MillerKnoll Reports $12.7 Million Net Loss in Q3 Fiscal 2025 Amid Rising Operating Expenses

MillerKnoll, Inc. reported a net loss of $12.7 million for the third quarter of fiscal 2025, a significant decline from the net earnings of $22.2 million recorded in the same period last year. The company's revenue for the quarter was $876.2 million, reflecting a slight increase of 0.4% compared to $872.3 million in the prior year. However, for the nine months ended March 1, 2025, total revenue decreased to $2.71 billion from $2.74 billion in the previous year, marking a decline of 1.1%. The gross margin for the quarter was 37.9%, down from 38.6% a year earlier, primarily due to unfavorable product mix and increased commodity costs.

Operating expenses surged by 40.9% to $414.6 million in the third quarter, largely driven by $130 million in impairment charges related to indefinite-lived intangible assets and goodwill. This increase overshadowed a decrease in incentive compensation expenses. The company reported an operating loss of $82.2 million for the quarter, compared to an operating profit of $42.8 million in the same period last year. The effective tax rate for the quarter was notably high at 88.3%, influenced by the pre-tax loss and impairment charges.

In terms of strategic developments, MillerKnoll implemented a significant organizational change effective March 1, 2025, which resulted in a reclassification of its reportable segments. The North America Contract segment now includes operations previously reported under the International Contract & Specialty segment, while the Global Retail segment has absorbed the Holly Hunt brand. This restructuring aims to enhance operational efficiency and align management reporting with the company's strategic goals.

Operationally, the company reported a backlog of $686.4 million, up 7.4% from the previous year, indicating a positive trend in order volume. Total orders for the quarter reached $853.1 million, a 2.7% increase year-over-year. The North America Contract segment saw a slight increase in net sales to $468.2 million, while the International Contract segment experienced a decline to $145.5 million. The Global Retail segment reported a 1.9% increase in net sales, totaling $262.5 million, benefiting from a shift in the timing of holiday promotions.

Looking ahead, MillerKnoll anticipates continued challenges due to macroeconomic conditions, including supply chain disruptions and inflationary pressures. The company remains focused on cost management and operational efficiency to navigate these challenges. Management expressed optimism about leveraging its diversified business model to mitigate weaknesses in certain markets while capitalizing on strengths in others. The company expects to maintain adequate liquidity through cash on hand and available credit facilities to support its operations and strategic initiatives.