GRAND RAPIDS — Steelcase Inc. expects to wrack up a sizable loss for the current quarter, as the company slugs its way through the unprecedented office furniture industry downturn that’s led to even deeper job losses.
In an earnings warning issued last week, Steelcase said it expected to post a loss of 7 cents to 12 cents per share before one-time charges that will push its loss to 21 cents to 29 cents per share, as well as record a 35 percent decrease in revenues for the quarter that ends Feb. 22.
Steelcase also said it is eliminating 150 to 200 salaried positions within the next 60 days in North America. Steelcase expects to take an after-tax charge of $9 million to $11 million related to the cuts.
Steelcase plans to cut another 200 to 300 positions in Europe in the next six to nine months, bringing to more than 6,000 the number of temporary and permanent positions eliminated worldwide since the industry downturn began in late 2000. The European cuts will result in a separate $12 million to $14 million after-tax charge for Steelcase, which wasn’t alone last week in announcing additional job cuts.
Herman Miller Inc. also is eliminating more jobs, bringing to 2,800 the number of positions jettisoned since December 2000. The company said last week that it’s eliminating 185 non-production positions, the majority of them at campuses in Zeeland, Holland and Spring Lake.
Both Steelcase and Herman Miller blamed the cuts on continued declines in sales.
“These actions are difficult but necessary measures to ensure Herman Miller’s future,” the company said in a statement. “Going forward, the company will continue to adjust its workforce in response to business demand.”
During 2001, the office furniture industry saw its worst ever one-year sales downturn, as shipments fell 17.8 percent, from $13.28 billion to $10.97 billion, according to the Business and Institutional Furniture Manufacturers Association. BIFMA back in November projected another 8.8 percent decline in shipments for 2002 before business picks up in 2003.
An updated forecast from BIFMA is due out any day.
Meanwhile, Herman Miller and Steelcase are expecting operating losses for their respective quarters.
Steelcase’s revised guidance of a 7-cent to 12-cent per share, pre-charge loss contrasts with earnings of 5 cents per share that Wall Street bokerage analysts previously expected.
Herman Miller did not change its earlier earnings guidance of a 6-cent to 10-cent per share loss for the quarter. Brokerage analysts expect the company to record a loss of 8 cents per share.
Herman Miller in its previous quarter reported revenues of $395 million for the period that ended Dec. 1, down 35.9 percent from the $616.3 million reported during the same period a year ago. The company recorded a net loss of $22.7 million, or 30 cents per share, that it attributed to $38.8 million in pre-tax charges. Minus the charge and the relating tax implications, Herman Miller said it would have posted a $1.7 million profit for the last quarter.
Steelcase in December reported third quarter revenues of $731.4 million, down 29 percent from the $1.03 billion of the same period a year earlier. Steelcase posted net income of $4.9 million, or 3 cents per share, which compares with net income of $51.7 million, or 35 cents per share, a year ago.
In addition to the job cuts, the companies have moved to reduce costs by cutting capital spending, altering production schedules and offering early retirements.
Herman Miller has had a freeze on wages and hiring for some time.
Steelcase implemented its own wage freeze last week for all of its hourly and salaried personnel worldwide, a move that will save about $15 million in the 2003 fiscal year, spokeswoman Heidi Hennink said. Steelcase CEO James Hackett also took a voluntary 10 percent reduction in his base salary.
Hackett received a base salary of $798,308 in the 2001 fiscal year, according to the annual proxy statement Steelcase filed last May with the U.S. Securities and Exchange Commission.