- Strong Q4 Financial Performance - Q4 net sales reached $962 million, up 8.2% year-over-year, with adjusted earnings of $0.60 per share.
- Segment Sales Growth - North America Contract sales grew 13%, International Contract rose 6.9%, and Global Retail saw 2.2% growth.
- Expansion and Innovation - Opened 4 new stores in FY2025, plans for 10-15 more in FY2026, and introduced over 30 new products during Design Days 2025.
- Financial Stability - Gross margin of 39.2%, generated $71 million in cash flow, and reduced long-term debt by $5 million.
- FY2026 Outlook - Q1 net sales expected between $899M-$939M, representing 6.7% growth at midpoint, with adjusted EPS of $0.32-$0.38.
Operational Highlights and Growth Initiatives
MillerKnoll's operational execution was a key highlight of the quarter. The company opened new flagship locations in London, New York, and Chicago, showcasing its brand strength and driving customer engagement. These showrooms featured over 30 new product launches during Design Days 2025, with booked appointments increasing by 11% year-over-year. The introduction of innovative products such as Knoll Dividends Skyline and Herman Miller's Gemma Healthcare Seating underscores the company's commitment to meeting evolving workplace and healthcare needs. In retail, MillerKnoll opened four new stores in fiscal 2025 and plans to expand further with 10-15 additional locations in fiscal 2026. The company also saw growth in its e-commerce channel, demonstrating its ability to adapt to changing consumer preferences.
Management Outlook and Future Guidance
Management expressed cautious optimism about market trends, citing increasing office usage and improving industry orders. CEO, Andi Owen, noted, "We are well-positioned to capitalize on growth opportunities with our strong product portfolio and global distribution network." The company provided guidance for Q1 FY2026, with net sales expected to range between $899 million and $939 million, representing a 6.7% year-over-year increase at the midpoint. Adjusted diluted EPS is projected to range from $0.32 to $0.38. However, tariffs are expected to impact Q1 earnings by $9 million to $11 million pre-tax, or $0.09 to $0.11 per share after tax. The company plans to offset these costs through pricing actions and cost management initiatives.
Valuation and Investment Thesis
MillerKnoll's strong financial performance and growth initiatives suggest a positive outlook for investors. The company's current valuation metrics indicate a reasonable price relative to its earnings and growth prospects. With a P/E ratio of -36.57 and a P/S ratio of 0.37, the stock appears attractively valued compared to industry peers. Additionally, the company's free cash flow yield of 9.44% highlights its ability to generate strong cash flows, supporting its dividend yield of 3.78%. While the stock's high net debt/EBITDA ratio of 10.03 raises concerns about leverage, management's focus on debt reduction and disciplined capital allocation offers a path to improving this metric. Overall, MillerKnoll's strong execution, innovative product portfolio, and strategic growth initiatives position it as a compelling investment opportunity in the furniture and design industry.