Knoll Q4 furniture sales recover

Knoll’s expansion into new product lines has paid off for the office furniture maker, as Q4 sales returned to growth.
For the three months ended 31 December 2017, sales in its Office segment rose 9.9% to $198.9 million.
However, adjusted operating profit fell 12% to $15.7 million as one-off impairments, acquisition costs and changes in tax law during the quarter weighed down margins.
For FY2017, the category reported sales of $682.9 million, 6% lower than the previous year, thanks to a poor performance in Q1 and Q2.
Commenting on the results, CEO Andrew Cogan called 2017 “an important rebuilding year for Knoll” as it made a number of investments across the business.
He said: “In particular, adjustments to our go to market strategy and product portfolio in our Office segment responded to rapidly changing market conditions. The return to growth that we delivered in the fourth quarter demonstrates the traction we believe we are gaining in our core markets and bodes well for the year ahead.”
Since the end of the reporting period, Knoll has closed the acquisition of Danish luxury furniture brand Muuto announced in Q1 2018 and has already begun integrating its North American sales team.
Cogan also noted that although these short-term investments had “dampened” the group’s profitability, profits should recover as spending plateaus and a lower tax rate takes effect.
Speaking on the earnings call, he highlighted the shift in workplace trends that had caused many of the market challenges faced by the company in previous quarters and detailed some of its new initiatives to expand into new markets.
Knoll estimates that half of the $18 billion office furniture market in North America now lies outside of traditional workplace products which tends to include individual desks and cubicles for example. As such, growth in new platforms is expected to offset legacy declines.
Cogan noted that the changing work styles and the impact of millennials on the office landscape had created a different set of practical and cultural expectations. As such, the competition to create environments that attract and retain talent was becoming more intense, and Knoll was positioning itself to take advantage of this.
He said: “Businesses have used this disruption to fashion a workplace which shifts the balance of space allocation away from the individual even if that individual space is upgraded with more ergonomic performance in the group while simultaneously reducing the use of total real estate and looking for ways to reduce the cost of their fit outs and furnishings.”
He added that the success of the group’s newer ‘immersive experiential workplace’ model was one of the reasons it had returned to growth as orders in this category exceeded those of its workstation and storage products during Q4.
Going forward, Cogan said he was “encouraged by the pipeline” and Knoll was now in an “improved competitive position” having recorded booking strength in Q4, which is expected to materialise by Q2 2018.
East Greenvile (PA), USA
Source Link: (OPI)
https://www.opi.net/news/knoll-q4-furniture-sales-recover/

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