MillerKnoll Posts $0.42 EPS Ex-Tariff Boost, Cuts Sales Outlook

MillerKnoll beat its own earnings guidance in the first quarter of fiscal 2027 even as sales fell, delivering adjusted earnings per share of $0.53 — or $0.42 excluding an $0.11 per-share net benefit from IEPA tariff refunds.

The $0.42 figure landed above the company's guidance range, a result Interim CEO Jeffrey Stutz attributed to "disciplined execution and cost management" during a quarter in which consolidated net sales declined 3.4% year over year to $923 million. Softer-than-anticipated revenue in the North America Contract and Global Retail segments drove the drop.

The Zeeland, Michigan-based furniture maker reported the results for the quarter ended August 29, 2026, on September 22, 2026.

Margin strength despite revenue pressure

First-quarter reported gross margin rose 23 basis points to 41.7%, while adjusted gross margin came in at 41.8%. Recognition of $16.5 million in refunds from the U.S. government related to previously expensed IEPA tariffs contributed 180 basis points to the year-over-year gross margin increase. Stripping out that benefit, adjusted gross margin still improved 150 basis points, primarily on pricing realization.

Consolidated orders for the quarter reached $914 million, up 3.2% as reported and 3.5% organically. Consolidated backlog stood at $669 million at quarter end, down 3.1% from a year earlier.

The company generated $49 million in cash from operations and spent $33 million on capital expenditures. It ended the quarter with $580 million of available liquidity and a net debt-to-EBITDA ratio of 2.75x as defined by its lending agreement, down from 2.8x last quarter.

In July, the board declared a quarterly cash dividend of $0.1875 per share, payable October 15 to shareholders of record on August 29, 2026. The indicated annual dividend of $0.75 per share yields 3.7% based on the prior day's closing stock price.

Segment splits tell a divergent story

North America Contract posted net sales of $506 million, down 5.3% reported and 5.2% organic, largely due to a tough comparison against orders pulled forward into the fourth quarter of fiscal 2025 ahead of tariff pricing actions — a shift the company estimates at $55 million to $60 million. Segment orders fell 1.7% as reported. Adjusted operating margin was 10.7%, down 70 basispoints year over year.

International Contract saw sales decline 6.4% to $157 million, but orders surged 17.3% as reported and 17.9% organically, including a notable project win in South Korea. Adjusted operating margin fell 390 basis points to 4.6%, reflecting deleverage, showroom investments, and the timing of sales events.

Global Retail delivered the standout performance. Net sales rose 2.6% to $261 million, with North America comp sales up 1.9%. Orders climbed 4.3% to $249 million, and North America orders grew 7.5% — the eighth consecutive quarter of North America retail order growth. Adjusted operating margin expanded 580 basisps to 7%; excluding a 410 basis-point net tariff benefit, the improvement was still 170 basis points.

Retail president Debbie F. Propst said the cohort of stores opened from the back half of fiscal 2025 through fiscal 2026 is on track to reach profitability in fiscal 2027, with second-year comp ramps running ahead of expectations. MillerKnoll opened four stores in the quarter — a DWR in Raleigh, North Carolina, and Herman Miller locations in Columbus, Ohio; St. Louis, Missouri; and San Antonio, Texas — and plans 14 to 18 openings across fiscal 2027.

Demand signals point to timing, not structural decline

Stutz pushed back against the notion that the North America Contract softness signals a deeper problem. Project funnel and funnel additions were up year over year, with notable growth in awarded contracts, and four-quarter net absorption in U.S. Class A buildings improved to the highest total since mid-2020.

"All of this suggests the order softness we experienced in the first quarter represents a timing issue rather than a structural slowdown, in general business conditions," Stutz said.

North America Contract president John Michael told analysts that sales teams report customers taking longer to convert awarded projects into orders, citing uncertainty around the upcoming midterms at the state and local level, slower activity at federal agencies affected by downsizing, and project timing pauses in health care. He confirmed the company still expects segment growth for the balance of the year.

CFO Kevin J. Veltman added that August was a growth month year over year, and orders through the first three weeks of September were up 9%, with growth across all three segments.

Guidance trimmed, tariff costs quantified

MillerKnoll cut its full-year net sales outlook to a range of $3.88 billion to $4.03 billion, representing roughly 3% growth at the midpoint, citing the lower-than-expected first-quarter sales and orders. It maintained its adjusted EPS guidance of $1.85 to $2.15, which includes an estimated $0.07 per share of unfavorable impact from the latest U.S.-Canada tariff actions.

For the second quarter, the company guided to net sales of $972 million to $1.012 billion — approximately 4% year-over-year growth at the midpoint — gross margin of 38.3% to 39.3%, adjusted operating expenses of $321 million to $331 million, and adjusted diluted EPS of $0.43 to $0.49.

On tariffs, Stutz detailed a familiar playbook: pulling component inventory ahead of implementation dates, adjusting customer order timing, sharing arrangements with key suppliers, and leveraging dual supply from regions outside the tariff regime. The company also implemented a surcharge averaging about 4% on its international contract business effective earlier in September.

Cost actions are compounding. Veltman identified $3 million to $5 million of savings in the year-over-year OpEx bridge, and the quarter included workforce reductions and reorganization at the Holly Hunt brand, which returned to order growth in Q1 after four consecutive quarters of decline. MillerKnoll has closed two plants, is closing a third in West Michigan, and is evaluating further capacity moves.

Capital allocation priorities remain unchanged: fund the highest-return growth initiatives, pay down debt, maintain the dividend, and act opportunistically on share repurchases. The company aims to reduce debt during fiscal 2027 while preserving investment capacity — and with September orders running 9% higher, management is betting the first-quarter miss was a pause, not a trend.