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Herman Miller acquisition moves it more towards consumer market

Monday 4 August 2014

Herman Miller expects that the acquisition of high-end furniture retailer, Design Within Reach, will grow the iconic office furniture company’s consumer market share dramatically.
Chief Executive Brian Walker wants to move the Zeeland-based company’s market beyond the office furniture industry to create products for residences, schools, doctor's offices and restaurants.
"We realized if we don't do something, we are going to be left behind in a shrinking pie," Walker said during the company's investor presentation last week, reports the Wall Street Journal.
Herman Miller, which reported $1.9 billion in revenue in fiscal 2014, continues to see a decline in its government business while the office environment has been transitioning away from cubicles - a Herman Miller invention - to open office systems.
Walker believes Herman Miller’s consumer sales can increase seven-fold with the addition of DWR, which is already the largest seller of Herman Miller furniture. Last year, the retailer had sales of $218 million through 38 stores, its website and a print catalog.
Herman Miller acquires the potential to expand its consumer business to $500 million over the next few years, compared with an earlier projection of $150 million to $175 million, according to internal projections. Herman Miller said its consumer business currently contributes about $68 million to annual sales. That translates to the segment's being responsible for about 3.4% of the company's approximately $2 billion in sales.
In the call with investors, Walker noted the U.S. consumer furniture business is about 10 times the size of the office-furniture business, and a "less volatile" segment.
Having a retail arm will help smooth out the company’s exposure to recessionary dips and gains, Ben Watson, Herman Miller’s executive creative director told Fortune Magazine Laura Lorenzetti for a recent story.
“We see this as a way to find higher margin business that is less impacted by economic cycles and an industry that has a nice growth trajectory,” Watson said.
The acquisition of DWR follows Herman Miller’s purchase of Maharam, a New York textile company, for $156 million in April 2013, “signals Herman Miller’s grand strategy to control as many parts of its operation as it can, from upholstering materials to retail outlets,”

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