Office furniture manufacturer MillerKnoll (NASDAQ: MLKN) fell short of the market’s revenue expectations in Q3 CY2026, with sales falling 3.4% year on year to $923.4 million. Next quarter’s revenue guidance of $992 million underwhelmed, coming in 1.8% below analysts’ estimates. Its non-GAAP profit of $0.53 per share was 49.3% above analysts’ consensus estimates.
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MillerKnoll (MLKN) Q3 CY2026 Highlights:
- Revenue: $923.4 million vs analyst estimates of $943.3 million (3.4% year-on-year decline, 2.1% miss)
- Adjusted EPS: $0.53 vs analyst estimates of $0.36 (49.3% beat)
- Adjusted Operating Income: $65.7 million vs analyst estimates of $49.87 million (7.1% margin, 31.7% beat)
- The company dropped its revenue guidance for the full year to $3.96 billion at the midpoint from $4.03 billion, a 1.9% decrease
- Management reiterated its full-year Adjusted EPS guidance of $2 at the midpoint
- Operating Margin: 6.5%, in line with the same quarter last year
- Backlog: $669.2 million at quarter end, down 3.1% year on year
- Market Capitalization: $1.38 billion
StockStory’s Take
MillerKnoll’s third quarter results were shaped by a decline in sales driven by weaker demand in its North America Contract and global retail segments, though the company delivered stronger margins and earnings through effective cost controls. Management attributed the revenue shortfall primarily to delayed project conversions and softer government and healthcare demand, while highlighting that international contract orders and global retail orders showed resilience. Interim CEO Jeffrey Stutz noted, “Our teams have sharpened their priorities and aligned resources behind the opportunities that can have the greatest impact.”
Looking ahead, MillerKnoll’s outlook is influenced by ongoing cost discipline, continued store expansion in global retail, and proactive tariff management. Management emphasized cautious optimism around project pipelines, especially as larger workplace projects are expected to return over the next year amid evolving digital marketing strategies and changing customer behavior. Stutz stated, “We are focused on improving our operating performance while investing in our most promising growth initiatives,” although the company remains vigilant about inflation and digital advertising cost pressures.
Key Insights from Management’s Remarks
MillerKnoll’s management pointed to a combination of delayed project timing, varying demand across sectors, and an evolving product mix as key factors shaping the quarter’s results and outlook.
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North America contract softness: The company saw slower order conversion in its North America Contract business, especially from government and healthcare clients. Management attributed this to delayed project timing and election-related uncertainty, not structural demand issues. John Michael, President of North America Contract, noted customers are “taking a little bit longer to convert from awarded project to orders.”
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International contract resilience: International orders grew, particularly in Asia and the Middle East, even as sales declined due to difficult comparisons and delayed project ramp-ups. New products such as the Concert line by Knoll gained traction, especially in underpenetrated European categories like private office furniture.
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Retail segment outperformance: The global retail segment delivered sales and order growth, with North America retail orders rising for the eighth consecutive quarter. Retail President Debbie Propst highlighted that new stores opened in the past two years are maturing and expected to become profitable in 2027, with August sales rebounding after softness in June and July.
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Cost control and restructuring: Management achieved $3 to $5 million in savings through workforce reductions, manufacturing capacity adjustments, and restructuring within the Holly Hunt brand. These actions supported margin performance despite lower sales volumes and inflation pressures.
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Tariff management and pricing: The company benefited from tariff refunds and implemented new pricing actions to offset cost inflation, including surcharges in international markets and proactive inventory strategies to mitigate new U.S.-Canada tariffs. Management indicated these measures would continue as inflation and trade policy uncertainties persist.
Drivers of Future Performance
MillerKnoll’s guidance is shaped by cautious optimism on project pipelines, ongoing cost management, and strategic investments in retail expansion amid inflation and digital marketing challenges.
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Project pipeline and order timing: Management expects growth in North America Contract for the remainder of the year, as internal indicators like project funnel additions and awarded contracts remain positive. However, delayed order conversions and sector variability, including continued uncertainty in government and healthcare, could impact the pace of recovery.
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Retail store expansion: The company plans to accelerate store openings—expecting 14 to 18 new locations this year—while adapting marketing strategies to offset rising digital ad costs. Propst emphasized that shifting to direct mail and optimizing the digital customer journey are intended to enhance brand reach and support retail segment growth.
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Inflation and tariff headwinds: MillerKnoll faces ongoing cost inflation in materials and logistics, as well as new U.S.-Canada tariffs. Management is relying on further pricing actions, cost controls, and supply chain flexibility to protect margins, but acknowledges these headwinds could pressure profitability if inflation accelerates or trade policy becomes more restrictive.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will focus on (1) signs of recovery in North America Contract order conversion and project activity, (2) continued profitability ramp and sales growth in the global retail segment as new stores mature, and (3) the company’s ability to mitigate cost inflation and tariff pressures through pricing and operational discipline. Additionally, progress in international contract volume and retail digital marketing effectiveness will be important signposts.
MillerKnoll currently trades at $20.57, in line with $20.42 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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