MILLERKNOLL, INC.
For the period ended May 31, 2025. Filed Jul 21, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jul 21, 2025
MLKN$21.49-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-06-01; filed 2024-07-30.
0000066382-24-000053
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-05-31; filed 2025-07-21.
0000066382-25-000069
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 239 previous paragraphs and 264 current paragraphs.
110 unchanged; 61 reworded; 81 added; 68 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (81)
Current report
•Net sales were $3,669.9 million, representing an increase of 1.1% when compared to the prior year. Growth was primarily driven by increased sales volumes in the North America Contract and International Contract segments, along with the positive impact of pricing actions. These drivers more than offset sales declines due to unfavorable foreign currency translation, the strategic closure of the HAY eCommerce channel in North America and sales volume declines in the Global Retail segment. On an organic basis, net sales were $3,676.1 million(*), representing an increase of 1.6% when compared to the prior year.
Current report
•Gross margin was 38.8% as compared to 39.1% in the prior year. The decline in gross margin was driven by increases in material costs, some of which are related to increases in tariffs during the year, as well as from unfavorable channel and product mix. These pressures were offset in part by gross margin benefit from favorable net pricing.
Current report
•Operating expenses increased by $119.8 million or 9.6% as compared to the prior year. The increase was primarily related to an increase in non-cash intangible impairment charges of $113.2 million.
Current report
•The current global macroeconomic environment — which reflects higher interest rates, tepid housing-related demand trends, relatively low CEO and consumer confidence levels, as well as geopolitical and global trade uncertainty — continues to pose challenges for the industry. While these factors are expected to continue in the near term, we are focused on prudent cost management and investment in targeted growth opportunities. These opportunities include growth within the Global Retail segment through expansion of our North American store footprint and product assortment. Within our North America Contract and International Contract segments, our strategy is focused on targeting economically resilient customer sectors, continued investment in product design and innovation leadership and expansion into geographies with opportunity to grow our market share.
Current report
•The Company's financial performance is sensitive to changes in material costs including changes related to tariffs or commodity cost changes. During fiscal year 2025 there were changes in trade policies that have resulted and are expected to continue to result in added cost pressures. The Company has implemented pricing actions together with other mitigation strategies that, over time, are expected to offset the net impact of tariff costs on the financial results.
Current report
•The International Contract segment reported a net sales increase of 2.2% and an organic sales increase of 2.7%() year-over-year. Operating margin increased 10 basis points year-over-year and decreased 10 basis points on an adjusted basis().
Current report
•The Global Retail segment reported a net sales decrease of 1.5% and an organic sales decrease of 0.3%() year-over-year. Operating margin decreased 1,110 basis points year-over year and 110 basis points on an adjusted basis(). The decrease on a reported basis was primarily driven by non-cash intangible asset impairment charges recorded in the current year.
Current report
•Knoll pension plan termination charges: Includes expenses incurred associated with the termination of the Knoll pension plan which was completed in the second quarter of fiscal year 2025
Current report
Net sales for fiscal 2025 increased $42 million, or 1.1% compared to the prior year. This increase was primarily driven by the following factors:
Current report
•Increased sales volume within the International Contract and North America Contract segments of approximately $28 million and $25 million, respectively.
Current report
•Net price increases, which contributed approximately $14 million to Net sales, reflecting our ability to maintain pricing discipline in a competitive environment. Offset in part by:
Current report
•A $12 million reduction due to the strategic closure of the HAY eCommerce channel in North America that occurred in the prior year.
Current report
•Decreased sales volume within the Global Retail segment of approximately $7 million.
Current report
Gross margin for fiscal 2025 was 38.8%, compared to 39.1% in fiscal 2024. The 30 basis point decline was primarily driven by the following factors:
Current report
•Tariff-related costs negatively impacted gross margin by 30 basis points in the year.
Current report
•Effective pricing strategies, net of incremental discounting, which contributed approximately 30 basis points of margin improvement.
Current report
•An increase of $113 million in non-cash intangible impairment charges;
Current report
•Selling and marketing expenses increased by $10 million, primarily due to higher selling and marketing costs within the Global Retail segment;
Current report
•Variable selling costs, which include sales-based commission and royalty expense, increased approximately $7 million;
Current report
•Increased acquisition-related integration costs as compared to the prior year, totaling approximately $4 million. These increases were partially offset by:
Current report
•A $16 million reduction in restructuring charges as compared to the prior year.
