EPS of $0.29 increased by 107.1% from previous year
Gross margin of 38.5%
Net income of 20.20M
"We outperformed our expectations and delivered strong revenue and profitability, with consolidated net sales growing almost 11% and adjusted EPS increasing 25%." - Andi Owen
MillerKnoll Inc (MLKN) QQ1 2026 Earnings Analysis: North America Contract Momentum, Tariff Headwinds, and Strategic Growth Initiatives
Executive Summary
MillerKnoll reported a robust start to fiscal 2026 (QQ1 2026), delivering consolidated net sales of $955.7 million and adjusted earnings per share (EPS) of $0.45, with net sales up 10.9% year-over-year and organic growth of 10%. Management attributed the outperformance to a combination of stronger demand across contract and retail segments, favorable fixed-cost leverage, and the contribution of geographic and channel expansion initiatives. The quarter benefited from a favorable product mix and price actions intended to offset tariff headwinds, while tariffs imparted a modest drag on margins in the near term. Management highlighted ongoing ramp in the North America Contract (NAC) business, a disciplined store expansion program in Global Retail, and a markedly accelerated product pipeline (50% more new product introductions in the year). The company reaffirmed 2026 guidance, signaling a mid-single-digit revenue trajectory with a gross margin in the high-37% to low-38% range, and adjusted EPS of $0.38–$0.44, while noting net tariff-related gross margin headwinds of $2–$4 million in Q2 and incremental pre-opening costs related to new stores. With liquidity of ~$481 million and a net debt-to-EBITDA ratio of ~2.92x, MillerKnoll remains financially flexible to fund store openings, product innovation, and potential bolt-on opportunities amid industry consolidation.
Key Performance Indicators
Revenue
955.70M
QoQ: 9.07% | YoY:7.51%
Gross Profit
368.10M
38.52% margin
QoQ: 10.74% | YoY:4.46%
Operating Income
53.50M
QoQ: 165.09% | YoY:-14.54%
Net Income
20.20M
QoQ: 259.06% | YoY:104.04%
EPS
0.29
QoQ: 252.63% | YoY:107.14%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $955.7M, YoY +7.5%, QoQ +9.1% (QQ1 2026)
Gross Profit: $368.1M, YoY +4.5%, QoQ +10.7%
Gross Margin: 38.5%
Operating Income: $53.5M, YoY -14.5%, QoQ +165.1%
Net Income: $20.2M, YoY +104%, QoQ +259%
Financial Highlights
- Revenue: $955.7M, YoY +7.5%, QoQ +9.1% (QQ1 2026)
- Gross Profit: $368.1M, YoY +4.5%, QoQ +10.7%
- Gross Margin: 38.5%
- Operating Income: $53.5M, YoY -14.5%, QoQ +165.1%
- Net Income: $20.2M, YoY +104%, QoQ +259%
- Earnings per Share (GAAP): $0.29, YoY +107%, QoQ +252%
- Adjusted EPS: $0.45 (Q1 2026) vs. prior year +25%
- Net Debt/EBITDA: 2.92x; Liquidity: $481M
- Backlog: $691M; New Orders: $885M
- Segment highlights: NAC Net Sales $534M (+12%); International Contract $168M (+14.4%); Global Retail $254M (+6.4%)
- Tariff impact: Net tariff-related headwind ~$8M in Q1; Q2 expected $2–$4M drag; pricing actions in place for mitigation
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
955.70M
7.51%
9.07%
Gross Profit
368.10M
4.46%
10.74%
Operating Income
53.50M
-14.54%
165.09%
Net Income
20.20M
104.04%
259.06%
EPS
0.29
107.14%
252.63%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and leadership: Andi Owen outlined accelerated product creation, channel/geographic expansion, and prudent cost management; Jeff Stutz promoted to COO; Kevin Veltman appointed Interim CFO, with ongoing integration efforts post-Knoll acquisition. Management emphasized the company’s balanced, long-term approach to profitable growth.
- Market conditions and funnel: The 12-month funnel in both North America and international contract is up year over year; orders in the quarter showed strength with July orders above expectations. The Aeron electrostatic discharge (ESD) variant was launched for data-center environments, signaling ongoing product differentiation and addressable markets in the CRE/tech space.
- North America Retail: Net sales in NA Retail up 7% y/y; e-commerce and web traffic strengths (web traffic up 17%); four stores opened in Q1 (DWR Sarasota, DWR Las Vegas, Herman Miller Chicago, Herman Miller Philadelphia) with four more planned in Q2; Outlook calls for 12–15 new stores in FY2026 to roughly double the footprint of DWR and Herman Miller stores over several years.
- New product and innovation: New product introductions are driving >20% growth in new product orders in the quarter; management expects 50% higher product newness in FY2026 versus FY2025.
- Tariffs and pricing: ~$8M net tariff-related impact in Q1; tariff drag anticipated to be $2–$4M in Q2; pricing actions (surcharges and list price increases) are expected to mitigate tariff effects in H2 2026.
- International and wholesale exposure: International wholesale markets lag NA performance; DTC channels in select regions (e.g., Hay, Mitchell) show growth; Debbie Propst noted green shoots in international DTC channels despite wholesale market headwinds.
- Financial discipline and capital allocation: Q2 debt refinanced to extend maturity to 2032; net debt/EBITDA remains under covenant; management reaffirmed leverage management and liquidity targets.
- Quotes: Andi Owen highlighted the quarter’s outperformance and the Aeron ESD launch as proof points of product leadership and market relevance.
We outperformed our expectations and delivered strong revenue and profitability, with consolidated net sales growing almost 11% and adjusted EPS increasing 25%.
