DEF 14A: MillerKnoll Reports Mixed FY25 Results Amid Strategic Expansion

MillerKnoll concluded fiscal year 2025 with year-over-year sales growth and strategic investments, but faced declines in key profitability metrics.

Summary

• Delivered year-over-year sales growth in fiscal year 2025, leveraging a diversified business model and global operations network.
• Net sales increased 1.1% on a reported basis and 1.6% organically in FY25.
• Operating margin declined by 320 basis points on a reported basis and 40 basis points on an adjusted basis.
• Gross margin decreased by 30 basis points to 38.8%, primarily due to tariff actions and unfavorable product and channel mix.
• Reported operating earnings were $50.5 million (1.4% margin), down from $167.2 million (4.6% margin) in the prior year.
• Adjusted operating earnings were $248.7 million (6.8% adjusted operating margin), compared to $262.2 million (7.2% adjusted operating margin) in fiscal 2024.
• Reported loss per share totaled $(0.54) for the full year, compared to earnings per share of $1.11 last year; adjusted earnings per share was $1.95, down from $2.08 in fiscal 2024.
• Net operating cash inflow was $209.3 million, a decrease from $230.4 million in the prior year, mainly due to a net increase in working capital.
• Capital expenditures for the year totaled $107.6 million, and $51.7 million was paid in dividends.
• Ended the fiscal year with a cash position of $193.7 million.
• Shareholders will vote on the election of three directors, an advisory approval of Named Executive Officer compensation, ratification of KPMG LLP as the independent auditor for fiscal 2026, and approval of the MillerKnoll, Inc. 2025 Long-Term Incentive Plan at the Annual Meeting.

Sentiment

Score: 6

Explanation: While MillerKnoll achieved sales growth and made strategic investments in global expansion and product innovation, key profitability metrics (reported operating earnings, operating margin, and EPS) declined significantly. Adjusted EPS also saw a modest decline. The tone is optimistic about future growth and market conditions improving, but current financial performance shows challenges.

Positives

• Achieved year-over-year sales growth of 1.1% reported and 1.6% organically in fiscal year 2025.
• Successfully opened new flagship MillerKnoll locations in Chicago, London, and New York, enhancing customer engagement and driving increased sales and order volume in regions like the U.K. and Europe.
• Introduced 30 new products at the Chicago design center, resulting in an 11% increase in booked appointments.
• Expanded product offerings in resilient sectors such as healthcare (Herman Miller Gemma Collection) and higher education (Muuto and HAY solutions, esports arena partnership).
• Executed on retail expansion strategy, opening four new stores in fiscal 2025 and increasing new product introductions by over 50%.
• Recognized nearly 1,000 employees with 20 or more years of service through the Watercarrier program, highlighting strong employee tenure.
• Named one of the most community-minded companies in the U.S. by The Civic 50, reflecting significant community engagement and volunteerism.

Negatives

• Reported operating margin declined by 320 basis points, and adjusted operating margin declined by 40 basis points.
• Gross margin decreased by 30 basis points to 38.8%, primarily due to tariff actions and unfavorable product and channel mix.
• Reported operating earnings of $50.5 million were significantly below the prior year's $167.2 million.
• Reported a loss per share of $(0.54) in fiscal 2025, a decline from earnings per share of $1.11 in the prior year.
• Adjusted earnings per share decreased to $1.95 from $2.08 in fiscal 2024.
• Net operating cash inflow decreased to $209.3 million from $230.4 million in the prior year, mainly due to an increase in working capital.
• The Global Retail segment experienced a net sales decline of 1.5% reported and 0.3% organically.

Risks

• Persistent demand pressures in the market.
• Uncertain and dynamic macroeconomic environment.
• Cyclicality of the global business, including supply chain constraints, commodity price volatility, and geopolitical issues.
• Impact of tariff actions on gross margin.
• Potential risks related to Data Privacy, Information Security, and Cybersecurity.
• Legal and Compliance risks.

Future Outlook

MillerKnoll is well positioned to capitalize on its product and brand leadership as market conditions improve. The company plans to open an additional 10 to 15 new stores across the U.S. in fiscal 2026, aiming to more than double the footprint of its DWR and Herman Miller stores in North America over the next several years. The company will continue to build upon its retail product assortment, increase eCommerce penetration, and expand brand awareness through targeted marketing investments. Despite persistent demand pressures, the company is optimistic about the future and expects continued focus on design excellence and global expansion to be key drivers of long-term success.

Management Comments

• "MillerKnoll delivered a strong finish to fiscal year 2025." Andi R. Owen, President and Chief Executive Officer.
• "In a year marked by uncertainty, we leveraged the power of our collective, diversified business model, and global operations network to navigate the environment and deliver year-over-year sales growth." Andi R. Owen, President and Chief Executive Officer.
• "With rising customer visits and deeper engagement across these new locations, we are well positioned to capitalize on our product and brand leadership as market conditions improve." Andi R. Owen, President and Chief Executive Officer.
• "While demand pressures persist, the strength of our business and our ability to adapt have positioned us well for the road ahead. We are optimistic about the future and thank you for your ongoing support." Andi R. Owen, President and Chief Executive Officer.

Industry Context

The company's strategic focus on elevating the workplace experience aligns with broader industry trends where organizations are investing in design to attract and retain talent. Expansion into resilient verticals like healthcare and higher education reflects a diversification strategy to capture growth beyond traditional office and home markets. The continued investment in retail expansion and eCommerce penetration is consistent with the evolving consumer landscape, emphasizing multi-channel engagement and brand touchpoints in the design furnishings industry.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Will vote on key governance matters and executive compensation. Impacted by mixed financial results (sales growth but declining profitability) and potential for long-term value creation through strategic initiatives. Potential for dilution from the proposed Long-Term Incentive Plan.
• Employees: Recognized for long tenure and community involvement. Benefit from retirement and health insurance plans. Executive compensation is tied to financial and operational performance.
• Customers: Benefit from enhanced engagement through new flagship showrooms, expanded product offerings, and improved retail experiences, particularly in healthcare and higher education sectors.
• Community: The company's recognition as a community-minded organization and its global volunteer events demonstrate a positive social impact.

Next Steps

• Shareholders to vote on the election of three directors, advisory approval of Named Executive Officer compensation, ratification of KPMG LLP as the independent auditor for fiscal 2026, and approval of the MillerKnoll, Inc. 2025 Long-Term Incentive Plan at the Annual Meeting on October 13, 2025.
• Open an additional 10 to 15 new stores across the U.S. in fiscal 2026, aiming to more than double the footprint of DWR and Herman Miller stores in North America over the next several years.
• Continue to build upon product assortment, increase eCommerce penetration, and expand brand awareness through targeted marketing investments.
• Maintain a continued focus on design excellence and global expansion as key drivers of long-term success.

Key Dates

Recommendation

While MillerKnoll demonstrated resilience with year-over-year sales growth and made strategic investments in global expansion and product innovation, key profitability metrics such as reported operating earnings, operating margin, and EPS declined significantly. Adjusted EPS also saw a modest decline. The company's long-term strategy appears sound, focusing on diversified business models and resilient sectors, but current financial performance indicates headwinds. The stock is likely to remain range-bound as the market weighs strategic progress against profitability challenges and persistent demand pressures. Investors should hold to observe if strategic investments translate into improved profitability and sustained growth in the coming fiscal years.

Keywords

MillerKnoll, proxy statement, SEC filing, corporate governance, executive compensation, financial performance, design furniture, office furniture, retail expansion, healthcare solutions, sustainability, shareholder meeting, board of directors, long-term incentive plan