Current report
Net other expenses for fiscal 2025 totaled $72.4 million, compared to $67.5 million in fiscal 2024. The year-over-year increase of $4.9 million was primarily attributable to the following factors:
Current report
•A $2.3 million reduction in net periodic benefit income, resulting from the termination of the Knoll pension plan during the current fiscal year.
Current report
•A $3.1 million increase in foreign currency losses compared to the prior year, reflecting greater volatility in exchange rates.
Current report
Effective as of March 1, 2025, the last day of the third quarter of fiscal 2025, the Company implemented an organizational change that resulted in a change in the reportable segments. The Company has recast historical results to reflect this change.
Current report
Below is a description of each reportable segment.
Current report
The North America Contract segment includes the operations associated with the design, sourcing, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout the United States and Canada as well as the global operations of the Spinneybeck|FilzFelt, Maharam, Edelman, and Knoll Textile brands.
Current report
The International Contract segment includes the operations associated with the design, sourcing, manufacture and sale of furniture products, indirectly or directly through an independent dealership network for office, healthcare, and educational environments in Europe, the Middle East, Africa, Asia-Pacific and Latin America.
Current report
North America Contract
Current report
Net sales increased 2.2%, or 2.4%(*) on an organic basis, from the prior year due to:
Current report
•Increased sales volume within the segment of approximately $25 million; and
Current report
Operating earnings increased $14.2 million, or 13.3% compared to the same period of the prior year due to:
Current report
◦A decrease of approximately $16 million in restructuring charges related to reductions in the Company's workforce; and
Current report
◦A decrease of approximately $8 million in annual incentive compensation. These decreases were offset in part by:
Current report
◦An increase of $12 million in non-cash intangible impairment charges as compared to the prior year; and
Current report
◦Increased acquisition related integration costs of approximately $2 million.
Current report
•Gross margin increased by $4.5 million, primarily driven by the higher sales volume discussed above. This increase was offset by a 60 basis point decline in gross margin percentage, which was mainly attributable to the following factors:
Current report
◦Unfavorable product mix reduced margin by approximately 40 basis points; and
Current report
◦Higher tariff-related costs led to a 30 basis point decline in gross margin; and
Current report
◦Increased commodity and product distribution costs further reduced margin by 30 basis points; and
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Removed paragraphs (68)
Previous report
•Net sales were $3,628.4 million, representing a decrease of 11.2% when compared to the prior year. The decrease in net sales was primarily driven by decreased sales volumes in all segments, the closure of the Fully business that occurred in the prior year, the closure of the HAY eCommerce channel in North America, as well as the additional week of operations in the prior fiscal year which is required periodically to re-align calendar months with our fiscal periods. These decreases were offset by increased sales resulting from price increases, net of incremental discounting as well as favorable foreign currency translation. On an organic basis, net sales were $3,615.4 million(*), representing a decrease of 8.1% when compared to the prior year.
Previous report
•Gross margin was 39.1% as compared to 35.0% in the prior year. The change in gross margin was primarily driven by the realization of price and channel optimization strategies, the realization of cost synergies associated with the Knoll acquisition, and reductions in commodities, storage and handling costs and freight and product distribution expenses.
Previous report
•Operating expenses decreased by $55.4 million or 4.2% as compared to the prior year. The decrease was primarily due to lower variable selling expenses, the continued focus on cost optimization and synergy capture, and restructuring actions announced and implemented during fiscal year 2024. These decreases were partially offset by compensation and benefit costs, which increased approximately $33.0 million driven by changes in variable-based compensation and incentives.
Previous report
•The integration of the Knoll acquisition continues to progress as planned. We made good progress implementing cost synergies, having achieved an annualized run-rate cost synergies of $160 million related to the integration of Knoll.
