company manufactures in both countries and is pursuing mitigation efforts including inventory planning, supplier arrangements, dual sourcing and sourcing from outside affected tariff regions.
International Contract Orders Advance Despite Sales Decline
International Contract revenue declined 6.4% to $157 million, but orders rose 17.3% to $181 million, including a notable project win in South Korea. The company reported strong activity in Asia, the Middle East and portions of Europe and Latin America, along with demand from financial services, private-office customers, healthcare and technology.
Adjusted operating margin was 4.6%, down 390 basis points from a year earlier. Veltman attributed the decline to lower sales, showroom investments, the timing of sales events and higher incentive compensation.
Stutz said profitability in the international business has also been affected by a shift toward a broader mix of furnishings beyond task seating, which has historically been a high-profit category. The company is pursuing broader product-category participation to compete for larger projects and increase total profit dollars over time, he said.
Management also cited cost inflation, energy-price pressures and regional manufacturing overhead absorption as factors affecting international profitability. During the quarter, the company hosted dealers from more than 20 countries in Jakarta, Indonesia, as it seeks to expand distribution and dealer engagement in Asia-Pacific.
Retail Growth Continues as Store Expansion Accelerates
Global Retail sales rose 2.6% to $261 million, with comparable sales flat overall and North American comparable sales up 1.9%. Orders increased 4.3% to $249 million, while North American orders rose 7.5%. The company said this marked its eighth consecutive quarter of North American retail order growth.
Adjusted operating margin in Global Retail increased 580 basis points to 7%, including a 410-basis-point benefit from tariff refunds. Excluding that benefit, adjusted operating margin improved 170 basis points, supported by pricing and cost savings despite planned investments in new stores.
President of Global Retail Debbie Propst said sales and orders were softer than expected in June and July, particularly in web sales and the outdoor category, where the company lacked some inventory because of PFAS regulations. August strengthened considerably, and the company said retail trends remained positive into September.
The company opened a Design Within Reach location in Raleigh, North Carolina, and Herman Miller stores in Columbus, Ohio; St. Louis, Missouri; and San Antonio, Texas. It expects to open five to seven stores during the fiscal second quarter and approximately 14 to 18 locations for the full year.
Propst said Herman Miller stores opened in the latter half of fiscal 2025 and throughout fiscal 2026 are progressing toward profitability in fiscal 2027. MillerKnoll is also restructuring its Holly Hunt business, including workforce reductions, corporate-footprint adjustments and the planned closure of its Minneapolis showroom in favor of an outside sales representative structure.
Outlook Updated for Lower Sales Expectations
For the fiscal second quarter, MillerKnoll expects sales of $972 million to $1.012 billion, representing approximately 4% year-over-year growth at the midpoint. It forecast adjusted EPS of $0.43 to $0.49.
For fiscal 2027, the company lowered its sales outlook to $3.88 billion to $4.03 billion, representing approximately 3% growth at the midpoint, citing lower-than-expected first-quarter sales and orders. It maintained its adjusted EPS outlook of $1.85 to $2.15, including the estimated impact from recent U.S.-Canada tariff actions.
About MillerKnoll (NASDAQ:MLKN)
MillerKnoll, Inc is a global design company that develops, manufactures and sells furnishings and related products for workplace, healthcare, education, hospitality and residential environments. Its portfolio includes furniture for offices and homes, seating, desks, tables, storage systems, lighting, textiles and accessories, as well as products intended to support collaboration and flexible workspaces.
The company operates a collection of design-focused brands, including Herman Miller, Knoll, Design Within Reach, Muuto, HAY, Maharam and Geiger.
