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Office furniture maker Herman Miller has reported that net sales for the second quarter ending Dec. 1 were down slightly under 1 percent, compared to the same quarter last year, but new orders were 8.1 percent higher.
The Zeeland company had net sales of $441.8 million, with new orders coming in at $475.8 million.
Sequentially, second quarter net sales decreased by 1.8 percent from the first quarter this fiscal year, while orders were up 5.3 percent.
CEO Brian Walker said several factors led to lower than expected sales in the second quarter, including long lead times for orders, disruption from the East Coast storm and still more weakening in demand from Europe.
Sales in Herman Miller’s North American reportable segment were $304.7 million, down 5.3 percent from the prior year. New orders in the second quarter in North America totaled $328.7 million, reflecting an increase of 7.3 percent.
On a sequential basis, North American sales decreased 4.9 percent from the first quarter, while orders improved 7 percent over the same period.
The non-North American reportable segment had net sales of $92.8 million for the quarter, a 6.1 percent increase from a year ago. The revenue growth was driven by the April acquisition of POSH Office Systems Ltd. in Hong Kong, with the growth partially offset by lower sales in Europe compared to the second quarter of fiscal 2012. Profitability in this segment was negatively impacted in the quarter by a loss of leverage resulting from the organic sales decrease and costs associated with the integration of POSH.
Non-North American new orders in the quarter were up 9.3 percent compared to the same quarter last year. Sequentially, that segment’s sales decreased 1.9 percent while orders were up 1.8 percent.
Herman Miller is eliminating its U.S. defined benefit pension plans in favor of a new defined contribution retirement program. The company’s results in the second quarter include expenses associated with this transition as well as non-cash, pre-tax expenses of $18.8 million relating to the “legacy” defined benefit pension plans, which are frozen and scheduled for future termination.
Herman Miller’s consolidated gross margin in the second quarter was 33.6 percent. This was below company expectations, due primarily to lower than anticipated net sales. Relative to the second quarter of last fiscal year, gross margin decreased approximately 50 basis points due to the legacy pension impact and changes in product and channel mix.