Previous report
•The current macroeconomic environment in North America — which reflects higher interest rates, tepid housing-related demand trends, and relatively low CEO and consumer confidence levels — continues to pose challenges for the industry. These factors are expected to persist in the near term, posing difficulties particularly for the luxury housing market and discretionary spending on goods. However, within the contract furniture industry, the business is beginning to see improving demand indicators such as increased contract activations and increases in the number and size of new project opportunities entering our sales funnel.
Previous report
•The Company's financial performance is sensitive to changes in certain input costs, including steel and steel component parts. Ongoing cost reduction initiatives and price increase actions have been implemented and have been effective in offsetting these cost pressures. Additionally, we began to benefit from relative decreases in steel and other key input costs as fiscal 2024 progressed.
Previous report
•The International Contract & Specialty segment reported a net sales decrease of 8.4% and an organic sales decrease of 7.2%() year-over-year. Operating margin decreased 130 basis points year-over-year and 30 basis points on an adjusted basis(). The decrease was primarily driven by the loss of leverage on lower demand and production levels in the European contract channel and within our Specialty businesses.
Previous report
•The Global Retail segment reported a net sales decrease of 16.4% and an organic sales decrease of 8.6%() year-over-year. Operating margin increased 640 basis points year-over year and 210 basis points on an adjusted basis(). The increase was primarily driven by pricing actions as well as improvements in inventory management and increased shipping revenues.
Previous report
Net sales decreased $459 million or 11.2% compared to the prior year fiscal period. The following items primarily contributed to the change:
Previous report
•Decreased sales volume within the Americas Contract, International Contract & Specialty and Global Retail segments of approximately $262 million, $76 million and $61 million, respectively.
Previous report
•The additional week during the first quarter of the prior year contributed to approximately $77 million of the Net sales decrease.
Previous report
•Decrease of $76 million related to the closure of the Fully business that occurred in the prior year and the closure of the Hay eCommerce channel in North America. Offset in part by:
Previous report
•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $80 million.
Previous report
•Foreign currency translation increased Net sales by approximately $13 million.
Previous report
Gross margin was 39.1% for fiscal 2024 as compared to 35.0% for fiscal 2023. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:
Previous report
•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the prior year which increased gross margin by approximately 260 basis points.
Previous report
•The positive impact of price increases, net of incremental discounting, contributed to margin improvement by approximately 140 basis points.
Previous report
•Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed to an increase in gross margin of approximately 40 basis points.
Previous report
•Benefit to margin from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year. These factors were offset in part by;
Previous report
•Variable selling and marketing costs decreased by approximately $34 million, due in part to the closure of the Fully business that occurred in the prior year;
Previous report
•Decrease in asset impairment charges recorded in the current year as compared to the prior year contributed a net decrease in Operating expenses of approximately $24 million;
Previous report
•The impact of an extra week in the first quarter of fiscal 2023 decreased Operating expenses by approximately $10 million;
Previous report
•Product development costs decreased approximately $3 million, primarily in the Americas Contract segment; and
Previous report
•Savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the prior year as well as reduced expenses attributable to the recently implemented restructuring actions. These decreases were offset in part by:
Previous report
•Compensation and benefit costs, which increased approximately $33 million driven by changes in variable-based compensation and incentives.
Previous report
Net other expenses for fiscal 2024 were $67.5 million compared to $70.9 million in fiscal 2023. This change is driven primarily by increased interest income in the current year of $3.3 million, the impact of net foreign currency transaction gains of $1.8 million as well as favorable net periodic benefit income from our pension plans. These favorable changes were offset by increased Interest expense of $2.2 million as compared to the same period of the prior year, driven by increased interest rates as compared to the same period of the prior year.
Previous report
Americas Contract
Previous report
Net sales decreased 10.0%, or 8.3%(*) on an organic basis, from the prior year due to:
Previous report
•Decreased sales volume within the segment of approximately $262 million, which was driven by the impact of a challenging macro-economic environment compounded by pandemic-driven pent-up demand at the start of the prior year; and
Previous report
•The impact of an additional week in the prior year, which reduced sales approximately $39 million; offset in part by
Previous report
Operating earnings decreased $0.9 million, or 0.9% compared to the same period of the prior year due to:
Previous report
◦An increase in variable based compensation of approximately $19 million;
Previous report
◦Increased Knoll acquisition integration costs of $9 million; and
Previous report
◦Decreased product development costs of $3 million as well as a decrease of $5 million due to the additional week in the prior year;
Previous report
◦A decrease of $6 million in non-cash intangible impairment charges as compared to the prior year;
Previous report
◦Decreased variable marketing and selling costs.
