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Herman Miller sees sales slowdown

Thursday 27 March 2008

Herman Miller\'s Brian Walker.Herman Miller Inc. is looking at flat or slow sales growth in the year ahead as the office furniture industry slows, though executives say offering a definitive outlook is a tough prospect at best.
In reporting strong earnings growth and a marginal sales increases last week, Herman Miller President and CEO Brian Walker prefaced guidance for the upcoming 2009 fiscal year with a sense of caution.

\"The question right now for us is it\'s really difficult for us to predict,\" Walker told brokerage analysts during a conference call. \"The U.S. business has been holding in there so far reasonably well. It\'s just a little cloudy picture when you get beyond that (current) quarter.\"

For the present fourth quarter of its 2008 fiscal year, Herman Miller forecast sales of $475 million to $500 million, which represents a two percent decline to a three percent increase from a year earlier.

Herman Miller [Nasdaq: MLHR] forecasts quarterly net income of 55 cents to 62 cents per share.

Rising commodity prices will impact earnings in the fourth quarter and in fiscal year 2009, chief financial officer Curt Pullen said. The company expects commodity costs to rise $25 million to $35 million for the current fiscal year and is considering a price increase to offset higher costs, he said.

For FY 2009 that begins June 1, executives expect flat or low single-digit sales growth.

\"Looking forward, we remain appropriately cautious in the current economic environment,\" Walker said.

The Business and Institutional Furniture Manufacturers Association forecasts a decline in industrywide shipments of 0.6 percent for 2008, to $11.4 billion, and a 2.6 percent decline in 2009, to $11.1 billion.

The BIFMA outlook \"looks reasonable, from what we see,\" Walker said.

The Holland-based office furniture maker reported net income of $38.3 million, or 65 cents per diluted share, for the third quarter that ended March 1. That compares with net income of $32.3 million, or 50 cents per share, for the same period a year earlier.

Brokerage analysts expected Herman Miller to report net income of 58 cents per share, according to a consensus estimate.

The company in December also provided guidance of 56 cents to 63 cents per share.

Quarterly sales grew 2.2 percent, to $495.4 million, and nine-months sales were up 4.1 percent, to $1.49 billion.

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