Tariffs drive higher costs for MillerKnoll and Steelcase

Both MillerKnoll Inc. and Steelcase Inc. expect tariffs to cost them millions of dollars in lost earnings in their current quarters alone.  

The Zeeland-based MillerKnoll (Nasdaq: MLKN) expects tariffs to cost $5 million to $7 million in the three-month period that ended March 1. The tariff-related costs for the fourth quarter of the company’s 2025 fiscal year, which ends May 31, will equate to 5 cents to 7 cents in pre-tax earnings per share, according to the report. 

“As we’ve seen in the past several weeks, recent tariff announcements have created uncertainty in our industries, but as policies evolve, we will remain flexible and seek to adjust our approach to minimize impact to our valued customers. We’re using what we’ve learned from earlier rounds of tariffs and the pandemic, along with our manufacturing and supply chain footprint, to manage our approach in this dynamic environment,” President and CEO Andi Owen told analysts during a Wednesday afternoon conference call to discuss quarterly results. 

“In addition, we will partner with suppliers, leverage value engineering and available flexibility within our supply chain and manufacturing footprint to offset cost impacts wherever possible. And we will also consider incremental price surcharges if necessary to manage this period of volatility,” Owen said. 

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Steelcase expects earnings to take a hit from tariffs that’s $9 million higher than a year ago in the present quarter. 

Steelcase targets to offset higher tariffs and inflationary costs “with appropriate pricing actions,” CFO David Sylvester said in a Thursday conference call to discuss quarterly results. This month, the company announced a list price increase starting in June and a “tariff recovery charge” in its Americas division on orders received after March 27, Sylvester said. 

“Our ability to offset tariff costs with pricing actions could be impacted by a number of factors such as the speed and pace of changes in the tariffs and available exemptions … as well the macro-economic environment and competitive factors,” he said. 

President Trump has implemented a series of tariffs this year and more may come next month. 

Steelcase will adjust the tariff recovery charge accordingly, depending on what happens, Sylvester said. 

“If we have to take it up, we will consider that, and if we need to take it down, we’ll be the first to move quickly to adjust it down,” he said. “But we cannot absorb costs, and I don’t think companies across the industry are going to absorb costs. We leverage a lot of the same suppliers around the world and therefore are exposed to these tariffs.” 

The guidance MillerKnoll offered in its earnings report on the resulting effect “includes our expected exposure under all known active tariffs and is net of expected mitigation efforts in the period,” CFO Jeff Stutz said. 

MillerKnoll plans to implement a 4.5% list price increase on June 2 to offset higher costs for items such as steel. The tariffs are only a part of the reason for the price increase, Stutz said. 

“It would be wrong to think that the price increase is squarely aimed as a response to tariffs. It’s in part that. But I would point out that even domestic U.S. steel prices have run up since the start of the calendar year, and it has been coincident with this tariff conversation — and that has happened in the past as well,” Stutz said. 

The guidance and estimate of the effects of the tariffs on the company’s earnings are based on what’s known now, he said. Future effects are “really difficult for us to estimate right now … until we see some of the movement settle down,” he said. 

“The wildcard is what happens in April. There’s a whole slew of potential tariff changes that seem to be changing a bit by the day,” Stutz said. “So, based on what we see that’s active today, our belief is that through pricing and other mitigation efforts, we can offset those.” 

In a recent statement to Crain’s Grand Rapids Business, the Grand Rapids industry trade association Business and Institutional Furniture Manufacturers Association said it “advocates for trade policies that maintain the strengths of our North American partnerships while addressing contemporary challenges.” 

“We urge policymakers to carefully weigh the potential consequences of aggressive tariff policies,” BIFMA said. “We invite policymakers to engage in constructive dialogue with industry stakeholders to find balanced solutions that support domestic manufacturing without sacrificing the benefits of regional trade integration helping US manufacturers to be the most competitive region globally.” 

MillerKnoll on Wednesday reported $876.2 million in sales for the third quarter of its 2025 fiscal year, up 0.4% from the same period a year earlier. The company posted a quarterly net loss of $11.7 million or 19 cents per share. The quarterly loss included $140 million in what Stutz described as “special charges related to intangible amortization, impairment and restructuring.” 

Of the $140 million, $130 million was tied to pretax, noncash impairment of goodwill for the Holly Hunt brand and global retail units and intangible assets for the Knoll and Muuto brands.

Sales for the first nine months of the fiscal year totaled $2.7 billion, down 1.1% from the first nine months of the prior fiscal year, with $23 million in net income, or 29 cents per share. 

MillerKnoll said quarterly orders grew 2.7% to $853 million and backlogged orders increased 7.4% from a year earlier to $686 million. 

The corporation “saw a notable difference in demand in our retail businesses compared to most of our contract businesses,” Owen said. 

“Strong performance in certain markets and channels mitigated softness in others and a disciplined focus on our cost structure helped us weather unpredictable and dynamic macroeconomic conditions,” she said. “Leading indicators within our contract segments are mixed and overall demand in many geographies were sluggish during the quarter amid uncertainty related to tariffs and other macroeconomic factors.” 

MillerKnoll projected $910 million to $950 million in sales for its current fourth quarter, a 4.3% to 8.9% increase from a year ago, and net income of 46 cents to 52 cents per adjusted share. 

Sales for the full fiscal year that ends May 31 could reach $3.61 billion to $3.65 billion, which about flat with the prior year. 

At Grand Rapids-based Steelcase, sales for the fourth quarter of the 2025 fiscal year grew 1.6% to $788 million with higher net income of $27.6 million, or 23 cents per diluted share. Sales for the full fiscal year that ended Feb. 28 were essentially flat at $3.16 billion, or $1.02 per diluted share. 

The Grand Rapids-based Steelcase (NYSE: SCS) projects $760 million to $785 million in sales for the ongoing first quarter of its 2026 fiscal year, a 4% to 6% increase from a year ago, with 10 cents to 14 cents in earnings per share. 

The guidance took into account the “negative sentiment in Canada as an example about buying things from the U.S.,” as well as the effects federal spending cuts may have on government business, Sylvester said. 

Steelcase’s order backlog at the end of the quarter was up 11% from the prior year, Sylvester said. 

“We’re encouraged by the order growth and earnings momentum we achieved in fiscal 2025,” Sylvester said. “We have a strong balance sheet and we’re implementing necessary actions to address the tariff and inflationary environment.”