Previous report
International Contract & Specialty
Previous report
Net sales decreased 8.4%, or 7.2%(*) on an organic basis, from the prior year due to:
Previous report
•Decline in sales volume of approximately $76 million driven mainly by challenging macroeconomic conditions in Europe and parts of Asia-Pacific; and
Previous report
•Impact of the extra week in the prior year period, which drove a decrease of $20 million; offset in part by
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Reworded paragraphs (61)
Previous wording
A key element of the Company's growth strategy is to scale the Global Retail business through the Company's Design Within Reach ("DWR"), HAY, Knoll, Muuto, and Herman Miller retail operations. The Global Retail business provides a channel to bring MillerKnoll's iconic and design-centric products to retail customers, along with other proprietary and third-party products, with a focus on modern design.
Current wording
A key element of the Company's growth strategy is to scale the Global Retail business through the Company's Herman Miller and Design Within Reach ("DWR") retail channels. DWR provides a channel to bring MillerKnoll's iconic and design-centric products across our brands such as Knoll, Muuto, and HAY, to retail customers, along with other proprietary and third-party products, with a focus on modern design.
Previous wording
•Americas Contract — Includes the operations associated with the design, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout North and South America.
Current wording
•North America Contract — Includes the operations associated with the design, sourcing, manufacture, and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout the United States and Canada as well as the global operations of the Spinneybeck|FilzFelt, Maharam, Edelman, and Knoll Textile brands.
Previous wording
•International Contract & Specialty — Includes the operations associated with the design, manufacture and sale of furniture products, directly or indirectly through an independent dealership network in Europe, the Middle East, Africa and Asia-Pacific as well as the global activities of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.
Current wording
•International Contract — Includes the operations associated with the design, sourcing, manufacture, and sale of furniture products, directly or indirectly through an independent dealership network for office, healthcare, and educational environments in Europe, the Middle East, Africa, Asia-Pacific, and Latin America.
Previous wording
•Global Retail — Includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores.
Current wording
•Global Retail — Includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores, along with the global operations of the Holly Hunt brand.
Previous wording
•Retail Locations - As of June 1, 2024, the Company operated 75 retail studios (including 37 operating under the DWR brand, 1 under the HAY brand, 29 Herman Miller stores, 3 Muuto stores, 4 Knoll stores and a multi-brand Chicago store). The business also operated 4 outlet studios.
Current wording
•Retail Locations - As of May 31, 2025, the Company operated 75 retail studios (including 38 operating under the DWR brand, 1 under the HAY brand, 30 Herman Miller stores, 3 Muuto stores, 2 Knoll stores and a multi-brand Chicago store). The business also operated 3 outlet studios.
Previous wording
In retail, we are working to evolve and enhance the Design Within Reach experience. We are testing new store formats, expanding our product assortment and offering design services both in store and online to enhance the customer experience, attract new customers and grow existing customers. In addition, we continue to launch new online tools to support our trade customers making it easier for them to incorporate our products in their client projects.
Current wording
In retail, we are working to evolve and enhance the Design Within Reach experience. We are expanding the retail footprint of both our DWR studios and Herman Miller stores into new geographic markets, with a primary focus on growth within the United States. We are testing new store formats, expanding our product assortment and offering design services both in store and online to enhance the customer experience, attract new customers and grow existing customers. In addition, we continue to launch new online tools to support our trade customers making it easier for them to incorporate our products in their client projects.
Previous wording
Our collective of dynamic brands includes Herman Miller, Knoll, DatesWeiser, Design Within Reach, Edelman Leather, Geiger, HAY, Holly Hunt, Knoll Textiles, Maharam, Muuto, and Spinneybeck Filzfelt. These brands are united in their commitment to our purpose, design for the good of humankind, and they offer a complementary set of design solutions. By leveraging our global operations footprint, we are able to fuel our brands and build solutions in market closer to our customers, and we are creating centers of excellence in our operations facilities to support all brands in each region.
