Steelcase posted third-quarter revenue of $794.9 million, marking a 2% increase year-over-year. Like its competitor MillerKnoll, Steelcase's performance was driven primarily by its American region, where sales grew by 5%. This growth was supported by increased business from government, large corporate clients, healthcare, and education sectors. However, orders from large corporate customers showed some growth towards the end of the quarter, though they remained modestly lower compared to the previous year.
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Internationally, Steelcase faced challenges, with sales declining by 6%, largely due to decreased demand in Asia, except for India. Orders from international markets fell by 8%, reflecting issues with demand and customer-driven shipment delays. 'Our international results were below expectations and were affected by both demand fluctuations and some customer-driven delays,' said Dave Sylvester, Steelcase's senior vice president and CFO. To address these challenges, the company implemented additional restructuring measures and cost-cutting initiatives, expected to generate approximately $5 million in annualised savings by the start of fiscal 2026.
Gross margin for the quarter stood at 33.4%, representing a 100-basis-point improvement from the previous year. This growth was driven by increased revenue in the Americas and the benefits of cost reduction initiatives. Operating expenses rose to $223.8 million, an increase of $17.3 million compared to the prior year. The increase was partially due to higher employee costs, although it was offset by a $4.4 million reduction from a divestiture.
At the end of Q3, Steelcase's backlog was approximately $664 million, which marked a 5% decline from the prior year. However, orders in the first three weeks of the fourth quarter grew by 15% compared to the same period the previous year. This growth included several large projects set to ship beyond the quarter's end. Steelcase expects fourth-quarter fiscal 2025 revenue, accounting for an additional week compared to the prior year, to fall within the range of $770 to $795 million, in line with the $775 million reported in the previous year's fourth quarter.
While Steelcase's performance in the U.S. remained strong, the company continues to face headwinds from international markets. Restructuring efforts and cost reductions are expected to support future growth, particularly in the Americas, but challenges remain in regaining momentum in international sales.
Source: www.furnituretoday.com