MLKN Q4 Deep Dive: Retail Expansion and Consistent Order Growth Drive Optimism

Barchart·12/18/2025 03:36:14

Office furniture manufacturer MillerKnoll (NASDAQ:MLKN) reported revenue ahead of Wall Streets expectations in Q4 CY2025, but sales fell by 1.6% year on year to $955.2 million. On top of that, next quarter’s revenue guidance ($943 million at the midpoint) was surprisingly good and 3.7% above what analysts were expecting. Its non-GAAP profit of $0.43 per share was 7.5% above analysts’ consensus estimates.

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

StockStory’s Take

MillerKnoll’s fourth quarter saw a positive market reaction, reflecting management’s ability to outperform Wall Street’s expectations despite a slight year-over-year decline in sales. The company attributed its results to strong order growth across all business segments, particularly within Global Retail, where new store openings and expanded product assortments led to notable increases in both orders and comparable sales. CEO Andi Owen highlighted, “We set multiple records in North America Retail including the highest orders in DWR brand history both in-store and online,” emphasizing the effectiveness of the company’s retail strategy.

Looking ahead, MillerKnoll’s guidance is driven by continued investment in its retail footprint, proactive pricing to mitigate tariffs, and a focus on operational efficiency. Management expects new store openings, a broader product assortment, and increased customer engagement to support revenue and margin stability. CFO Kevin Veltman stated, “Our proactive mitigation actions are expected to fully offset tariff costs in the second half,” signaling confidence in maintaining gross margins and supporting earnings resilience despite incremental expenses tied to growth initiatives.

Key Insights from Management’s Remarks

Management credited the quarter’s performance to retail momentum, expanding store presence, and an improving contract business environment, while addressing margin pressures from new store investments and external factors.

• Retail segment momentum: Global Retail orders rose 6% year over year, with especially strong results in North America driven by new store openings, higher average order values, and expanded product assortments. Management pointed to increased brand awareness and e-commerce acceleration as key contributors.
• Contract business recovery: The North America contract segment experienced consistent order growth, benefiting from a steady return-to-office trend and demand for workspace updates, particularly in sectors such as healthcare, energy, and professional services.
• Tariff management and supply chain: The company’s supply chain strategy—sourcing approximately 70% of North America retail’s cost of goods from within the region—helped limit exposure to tariffs, and leadership expects mitigation actions to offset remaining tariff costs going forward.
• Store investment impacts margins: Operating expenses rose due to investments in new store openings, which management believes will start to generate accretive income as stores mature and overhead is leveraged in subsequent quarters.
• International expansion and showroom launches: MillerKnoll opened a new showroom in Shanghai and expanded in key international markets, identifying significant growth opportunities and positioning its brands for greater share in resilient sectors and premium commercial real estate.

Drivers of Future Performance

MillerKnoll’s outlook is shaped by ongoing retail expansion, operational streamlining, and external factors like tariffs and evolving workplace trends.

• Retail store growth strategy: The company plans to open 14 to 16 new stores in the coming year, expecting these investments to support long-term revenue growth and eventually contribute positively to operating income as initial costs are absorbed and new locations mature.
• Tariff and pricing mitigation: Management expects proactive tariff mitigation and pricing actions to preserve gross margins, even as tariff-related costs persist. These efforts include strategic sourcing from North America and passing along modest price increases.
• Demand environment and sector trends: A continued return-to-office movement and increased demand in premium office spaces and healthcare are expected to drive contract business growth. However, management remains watchful of public sector, banking, and pharmaceutical demand, which have been softer relative to other industry verticals.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will closely monitor (1) the ramp-up and sales productivity of new retail store openings, (2) the effectiveness of tariff mitigation strategies and their impact on gross margins, and (3) order trends in both contract and international markets—particularly as return-to-office momentum and sector demand evolve. Additionally, the company’s ability to leverage operating expenses and achieve targets for retail profitability will serve as important indicators of successful execution.

MillerKnoll currently trades at $18.98, up from $17.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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