Current wording
Our collective of dynamic brands are united in their commitment to our purpose, design for the good of humankind, and they offer a complementary set of design solutions. By leveraging our global operations footprint, we are able to fuel our brands and build solutions in market closer to our customers, and we are creating centers of excellence in our operations facilities to support all brands in each region.
Previous wording
To capitalize on the opportunity ahead, we will seek to lead the industry in product innovation, design excellence, and sustainability; fortify the flagship Knoll and Herman Miller brands while nurturing and growing each of the brands within MillerKnoll; position the Americas Contract business to lead; drive outsized growth in International Contract & Specialty; and continue transforming our Global Retail business.
Current wording
To capitalize on the opportunity ahead, we will seek to lead the industry in product innovation, design excellence, and sustainability; fortify the flagship Knoll and Herman Miller brands while nurturing and growing each of the brands within MillerKnoll; position the North America Contract business to lead; drive outsized growth in International Contract; and continue transforming our Global Retail business.
Previous wording
•The effective tax rate was 14.8% for fiscal 2024 compared to negative 8.8% for the prior year.
Current wording
•The effective tax rate was negative 53.1% for fiscal 2025 compared to 14.8% for the prior year.
Previous wording
•Diluted earnings per share for the full year totaled $1.11 compared to $0.55 in the prior year. On an adjusted basis(*), diluted earnings per share totaled $2.08 in fiscal 2024 compared to $1.85 in fiscal 2023.
Current wording
•Diluted loss per share for the full year totaled $0.54 compared to earnings per share of $1.11 in the prior year. On an adjusted basis(*), diluted earnings per share totaled $1.95 in fiscal 2025 compared to $2.08 in fiscal 2024.
Previous wording
•The Americas Contract segment reported a net sales decrease of 10.0% and an organic sales decrease of 8.3%() year-over-year. Operating margin increased 50 basis points year-over year and 100 basis points on an adjusted basis(). The increase was primarily driven by the combination of gross margin expansion and well managed operating expenses.
Current wording
•The North America Contract segment reported a net sales increase of 2.2% and an organic sales increase of 2.4%() year-over-year. Operating margin increased 60 basis points year-over year and 50 basis points on an adjusted basis(). The increase was primarily driven by a reduction in restructuring charges as compared to the prior period
Previous wording
This presentation contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this presentation. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented.
Current wording
This presentation contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this presentation. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented. Certain non-GAAP measures, including adjusted operating earnings, are used by the Company in its executive compensation program.
Previous wording
Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, and the related tax effect of these adjustments. These adjustments are described further below.
Current wording
Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges and the related tax effect of these adjustments. These adjustments are described further below.
Previous wording
Adjusted Operating Earnings (Loss) represents reported operating earnings plus integration charges, amortization of Knoll purchased intangibles, restructuring expenses, and impairment charges. These adjustments are described further below.
Current wording
Adjusted Operating Earnings (Loss) represents reported operating earnings plus integration charges, amortization of Knoll purchased intangibles, restructuring expenses, impairment charges and Knoll pension plan termination charges. These adjustments are described further below.
Previous wording
Adjusted Operating Margin represents Adjusted Operating Earnings (Loss) divided by net sales.
Current wording
Adjusted Operating Margin is calculated as Adjusted Operating Earnings (Loss) divided by Net Sales.
Previous wording
Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects, the impact of an extra week in fiscal 2023, the impact of the closure of the Hay eCommerce channel in North America, and the impact of the closure of the Fully business.
Current wording
Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impact of the closure of the North America HAY eCommerce channel in the Global Retail segment.
Previous wording
•Integration charges: Knoll integration-related costs include severance, accelerated stock-based compensation expenses, asset impairment charges, and expenses related to synergy realization efforts and reorganization initiatives.
Current wording
•Integration charges: Knoll integration-related costs include severance, asset impairment charges associated with lease and operations facility consolidation activity, and expenses related to synergy realization efforts and reorganization initiatives.
Previous wording
•Restructuring charges: Includes costs associated with actions involving targeted workforce reductions and non-cash charges for the impairment of assets associated with the decision to close certain showrooms.
