Q2 2021 Herman Miller Inc Earnings Call

[music] good morning, and welcome to Herman Miller second quarter earnings Conference call as a reminder, this college.

Being recorded I would now like to introduce your host for today's conference, Kevin Veltman, Vice President of Investor Relations and Treasurer.

Good morning, everyone.

Joining me today on our second quarter earnings call for Andy on our President and Chief Executive Officer, just on our Chief Financial Officer.

Michael President of North American contract Debbie.

That'd be probes president of Herman Miller, retail and bedroom or Chief Digital officer.

Similar to last quarter, we have changed our approach to the quarterly press release to adopt the shareholder letter format that replaces our prepared remarks on the conference call. We believe this approach provides more timely information for investors and allows for more questions on dialogue on the wheel.

We have posted yesterday's press release on.

On our Investor Relations website, Herman Miller Dot com.

Wherever any figures are presented on the non-GAAP basis, we have reconciled the GAAP and non-GAAP amounts of within the press release as well.

Before we begin today's Q1 day session I would like to remind everyone that this call will include forward looking statements for information on factors that could cause actual results to.

The differ materially from these forward looking statements. Please refer to the earnings press release as well as our annual and quarterly EPS you see filings.

Any forward looking statements that we make today are based on assumptions as of this day and we undertake no obligation to update these statements of the result of new information for future events.

Today's call is scheduled for 60 minutes with that I'll turn the call back over to the operator, and we will take your questions.

Thank you ladies and gentlemen, if you have the question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered for you wish to remove yourself from the queue. Please press the pound key.

Again, if you have the question at this time. Please press Star then one our first question comes from the line of Greg Burns with Sidoti and company. Your line is open. Please go ahead.

Morning for.

Were sort of talking about the order trends throughout the quarter on both the the contract on the retail side and maybe some insight into the first couple of weeks of the Oh this quarter. Thank you.

Good morning, Greg This is Jeff.

Yeah on taxes for you. So what we saw in the consolidated group level. What we saw was an improvement in order trends in total.

We moved toward the back portion of back half of the quarter I'm. The kind of give you an idea we were down in the mid teens percentages for September and October.

On kind of on the average that improved down closer to around 9% in the month of November and in the first couple of weeks of the third quarter, we trended down close to that down 9% between nine and 10%.

Okay and at the the segment level is there any any kind of.

Yeah total trends there.

Yeah, that's an interesting order trends in retail I can this go on the Saturday morning.

And since September order trends for plus 29 October plus 28, and then we saw the big Spike in November of last six the case and we had the fiber of holiday periods of the bridge. The Q2 Q3, So we're coming into Q3 with really strong backlogs and retail 70 million well ahead of.

Mark go back losses.

Its debt and saw strong orders in the the first couple of weeks of Q3 pertaining to the cyber sales.

Okay, great and that that I guess leads me to my next question do you the order the the consolidated order growth on the retail side of it I guess Oh, 40%. The last couple of quarters. So I thought the I was thinking maybe the the growth would even be a little bit stronger this quarter. So for for this quarter was.

There any supply constraints or you know of.

Product limitations that may be for tailed revenue a little bit and then it sounds like as we look into the third quarter, maybe you know based on the backlog and.

The order growth for MACI revenue growth Reaccelerate, if you can give us any color on that that would be helpful.

One of our order growth for the quarter was 41% of ahead of last year for the retail segment and we certainly feel really good about the shift and the growth from October into November November December January or three months that we typically havent been aggressive for my marketing campaign perspective on the path.

So what we're seeing as we build from September and October into that nice November growth as the some of our new initiatives activating across the marketing on some build the digital and and also executing some of our new task seating campaigning and go to market strategies.

So we feel like the the growth that we're seeing throughout the quarter is indicative of the continued strength in the residential channel and it might be helpful. Just to break the in the segment a little bit or are you growth.

Our retail consumer on the consumer the purchasing product for themselves.

On grew 84% in orders in the quarter and our trade business, obviously interior designers purchasing on behalf of the residential consumer groups working for sat on the quarter. The treat actually rebounded this quarter for if he thought we saw on Q1 and the residential channel growth work.

The we're feeling really good about the trends we're seeing in the consumer segment that we feel like we can continue to build on.

And I think that okay, and if we.

Do you see architectural billings start.

On the Lincoln on film stars.

Yeah, and Greg This is Jeff just one more for the color for you.

On the consolidated at the segment level for me.

Order trend perspective, the net that north American contract business.

I would say fairly consistent when you draw the line through the quarter, we were kind of in that down 30, the down 35% range of.

Pretty consistently throughout the quarter and got a little deeper in October and rebounded in November of it but I wouldn't say any notable change there are some clearly we continue to see.

The crest order activity, there I still and John can speak of there's a lot of inquiries and conversations with customers and give us hope, but the one thing I want to highlight.

Our international business, which as we've said the last quarter. The is very encouraging because as you know in many ways. The kind of leaves the on the leading edge of the post virus.

Uh Huh activity, we saw a nice bump in order activity as we move through the quarter of back in November on an organic basis International orders were actually up about 5%, bringing the full quarter to down 2% on an organic basis for for total orders so the trends there.

Very very encouraging.

Okay, Great and then [laughter].

In terms of the retail segment when we look at it can you maybe just give us a little bit of a.

Color on where the growth is coming from because if we look at the the comparable sales seems same brand sales of for DWR. They are actually down so.

There's the the retail growth coming from the coming through from Herman Miller Dot Com Hey, like.

And within DWR, what is the split between.

The traditional brick and mortar channels versus E commerce.

Hey, Greg we typically don't break the head at the brand level the business performance, but certainly of the channel level. We can send you continue to see really strong performance from our E Commerce.

For 220% to last year on but we're also really pre leased with us the apartments with on the quarter from our studios for physical retail locations on which.

In order of built at 14% of over last year. Despite the fact that traffic was down 35, the we're seeing a slight improvement and the it'll be in our stores in the studios on an improvement in conversion, we're still seeing a lot very dedicated the traffic I'm coming into the into the studios in the stores at the end of their customer journey.

On to validate the decisions that they've made for the on might be search.

Okay, Great and then lastly, I know you the updated the the DWR website in July where where are you in terms of updating the I guess the rest of year E Commerce platforms, Herman Miller, Dot Com, Hey, dot com and and.

And have you continued to see the benefit of those changes in the the conversion rates on order numbers.

Yeah, Greg So I'll take the with.

Yeah, we've been really impressed with the performance of the new D. the feed of <unk> Dot com since we released that site in July we've seen significant conversion improvement in that site.

I can tell you that you know compared to immediately pre launch we're seeing.

At 26 26, the skin increasing in conversion on that thought so were really impressed with how that's performing on.

And as you mentioned, where we're focusing now on developing the new mill stool on we're currently on track to release that site in Q4 onto the lot of work going into that and then we'll turn our attention to hate dot com and re launch that in the next financial year.

Okay. Thank you.

Thank you and again, ladies and gentlemen, if you have the question at the time. Please press Star then one.

I'm showing no further questions for me I'd like to turn the conference back over to any other ones for any further remarks.

Hi, I'm sorry, that's got the technical difficulties I Hope you can hear me. This morning, thanks for joining us on the call.

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I mean look for it.

Corner and on behalf of all of the for Herman Miller.

On your family of wonderful holiday season. Thank you.

Yeah.

Ladies and gentlemen, thank you for participating on today's conference. This does conclude the program and you may all disconnect everyone have a great day.

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