QUOTE AND NEWS
SeekingAlpha  Oct 1  Comment 
By Trading Champ: Headquartered in Zeeland, MI in the United States, Herman Miller, Inc. (NASDAQ:MLHR) is a leading designer and manufacturer of interior furnishings for office, residential, healthcare, and educational settings. The company also...
SeekingAlpha  Sep 18  Comment 
By SA Transcripts: Herman Miller Inc. (NASDAQ:MLHR) Q1 2015 Earnings Conference Call September 18, 2014 9:30 pm ET Executives Brian C. Walker - President and CEO Gregory J. Bylsma - EVP and CFO Analysts Josh Borstein -...
Benzinga  Sep 17  Comment 
Herman Miller Inc. (NASDAQ: MLHR) shares ticked up in the extended session Wednesday after the company beat the fiscal first-quarter revenue consensus and offered a better-than-expected outlook. The Zeeland, Michigan, furniture maker predicted...
SeekingAlpha  Aug 12  Comment 
ByMark Lin: Elevator Pitch Herman Miller (NASDAQ:MLHR) has traditionally been perceived as a pure B2B or office furniture play. The cyclical nature of the office furniture market, government austerity measures and changing workplace habits...
TheStreet.com  Jul 19  Comment 
NEW YORK (TheStreet) -- High-end furniture designer Herman Miller is seeking to grow in the residential furnishing market with its acquisition of Design Within Reach , announced late on Thursday. Herman Miller CEO Brian Walker told TheStreet on...
TheStreet.com  Jul 18  Comment 
NEW YORK (The Deal) -- Office furniture maker Herman Miller  is continuing to remodel its strategy, striking a deal to acquire modern furniture retailer Design Within Reach for about $154 million in cash. Zeeland, Mich.-based Herman will...
Wall Street Journal  Jul 17  Comment 
Office furniture company Herman Miller Inc. has agreed to take over Design Within Reach Inc., a retailer of furniture, lighting and accessories.
StreetInsider.com  Jul 17  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Herman+Miller%2C+Inc.+%28MLHR%29+to+Acquire+DWR+for+%24154M/9670405.html for the full story.
Benzinga  Jun 26  Comment 
Herman Miller (NASDAQ: MLHR) reported its fourth quarter earnings on Wednesday; shares of the company traded down 6.3 percent in after-hours trading. The company reported fourth-quarter earnings per share of $0.50 versus an estimated $0.46,...
SeekingAlpha  Jun 26  Comment 
Herman Miller, Inc. (MLHR) Q4 2014 Earnings Conference Call June 26, 2014 9:30 AM ET Executives Brian Walker - President and CEO Greg Bylsma - EVP and CFO Jeff Stutz - CAO and Treasurer Analysts Josh Borstein -...




 

Herman Miller (Nasdaq: MLHR) is the third largest player in the office furniture industry with $1.3 billion in global sales, an installed base of $8 billion in the US and 12% of the industry's market share.[1] In addition to selling office furniture worldwide, the company also produces interior furnishings for health care facilities, schools, and homes. With a strong emphasis on research and development, the company is recognized as an innovator in furniture design. The company earned $1.3 billion in revenue and $28 million in net income in 2010.[1]

Herman Miller’s performance, like the entire office furniture industry, is highly dependent on US commercial activity. With declining levels of nonresidential construction, white collar employment, and office occupancy stemming from the subprime crisis, orders and shipments of US office furniture have fallen. Herman Miller is attempting to weather this downturn by expanding into international markets and other product lines, while maintaining its competitiveness by reducing fixed costs. Nevertheless, with 60% of revenues generated from the US office furniture industry and commodity prices remaining elevated, it will be difficult to completely offset struggling US sales.

Company Overview

Herman Miller designs and manufactures furniture for office, health care, educational, and residential settings.[2] 70% of the company’s sales are made through 151 independent dealers in the US and several other independent dealers internationally. The other 30% are sold either directly to government institutions and major corporations or through company owned distribution networks.[3]

Business Segments[4]

  • North American Furniture Solutions - The North American Furniture Solutions segment sells work-related furniture throughout the US, Canada, and Mexico.
  • Non-North American Furniture Solutions - The non-North American Furniture Solutions segment manufactures and sells MLHR furniture products outside of North America. Herman Miller has customers in over 100 countries with the UK and Japan having the largest customer base.
  • Other - Besides miscellaneous research and design expenses, the company’s “other” category consists primarily of the residential furniture and Convia businesses. Convia, a product line, is an instrument built into the building infrastructure that controls the power, environment and data flow of the entire building.

