Office furniture manufacturer MillerKnoll (NASDAQ: MLKN) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 8.2% year on year to $961.8 million. On top of that, next quarter’s revenue guidance ($919 million at the midpoint) was surprisingly good and 3.2% above what analysts were expecting. Its non-GAAP profit of $0.60 per share was 37.4% above analysts’ consensus estimates.

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StockStory’s Take

MillerKnoll’s second quarter results drew a strong, positive reaction from the market, as management credited both robust demand and effective execution across its contract and retail businesses. The company saw meaningful order growth in North America, supported by customer urgency ahead of planned pricing actions tied to new tariffs. CEO Andrea Owen noted the impact of new flagship showrooms and expanded product launches, stating these moves “elevated how we present the collective strength of our brands and products to customers.” Operationally, improved customer engagement and targeted innovation were key factors behind the company's sales momentum.

Looking ahead, MillerKnoll’s guidance is shaped by the anticipated effects of tariff-related pricing actions and a continued focus on retail expansion. Management expects a near-term margin impact from orders placed before surcharges took effect, but believes pricing adjustments will offset these costs over the next two quarters. CEO Andrea Owen emphasized planned investments in new store openings and expanded product assortments, while CFO Jeff Stutz highlighted ongoing cost management and pricing strategies as central to the company’s outlook. The company is also closely monitoring macroeconomic factors and expects improved performance as market conditions stabilize.

Key Insights from Management’s Remarks

Management attributed quarterly performance to strong North America contract orders, proactive pricing ahead of tariffs, and continued investment in product and retail expansion.

• Tariff-driven order pull forward: North America contract segment benefited from customers accelerating orders in advance of announced tariff surcharges and price increases, resulting in mid-teens order growth for the period. Management estimated $55–$60 million of demand was pulled forward, temporarily boosting backlog and sales.

• New product launches and showrooms: The launch of over 30 new products across brands and the opening of new flagship showrooms in Chicago, London, and New York increased customer engagement and brand visibility. These initiatives were described as driving higher customer visits and raising the company’s profile in key markets.

• Retail segment expansion: The company opened four new retail stores during the year and plans to open an additional 10–15 in the next year. Management sees significant “white space” opportunity, noting that MillerKnoll is under-represented compared to competitors in several geographies, with each new store driving incremental e-commerce revenue and brand awareness.

• Sectoral and regional strength: Growth was particularly strong in North America contract, healthcare, and public sector verticals, as well as in European and Latin American markets. The company also highlighted continued resilience in higher education and healthcare, which are considered less sensitive to economic downturns.

• Gross margin dynamics: Gross margin improved sequentially but was modestly lower year over year due to tariff-related costs. Management expects further near-term margin pressure as tariff costs are realized before price increases fully take effect, but projects recovery in the second half of the year.

Drivers of Future Performance

MillerKnoll expects future results to be shaped by tariff mitigation, the pace of retail expansion, and broader macroeconomic trends.

• Tariff mitigation and pricing actions: Management expects tariffs to weigh on margins over the next two quarters, as many orders in backlog were placed before surcharges. However, as price increases are realized in new contracts, the company anticipates margin recovery in the second half of the year, with CFO Jeff Stutz stating, “we believe our collective mitigation actions to fully offset these costs as we move into the second half.”

• Retail footprint growth: The ongoing rollout of new Design Within Reach and Herman Miller stores is expected to support long-term revenue growth, though upfront costs will temporarily pressure retail segment margins. President of Global Retail Debbie Propst noted that new stores typically reach profitability within their first year, with the operating income margin expected to improve as the fleet matures and the housing market recovers.

• Demand indicators and macro factors: Management highlighted continued strength in leading indicators such as project funnel additions and pricing requests, particularly in healthcare and public sector verticals. They remain cautiously optimistic about a recovery in office demand and are watching for sustained improvement in commercial real estate activity.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team is closely monitoring (1) the pace at which pricing actions offset tariff-related margin pressure, (2) the successful opening and ramp of new retail stores and their impact on segment profitability, and (3) continued strength in healthcare and public sector verticals. Execution on product innovation and the stabilization of commercial office demand will also be key markers of progress.

MillerKnoll currently trades at $19.34, up from $17.65 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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