Herman Miller (MLHR 31.15, +0.88, +2.91%) opened higher (+6.5%) after the company
reported 2Q19 (Nov) earnings results after the close yesterday. Herman Miller
is a Michigan-based supplier of furniture suited to various environments,
including office, healthcare, educational, and residential settings. The
company's products are sold primarily through the following channels: furniture
dealers, direct customer sales, owned and independent retailers, direct-mail
catalogs, and the company's online stores.
In recent news for the company, MLHR hired a new CEO in August of this year: Andi Owen. She joined Herman Miller after a 25-year career at Gap (GPS), where she had most recently served as Global President of Banana Republic. In that role, she led all facets of the global omni-channel division, and during her time at Gap, she was responsible for heading a complete omni-channel organizational transformation, creating a "digital first" structure.
Before that, in June, Herman Miller acquired a 33% stake in HAY for $66 mln. HAY is a leader in ancillary furnishings in Europe and Asia offering a range of high-quality furniture and accessories. The deal extends MLHR's global reach and expands its offerings for the home, contract, and hospitality markets. The HAY assortment exposes MLHR to a younger, more urban demographic as more workplaces and commercial spaces adopt a residential feel.
In another June acquisition, Herman Miller bought a 48% stake for $6 mln in Maars Living Walls, a supplier of modular walls. Headquartered in the Netherlands, Maars creates innovative modular walls for interior spaces, including offices, care facilities, airports, hospitality centers, and universities. The modular wall market is growing quickly in North America and is already well-established in EMEA. Maars will now be better positioned to penetrate the North American market.
Continued efforts to integrate the HAY and Maars Living Walls brands remain a strategic priority for the company. Through the launch of the HAY.com eCommerce site and the opening of the first HAY retail studios in Oregon and California during the quarter, HAY’s designs have come to be introduced actively to North American consumers.
In MLHR’s November quarter, non-GAAP EPS rose 32% year/year to $0.75, which was above prior guidance of $0.70-0.74. Revenue rose 7.9% year/year to $652.6 mln, at the higher end of prior guidance of $635-655 mln. MLHR also issued upside guidance for Q3 (Feb), seeing non-GAAP EPS of $0.59-0.63 and revenue of $615-630 mln.
MLHR cited strong demand for its upside NovQ results. The company set all-time records for quarterly sales and order levels. This growth was broad-based across MLHR's business segments.
The overall macro-economic backdrop, says MLHR, is supportive for continued growth, though the ultimate resolution of global trade tensions remains an outlook risk for the business. That said, MLHR's strategic focus on profit optimization was designed to help mitigate the potential for inflationary pressures.
This was a nice quarter for MLHR. It was the first full quarter for the new CEO, and the initial results under her tenure look promising. With that said, the stock has been trending lower since mid-September, falling from around $40 to close just above $30 yesterday. Overall market weakness and jitters about trade have impacted the stock. The good news is that it sounds like demand was quite good in the quarter, and MLHR's recent acquisitions seem capable of providing a more modern product offering.
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