Current wording
•Restructuring charges: Includes costs associated with actions involving targeted workforce reductions.
Previous wording
•Impairment charges: Includes non-cash, pre-tax charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand as well as impairment of the Knoll and Muuto trade names.
Current wording
•Impairment charges: Includes non-cash, pre-tax charges for the impairment of the Knoll and Muuto trade names as well as impairment of goodwill attributed to the Global Retail and Holly Hunt reporting units.
Previous wording
•Favorable foreign currency translation of approximately $6 million; and
Current wording
•Unfavorable foreign currency impact of approximately $6 million.
Previous wording
•Loss of leverage on lower sales volumes and unfavorable channel and product mix, which negatively impacted gross margin by approximately 70 basis points.
Current wording
•Unfavorable channel and product mix negatively impacted gross margin by approximately 30 basis points. These factors were offset in part by:
Previous wording
Operating expenses decreased by $56 million or 4.3% compared to the prior year fiscal period. The following factors contributed to the change:
Current wording
Operating expenses increased by $120 million or 9.6% compared to the prior year fiscal period. The current period reflects the following key changes compared to the prior year:
Previous wording
The business is comprised of various operating segments as defined by U.S. GAAP. These operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions. The segments identified by the Company include Americas Contract, International Contract & Specialty, and Global Retail. The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs. For descriptions of each segment, refer to Note 14 of the Consolidated Financial Statements.
Current wording
The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs. For descriptions of each segment, refer to Note 13 of the Consolidated Financial Statements.
Previous wording
•Price increases, net of incremental discounting, of approximately $97 million; and
Current wording
•Price increases, net of incremental discounting, of approximately $20 million. These increases were offset in part by:
Previous wording
◦Increased restructuring expenses of approximately $2 million related to a workforce reduction as well as showroom consolidations. These increases were offset in part by:
Current wording
•Unfavorable foreign currency translation of approximately $2 million.
Previous wording
•Increased operating expenses of $9.9 million. The following factors contributed to the change:
Current wording
•Decreased operating expenses of $9.7 million. The following factors contributed to the change:
Previous wording
◦The impact of incremental list price increases, net of contract price discounting, that increased gross margin percentage by 370 basis points; and
Current wording
◦Incremental list price increases, net of contract price discounting, which improved gross margin by approximately 70 basis points.
Previous wording
•Incremental promotional discounting, net of price increases, which decreased sales by $21 million; and
Current wording
•Incremental discounting, net of price increases, which negatively impacted sales by approximately $11 million; and
Previous wording
•Favorable foreign currency translation of approximately $3 million.
Current wording
•Unfavorable foreign currency translation of approximately $3 million.
Previous wording
•The increase in operating expenses was offset in part by improved gross margin of $9.0 million due to the increased gross margin percentage of 380 basis points. The increase in gross margin percentage was due primarily to:
Current wording
•Increased gross margin of $7.7 million due to the increase in sales explained above and an increase in gross margin percentage of 40 basis points. The increase in gross margin percentage was due primarily to:
Previous wording
◦Unfavorable product mix which had a negative impact on margin of 170 basis points and increased labor costs as well as loss of fixed cost leverage due to reduced production volumes that decreased gross margin percentage by 20 basis points.
Current wording
◦Incremental discounting, net of price increases which had a negative impact on margin of 90 basis points.
Previous wording
•Increased Operating expenses of $5.7 million which was largely due to an:
Current wording
•The increase in gross margin was partially offset by increased Operating expenses of $6 million which was largely due to increased variable selling costs in the current year.
Previous wording
•Favorable foreign currency translation of approximately $4 million.
Current wording
•Price increases, net of incre mental discounting, of approximately $4 million.
Previous wording
•Decreased Gross margin of $14.7 million due to the decrease in sales explained above, offset in part by an increase in gross margin percentage of 230 basis points due primarily to favorable product mix.
