Steelcase Q2 revenues rise, but profit pressured by tariffs
Office furniture maker posts higher adjusted earnings while preparing for $2.2 billion acquisition by HNI.
GRAND RAPIDS, Mich. — Steelcase reported higher revenue but lower profit in its fiscal 2026 second quarter as the office furniture maker prepares to be acquired by HNI Corp. in a $2.2 billion deal.
The company posted revenue of $897.1 million for the quarter ended Aug. 29, up 5% from $855.8 million a year earlier. Net income fell to $35 million, or 29 cents per share, from $63.1 million, or 53 cents per share, in the prior-year period. Adjusted earnings per share rose to 45 cents from 39 cents, reflecting stronger operating performance once merger costs and restructuring expenses were excluded.
“Our second quarter revenue and order growth was led by continued strengthening of demand from our large corporate customers,” said Sara Armbruster, president and CEO. “Business leaders are making investments in their workplaces as they bring their employees together, and they are turning to Steelcase for research-driven solutions that support connection, creativity and performance.”
See also:
Steelcase announced in August that it had agreed to be acquired by Muscatine, Iowa-based HNI in a cash-and-stock transaction. The deal is valued at about $2.2 billion for Steelcase shareholders and is expected to close by the end of 2025, pending shareholder and regulatory approvals.
“We are proud of the results our teams delivered this quarter as we remain focused on executing our strategy and winning new business while preparing for our anticipated acquisition by HNI,” Armbruster said. “As an industry leader, we continue to help our customers around the world reimagine their workplaces in ways that support how people want to work today and in the future.”
Segment performance
Steelcase’s Americas segment, which accounts for nearly 80% of revenue, posted $707.1 million in sales, a 3% increase over last year. Growth was driven by large corporate customers, offset by declines in education orders. Operating income for the Americas fell to $67.7 million from $102 million, reflecting restructuring charges and merger-related expenses. On an adjusted basis, operating income edged up to $78 million.
International revenue rose 13% to $190 million, helped by growth in India, China and the United Kingdom. The region reported an operating loss of $14.6 million, compared with a $12 million loss last year. Adjusted results showed a smaller loss of $2.7 million, an improvement from $7.6 million a year earlier.
“Higher volume in India and China drove the $5 million reduction in our year-over-year adjusted operating loss in our International segment this quarter,” said Dave Sylvester, senior vice president and CFO. “We executed additional actions this quarter that are targeted to further reduce our cost structure to support our goal of improved profitability in our International segment.”
Overall orders grew 6% organically compared with last year, including 8% growth in the Americas. Orders from education and government customers declined, while demand from large corporations and small to midsized businesses strengthened.
Tariffs weigh on margins
Despite top-line growth, Steelcase’s profitability was pressured by higher tariff costs. Gross margin slipped to 34.4% from 34.5% last year, with the company citing tariffs as a key factor alongside an unfavorable business mix and increased discounts in Europe, the Middle East and Africa. Restructuring costs also weighed on results.
Those headwinds were partially offset by pricing actions, ongoing cost reductions and lower variable compensation expenses. But executives said tariff-related costs remain a drag as the company balances global sourcing with shifting customer demand.
Operating expenses climbed to $247.1 million from $205.1 million a year earlier, driven by merger transaction costs, currency translation effects and higher director compensation tied to stock gains. Last year’s results were bolstered by a $27.9 million land sale, compared with a $1.2 million gain this year.
Operating income fell to $53.1 million from $90 million a year earlier. Excluding restructuring charges, merger costs and land-sale gains, adjusted operating income rose to $75.3 million from $68.5 million.
Steelcase ended the quarter with $426.8 million in liquidity, down $80.3 million from a year earlier.
The board also declared a quarterly dividend of 10 cents per share, payable Oct. 20 to shareholders of record as of Oct. 6.
link
