MLKN Q3 Deep Dive: Retail Expansion and Tariff Mitigation Define Quarter

September 24, 2025 at 10:10 AM EDT

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Office furniture manufacturer MillerKnoll (NASDAQ: MLKN) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 10.9% year on year to $955.7 million. On the other hand, next quarter’s revenue guidance of $946 million was less impressive, coming in 1.5% below analysts’ estimates. Its non-GAAP profit of $0.45 per share was 31.1% above analysts’ consensus estimates.

Is now the time to buy MLKN? Find out in our full research report (it’s free).

MillerKnoll (MLKN) Q3 CY2025 Highlights:

Revenue: $955.7 million vs analyst estimates of $911 million (10.9% year-on-year growth, 4.9% beat)
Adjusted EPS: $0.45 vs analyst estimates of $0.34 (31.1% beat)
Adjusted EBITDA: $79.15 million vs analyst estimates of $81.29 million (8.3% margin, 2.6% miss)
Revenue Guidance for Q4 CY2025 is $946 million at the midpoint, below analyst estimates of $960.7 million
Adjusted EPS guidance for Q4 CY2025 is $0.41 at the midpoint, below analyst estimates of $0.41
Operating Margin: 5.6%, in line with the same quarter last year
Backlog: $690.9 million at quarter end
Market Capitalization: $1.30 billion

StockStory’s Take

MillerKnoll’s third quarter results reflected robust sales momentum, with management highlighting growth across contract and retail channels. CEO Andi Owen noted that “improving conditions in several key markets” and strong execution on strategic initiatives drove the company’s outperformance. The quarter benefited from a combination of higher sales volumes, successful new product introductions, and positive early indicators in office leasing activity, particularly in North America. Management also pointed to stable pricing and the absence of increased discounting as factors supporting margins, even as new store openings and tariffs weighed on profitability in the retail segment.

Looking forward, MillerKnoll’s outlook is shaped by continued investment in retail expansion, a focus on mitigating ongoing tariff pressures, and expectations for gradual order normalization after recent pull-forward effects. Management acknowledged that margin impacts from tariffs and new store expenses will be most pronounced in the first three quarters, with relief expected by year-end as pricing actions take hold. CFO Kevin Veltman cautioned that visibility remains limited due to macroeconomic uncertainty, but stated the company is “well underway” in offsetting tariff-related costs and expects new store contributions to improve profitability in the coming quarters.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to sustained contract demand, new product traction, and a disciplined approach to cost management, while addressing challenges from tariffs and retail expansion.

Contract business momentum: North America contract sales grew, supported by increased volume and a shift toward orders with shorter lead times, which management said signals improving customer certainty and near-term revenue conversion.
Retail strategy execution: The company emphasized its focus on North America retail, where store openings, expanded assortments, and digital traffic drove growth. Four new stores opened in the quarter, and management plans to open up to 15 by year-end.
Product innovation pipeline: Management highlighted the launch of an electrostatic discharge Aeron chair for clean room environments and a 50% increase in new product introductions versus last year, which contributed to double-digit order growth in new product categories.
Tariff cost headwinds: Tariff-related expenses continued to affect gross margins, especially in the retail segment. Management implemented surcharges and price increases to mitigate these impacts, noting that benefits from these actions will be realized more fully in the second half of the year.
Leadership changes: The company announced board succession plans and elevated Jeff Stutz to Chief Operating Officer, aiming to strengthen operational oversight and execution across international and manufacturing segments.

Drivers of Future Performance

MillerKnoll’s guidance is shaped by expectations for retail footprint growth, tariff mitigation, and ongoing contract demand, but tempered by macro uncertainty and new store expense timing.

Retail expansion investment: The plan to open 12 to 15 new stores in North America will drive operating expenses in the near term, with management expecting these locations to become accretive by year-end as they ramp to full sales potential.
Tariff mitigation actions: Management is executing pricing and surcharge strategies to offset tariff-related costs, projecting that gross margin pressure will ease as these actions are absorbed throughout the year, assuming no major changes in tariff policy.
Order normalization and demand trends: After a period of order pull-forward linked to tariff surcharges, management expects more typical ordering patterns to resume, with a positive sales funnel and early-quarter order rates indicating steady demand, especially in the North America contract segment.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will track (1) the pace and profitability of new store openings in the North America retail segment, (2) the effectiveness of tariff mitigation strategies and their impact on gross margins, and (3) the normalization of order volumes after tariff-related pull-forward effects. Progress in international retail recovery and sustained contract funnel growth will also be important markers of execution.

MillerKnoll currently trades at $17.36, down from $18.95 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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