Sales fall at office furniture giant HNI, but cost-cutting comes up big

MUSCATINE, Iowa – Office furniture manufacturer HNI Corp. reported fourth quarter sales of $568.9 million, a 6% decline from last year.

But despite the decline, the company reported a 47% increase in earnings per share, primarily due to a major cost-cutting initiative and margin expansion strategy that began last quarter.

“We delivered solid margin expansion and strong earnings growth in both the fourth quarter and the full year of 2022 in a softening demand environment,” said CEO Jeff Lorenger. “Our margin expansion initiatives in Workplace Furnishings are delivering results. Second half 2022 operating margin expanded 150 basis points vs. the prior-year period despite volume pressures tied to the slowing economy. In our Residential Building Products segment, we delivered profit growth and margin expansion while preparing for softer housing-related demand.”

HNI unveiled its strategy in its third quarter report in November, detailing that it would cut $30 million in costs as business conditions continued to worsen.

HNI’s Workplace Furnishings segment saw quarterly net sales dip by 10.8% from last year, with Lorenger citing negatively impacting broader macroeconomic forces as well as volume pressures. Still, the company is optimistic.

“We expect to drive profit improvement in Workplace Furnishings despite continued volume pressures as our focused margin expansion initiatives continue to gain traction,” he said. “During 2023, we expect improved productivity, favorable price-cost and cost actions to more than offset lower volume. Beyond 2023, we are not reliant on volume growth to drive margin expansion in Workplace Furnishings.

“However, looking ahead, recent mid-market employment and demand trends, feedback from large corporate customers regarding return-to-office plans and signals from recent migration patterns toward secondary and tertiary geographies all align with our market positions and point to the return of sustained volume growth.”

HNI also predicts seasonality to return, with an expectation to generate more than 85% of its annual profit during the second half of the year.

See also:

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *