Steelcase (SCS 14.15, -2.20 -13.46%) dove to seven-month lows this morning following a tough Q1 report and equally weak Q2 guidance as company hints that shift to customer’s workspaces may require new investment in products to accommodate them.
For some context, SCS designs and manufactures a wide range of office furniture and products that are sold under the Steelcase, Coalesse, Details, Designtex, PolyVision, and Turnstone brands. For example, it sells office chairs, sofas, desks, tables, bookcases, storage cabinets, whiteboards, walls and panels, rugs, and power cable management products, among many other items.
The company, which does most of its business on in the Americas, saw revenues in the region grow 2.8% to $535.0 million in Q1. Orders in the Americas declined 3% compared to the prior year, driven by reduced demand from large customers. By contrast, revenues in EMEA fell about 9.7% in the quarter to $113.1 million as revenue mix from the region also slimmed.
Taking a look at the results for Q1, both earnings and revenues came in below market expectations. Earnings per share (EPS) were $0.15 on revenues which rose 2.3% to $735.1 million, yet fell short of what the Street had expected.
Looking ahead, SCS feels the industry is changing as customers begin to adopt dramatically different spaces that support new ways of working. Therefore, the company expects to increase its investments in new products and partnerships relevant to their emerging needs.
On a more quantitative note, SCS sees Q2 EPS and revenues below market expectations at $0.21-0.25 and $750-780 million, respectively.