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Steelcase 2nd quarter’s results – earnings fall 6.4%

Wednesday 18 September 2013

Steelcase Inc.'s fiscal 2nd quarter earnings slipped 6.4% as the office-furniture maker recorded an increase in operating expenses and restructuring costs, and a drop in sales in the company's Europe, Middle East and Africa segment.
"Our consolidated results continue to be negatively impacted by the economic crisis in Western Europe," said Chief Executive James P. Hackett, noting that while the Americas outperformed the company's expectations, results in Europe, Middle East and Africa "reflect a significant operating loss, despite the great work of our resident teams to position our business for the eventual economic recovery in Western Europe."
The furniture maker has been helped in recent years by increased spending on work spaces, as more offices move away from cubicles and demand things like benches, tables and lounge seating.
In July, Standard & Poor's Rating Services raised Steelcase's long-term corporate credit rating a notch to triple-B, saying the company should benefit from an improving economy and cost-cutting efforts.
Steelcase also said in July that its chief executive, James P. Hackett, will end a nearly two-decade tenure at the helm of the company in February. At that time the company hadn't named a replacement, but said Mr. Hackett will continue as vice chairman for an additional year after stepping down, and will remain a member of the board.
In the latest period, sales in the Americas were up 3.5% at $558.7 million, while sales in Europe, Middle East and Africa fell 5.4% to $132.4 million.
For the quarter ended Aug. 23, Steelcase reported a profit of $27.6 million, or 22 cents a share, compared to $29.5 million, or 23 cents a share, a year earlier. Excluding restructuring charges, earnings were 24 cents a share in the latest period. Revenue rose 1.7% to $757.6 million.
Steelcase in June expected per-share earnings of 22 cents to 26 cents, including about three cents in adjustments, on revenue of $760 million to $785 million.
Gross margin widened to 32.2% from 30.6%.
Operating expenses climbed 4.4% to $188.9 million, while restructuring costs rose to $3.4 million from $0.3 million a year ago.
For its third quarter, the company predicted per-share earnings of 23 cents to 27 cents, including a penny in adjustments, on revenue of $755 million to $780 million. Analysts polled by Thomson Reuters recently forecasted earnings of 26 cents a share and revenue of $757.1 million.
Shares fell 1.3% to $15.44 in after-hours trading. As of the close, the stock had risen 23% since the start of the year.

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