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MillerKnoll (MLKN -22%) is under pressure following its Q3 (Feb) earnings report, after reporting a rare miss on both EPS and revenue. The company also guided Q4 (May) EPS below expectations, and the mid-point of its Q4 revenue outlook came in lower than expected. Q3 results missed on both EPS and revenue, marking an uncommon shortfall for the company. Q4 EPS guidance was below Street expectations, and the mid-point of revenue guidance was also light.

• MLKN cited ongoing macroeconomic and geopolitical uncertainty, along with severe weather impacts during Q3, as key headwinds.
• Middle East operations remain a long-term growth opportunity, but the current conflict is expected to disrupt Q4 sales and increase costs.
• North America Contract delivered solid margin performance, with strength in gross margin and operating income as sales continued to grow. Industry benchmarks point to improving office trends, including Class A leasing, net absorption, and return-to-office activity.
• Order growth was seen across most sectors, highlighting resilient demand as companies continue investing in office spaces.
• Global Retail comps rose +5.5%, with North America comps up +3.9%, reflecting share gains in premium home furnishings.
• Severe weather in North America reduced store traffic and led to temporary closures, weighing on retail performance.

Briefing.com Analyst Insight:

MillerKnoll's Q3 report stands out negatively given the dual miss on EPS and revenue, coupled with disappointing Q4 guidance. While management pointed to transitory factors like severe weather and geopolitical disruptions, the softer outlook suggests that demand visibility remains clouded in the near term. Encouragingly, the North America Contract segment continues to demonstrate strong margin leverage and cash-generation capabilities, supported by improving office utilization trends. Meanwhile, the Global Retail segment is showing steady share gains despite macro pressures. Even so, with geopolitical risks, weather-related disruptions, and a still-uncertain macro backdrop, MLKN may struggle to regain consistent earnings momentum in the near term. This report does make us nervous for other office equipment names, including HNI (which also recently acquired SCS).