Distribution Channels[5]

  • Independent Contract Furniture Dealers and Licenses - product sales are made to a network of independently owned and operated contract furniture dealerships doing business in many countries around the world. These dealers purchase our products and distribute them to end customers.
  • Owned Contract Furniture Dealers - the company owns 9 contract furniture dealerships.
  • Direct Customer Sales - includes sales to the US federal goverment
  • Independent Retailers

Business Growth

FY 2010 (ended May 29, 2010)[1]

  • Net sales fell 19.1% to $1.3 billion. This year-over-year decline was driven by the global economic environment and was experienced across nearly all operating and geographic units.
  • Net income fell 58.4% to $28 million.

Trends and Forces

Weakening Economic Conditions are Adversely Affecting MLHR’s US Office Furniture Sales

Because buyers rarely upgrade their products, demand for office furniture is driven by business expansion. Therefore, office furniture sales are highly dependent on nonresidential construction, vacancy rates and white collar employment levels. Because of the economic turmoil stemming from the subprime crisis all of these macroeconomic forces have begun to weaken.

Herman Miller Positions Itself in the Chinese Market

As US office furniture demand growth has declined from 2005 to 2008, Herman Miller has focused on achieving geographical diversification to sustain revenue growth. In the past few years, Herman Miller has heavily invested in growing Asian markets, specifically China. With a rapidly growing office furniture market valued at $2.5 to $3 billion, China is a vital driver for international growth. By expanding into international markets like China, Herman Miller hopes to generate 50% of annual growth from outside the North American office furniture market by 2010.

Rising Raw Material Costs Will Reduce MLHR's Margins

Because of massive demand from emerging economies, the prices of all major raw materials used in Herman Miller’s manufacturing have risen considerably over the past year. The price of steel, plastic, and aluminum have risen since the mid 2000s. Since the company’s procurement of raw materials occurs through long term fixed-price contracts, the company is able to negotiate contracts before commodity prices go higher. In order to offset the rising cost of raw materials, the company plans to increase prices on all furniture products, which may adversely affect sales.

Competition

Herman Miller resides in a fragmented and highly competitive office furniture industry. The company believes its primary competitive advantage lies in its focus on research and development to create innovative furniture products. With office furniture demand moderating from a weakening US economy, pricing competition between office furniture companies has escalated. If Herman Miller can continue to successfully innovate, the company can still compete against lower cost producers. In addition, the company’s sales-based cost structure will be advantageous in pricing competition as operation costs will concurrently decline with sales. Nevertheless, the company faces significant competitive challenges. While the company has focused on diversification, the company’s primary business, US office furniture, has lagged the industry. Herman Miller is also facing stiff competition from abroad. Many of the company’s major competitors are also simultaneously positioning themselves in foreign markets. HNI Corporation and Steelcase have already acquired local manufacturing companies that have established distribution networks in China and the rest of Asia.

  • Steelcase (SCS) designs and manufactures office furniture and other complementary products like lighting and infrastructure. The company retains the largest market share of office-related furniture in the world and competes with Herman Miller through a greater supply chain and a more expansive distribution network.
  • HNI Corporation (HNI) also manufactures office-related furniture. Although HNI competes with Herman Miller for both contract sales to large corporations and commercial sales to independent dealers serving small businesses and home office users, each company has a different focus. Herman Miller primarily pursues contract sales while HNI pursues commercial sales.
  • Kimball International (KBALB) provides products and services for both office furniture and electronic contract assemblies. Kimball mainly competes with Herman Miller's wood furniture product lines.

References

  1. 1.0 1.1 1.2 MLHR 2010 10-K "Selected Financial Data" pg. 15
  2. MLHR 2010 10-K "Narrative Description of Business" pg. 3-4
  3. MLHR 2010 10-K "Customer Base" pg. 4
  4. MLHR 2010 10-K pg. 17-18
  5. MLHR 2010 10-K "Channels of Distribution" pg. 18-19
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