Current wording
•Decreased gross margin of $9.1 million due to the decrease in sales explained above and a decrease in gross margin percentage of 20 basis points. The decrease in gross margin percentage was due primarily to:
Previous wording
◦Decreased commodity and product distribution costs that increased gross margin percentage by 200 basis points. These increases were offset in part by:
Current wording
◦The impact of incremental price increases, net of promotional discounting, that increased gross margin percentage by approximately 20 basis points. These increases were offset in part by:
Previous wording
The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture, distribute, and market our products. Net cash provided by operating activities for the twelve months ended June 1, 2024 totaled $352.3 million compared to $162.9 million in the twelve months ended June 3, 2023. The increase in cash inflow is due primarily to an increase in earnings of $38.5 million in the current year compared to the prior year, a reduction in contributions to our pension plans, as well as a reduction in working capital. Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses. The following all affect these account balances:
Current wording
The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture, distribute, and market our products. Net cash provided by operating activities for the twelve months ended May 31, 2025, totaled $209.3 million compared to $352.3 million in the twelve months ended June 1, 2024. The decrease in cash inflow is due primarily to a net increase in working capital. Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses. The following all affect these account balances:
Previous wording
Cash used in investing activities for the twelve months ended June 1, 2024 was $86.3 million, as compared to $76.5 million in the twelve months ended June 3, 2023. The increase in cash outflow in the current year was primarily due to:
Current wording
Cash used in investing activities for the twelve months ended May 31, 2025, was $100.9 million, as compared to $86.3 million in the twelve months ended June 1, 2024. The increase in cash outflow in the current year was primarily due to:
Previous wording
•The advancement of $13.5 million of cash against the value of company owned life insurance policies received in the twelve months ended June 3, 2023 for which there was no activity in the current year. Offset in part by:
Current wording
•Increased capital expenditures in the current year; Offset in part by:
Previous wording
•An increase in notes receivable received from certain independently owned dealers in the current year;
Current wording
•A decrease in the total volume of notes receivable entered into with certain independently owned dealers in the current period as compared to the same period of the prior year.
Previous wording
Capital expenditures for the current year were $78.4 million as compared to $83.3 million in the prior year. At the end of the fiscal 2024, there were outstanding commitments for capital purchases of $53.7 million. The Company plans to fund these commitments with cash on hand and/or cash generated from operations. The Company expects capital spending in fiscal 2025 to be between $100 million and $125 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.
Current wording
Capital expenditures for the current year were $107.6 million as compared to $78.4 million in the prior year. At the end of the fiscal 2025, there were outstanding commitments for capital purchases of $69.2 million. The Company plans to fund these commitments with cash on hand and/or cash generated from operations. The Company expects capital spending in fiscal 2026 to be between $120 million and $130 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.
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Current report — wording carried from elsewhere
The business is comprised of various operating segments as defined by U.S. GAAP. These operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions.
Current report — wording carried from elsewhere
The Global Retail segment includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores, along with the global operations of the Holly Hunt brand.
Current report — wording carried from elsewhere
•A decrease in the operating margin of 100 basis points in all years, leaving all other assumptions static, would not result in impairment for the Americas Contract or International Contract reporting units. For the Coverings reporting unit it would result in impairment of $3.0 million.
Current report — wording carried from elsewhere
Each indefinite-lived intangible asset was reviewed for impairment using a qualitative assessment as of March 31, 2025. The Company elected to test each asset qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. Through the performance of this qualitative assessment we determined that there were no indicators of impairment.
Current report — wording carried from elsewhere
In the fourth quarter of fiscal 2024, the decision was made to cease the use of certain leased locations resulting in impairment charges of $5.5 million related to the right of use assets associated with these locations.
Current report — wording carried from elsewhere
•Global and national economic conditions such as heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, escalating tensions in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events;
Current report — wording carried from elsewhere
•Public health crises, such as pandemics and epidemics, and governmental policies and actions to protect the health and safety of individuals or to maintain the functioning of national or global economies;
Current report — wording carried from elsewhere
•Availability and pricing of raw materials;
Current report — wording carried from elsewhere
•Financial strength of our dealers and customers;
Current report — wording carried from elsewhere
•Pace and level of government procurement; and
Current report — wording carried from elsewhere
•Outcome of pending litigation or governmental audits or investigations.
Current report — wording carried from elsewhere
For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our periodic reports and other filings with the SEC, including the risk factors identified in this report. The forward-looking statements included in this report are made only as of the date of this report, and we do not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.