— Andi Owen
We launched an electrostatic discharge version of one of our icons, the Aeron chair, allowing it to be used in data center clean room environments.
— Andi Owen
Forward Guidance
- 2026 net sales guidance: $926M–$966M; midpoint $946M implies ~3.8% year-over-year growth. The guide normalizes a ~$55–60M pull-forward in NA contract from FY2025 Q4.
- Gross margin guidance: 37.6%–38.6%
- Adjusted Opex guidance: $300M–$310M
- Adjusted diluted EPS: $0.38–$0.44
- Tariff headwinds: Net tariff-related gross margin drag of $2M–$4M in Q2 (pre-tax) with anticipated offset in H2 2026 via pricing/mix and cost actions.
- Incremental store opening costs: Expected incremental OpEx of $4M–$5M in Q2, with a similar cadence in subsequent quarters as new stores ramp; full-year store openings guided at 12–15 stores.
- Investment thesis and monitorables: (1) Trajectory of the funnel and order visibility (especially in NAC and International Contract); (2) Margin trajectory as volume/mix gains offset tariff pressure; (3) Store expansion profitability and contribution to top-line growth; (4) Macroeconomic conditions affecting office demand and consumer sentiment; (5) International Wholesale recovery pace and DTC expansion effectiveness in overseas markets.
- Assessment: With a start to FY2026 that outperformed expectations and a clear plan to offset tariffs, the path to achieving the low-to-mid single-digit revenue growth and mid-to-high 30s gross margins appears plausible, contingent on tariff mitigation, continued product differentiation, and favorable NA contract demand. Investors should monitor tariff progression, store-level profitability, and the pace of international recovery, which historically lagged NA performance.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MLKN Focus
38.52%
N/A
N/A
N/A
LZB
43.10%
6.53%
2.62%
17.50%
MBC
30.60%
5.62%
1.02%
31.30%
BSET
57.00%
2.99%
1.11%
18.49%
AMWD
20.20%
10.20%
3.24%
13.40%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
MillerKnoll enters FY2026 with a constructive, albeit cautiously optimistic, investment thesis. The company demonstrated resilience and an ability to exceed expectations in QQ1 2026, highlighted by an ~11% revenue uplift and a 25% increase in adjusted EPS, supported by a diversified mix across NAC, International Contract, and Global Retail. The NA Contract segment remains a key growth engine, with net sales up 12% and a normalization of orders when accounting for 2025–2026 pull-forward dynamics. The Global Retail footprint is expanding, with meaningful new store openings and a deliberate push to drive product innovation, which should gradually improve profitability as new locations ramp. The 50% increase in product newness and a >20% rise in new product orders in Q1 are encouraging indicators of customer acquisition and higher wallet share. Management’s tariff mitigation plan and pricing actions are essential for sustaining margin progression into H2 2026 and beyond. The company’s liquidity position and a levered but controlled balance sheet (net debt/EBITDA 2.92x) provide financial flexibility to fund the store expansion and continued product development amid ongoing industry consolidation. Key catalysts include: 1) stability and growth in NAC and International funnel; 2) unit economics and profitability improvements from new stores in Retail; 3) execution of Aeron ESD initiatives and other product innovations; and 4) successful tariff mitigation translating into margin expansion. Risks to monitor include tariff policy shifts, macro demand for office furniture, and the pace of international wholesale recovery. Overall, the investment stance is cautiously constructive with a bias toward a measured uplift as operational levers mature and tariff headwinds recede, supported by expanding product adjacencies and store-level monetization.
Key Investment Factors
Growth Potential
Strong NA Contract momentum, a sizable NA Retail expansion plan (12–15 stores for FY2026), and a 50% uptick in product newness driving customer acquisition and order growth (new product orders up >20% in Q1). Aeron ESD expansion broadens addressable markets (data-center/secure environments) and supports ongoing innovation leadership.
Profitability Risk
Tariffs remain a near-term margin pressure; macro headwinds for office leasing and wholesale channels in international markets; incremental store openings impose near-term operating deleveraging; FX volatility; potential slower-than-expected return of enterprise-level capex cycles; reliance on NA markets for the majority of growth.
Financial Position
Liquidity of ~$481M; net debt/EBITDA de-levered to 2.92x; debt refinancing extended term to 2032; prudent balance sheet supporting capex for store openings and product innovation; forecasted mid-single-digit revenue growth with margin recovery in H2, subject to tariff mitigation and cost discipline.
SWOT Analysis
Strengths
Integrated portfolio post-Knoll acquisition (Herman Miller and Knoll) delivering a broad, differentiated product suite for contract, healthcare, and residential segments
Strong NA Contract momentum with 12-month funnel up YoY; favorable proximity of orders to revenue
Growing North America Retail footprint with four stores opened in Q1 and 12–15 stores planned for FY2026
Significant product pipeline expansion (50% more new product introductions; new product orders up >20% in Q1)
Solid brand recognition and recognition as a top workplace (SAS best workplace for innovators) supporting talent retention and execution
Weaknesses
Tariff exposure and near-term gross margin pressure
Higher near-term operating expenses from store openings, which compress margins in the current quarters
International wholesale recovery remains slower than North America, creating regional mix risk
Opportunities
Growing DTC and wholesale mix internationally through DTC channels (Hay, Mitchell brands) and selective catalog/brand expansion
Electrostatic discharge Aeron expansion enabling new data-center/clean-room opportunities
Strategic store openings and e-commerce growth driving long-term customer acquisition and lifetime value
Potential for selective M&A to accelerate scale and geographic reach
Threats
Tariff/tax policy volatility and potential changes in trade dynamics impacting input costs and pricing
Macro demand softness in office real estate and enterprise capex cycles