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Moderate sales growth expected over summer for US office furniture companies

Tuesday 9 July 2013

Two of the largest office furniture manufacturers in West Michigan say they expect to see moderate sales growth through the summer, according to executives from Herman Miller Inc. and Steelcase Inc., both of which recently reported quarterly results.
Zeeland-based Herman Miller, after reporting strong sales growth for the March-to-May period that ended the 2013 fiscal year, said it expects sales growth for the present first quarter of FY 2014 of 1 percent to 6 percent to $455 million to $475 million. The company also projected quarterly net income of 36 cents to 41 cents per share.
The guidance was tempered somewhat by a four-week dip in Herman Miller’s order rate toward the end of FY 2013 in May and into early June to start FY 2014, CEO Brian Walker told investors following Herman Miller’s quarterly report. The company for now does not consider the order softness, which came mostly in the government sector, to be a trend, Walker said.
“As we go out and talk to the sales team, nobody seems to think this is a pattern that they expect to continue,” he said.
If GDP predictions for the U.S. economy hold up, “we’ll see good activity in the industry, and we think we’ll get our fair share of that,” Walker said. “So we don’t see this as anything that’s going to change dramatically our plans for the year, but we’ll manage our way through the first quarter.”
Herman Miller reported sales of $460.0 million for the fourth quarter of FY 2013, a 9.3-percent increase from the same period a year earlier. Despite the late-quarter softness, orders still grew 4.0 percent to $461.6 million.
Quarterly net income totaled $23.4 million, or 40 cents per diluted share, nearly twice the $11.9 million, or 20 cents per diluted share, in the fourth quarter of FY 2012.
The strong earnings growth, combined with the recent acquisition of textile maker Maharam and the introduction of new products, “give us great momentum and a springboard for further success in the year ahead,” Walker said.
“Taken on the whole, we remain optimistic for the continued improvement of the macro U.S. and international markets through 2014, and we have great confidence in our own position and momentum for the new year ahead,” he said.

At Steelcase, after reporting a dip in sales for its first quarter of FY 2014, executives expect global sales growth of 1 percent to 4 percent, or $760 million to $785 million, and net income of 22 cents to 26 cents per share for the present period.
Steelcase’s “pace of business is largely as expected,” Steelcase CFO David Sylvester told investors in a conference call.
Orders for the Americas in the quarter grew 7 percent year to year and the division’s order backlog increased 10 percent. The Americas division includes the U.S., Canada and Latin America and accounts for about 72 percent of global sales.
“Our order patterns and quarter-end backlog in the Americas remain solid,” he said. “So we feel pretty good and continue to feel pretty good about the full fiscal year.”
The Grand Rapids-based Steelcase reported sales of $667.1 million for the first quarter of FY 2014, down 1 percent from the same period a year earlier.
Quarterly net income totaled $13.2 million, or 10 cents per share, for the quarter that ended May 24, equaling the earnings in the first quarter of FY 2013.
The sales decline was the first for Steelcase in 12 quarters of organic revenue growth, President and CEO James Hackett said.
“We are not too concerned with this decline, as order growth in the Americas was better than expected, resulting in a strong quarter-end backlog, and customer visits and project activity remain high,” he said.

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