Sep 22, 2026 earnings call — Margins, tariffs, and retail store expansion
Company cut full-year net sales range to $3.88 billion to $4.03 billion, and kept adjusted EPS range of $1.85 to $2.15.
Revenue $0.9B (est $0.9B) · EPS $0.53 (est $0.35) · Next-quarter revenue outlook $1.0B–$1.0B
Key quotes
"First, we are elevating the level of operational discipline we bring to setting priorities and running the business by concentrating our resources on the initiatives, where we believe we can create the greatest value for the organization and for our stakeholders."
"Based on that assessment, we estimate an approximate $0.07 per share impact from costs related to these new tariffs."
"And looking ahead, we expect to open 5 to 7 new stores during the second quarter and continue to plan for approximately 14 to 18 new store openings throughout fiscal 2027."
Analyst Q&A 4
Why contract demand didn't lift sales
Q (Greg Burns · Sidoti and Company): He asked why positive North American contract indicators did not translate to a stronger quarter, and whether the company still expects growth for the year. He also asked how mature global retail stores are performing on sales and margins.
A: Management said internal indicators are positive but customers are taking longer to convert awarded projects into orders, driven partly by state and local uncertainty ahead of the midterms and timing in health care projects. They still expect North American contract growth for the balance of the year but are a bit behind after Q1 and teams are working to catch up. For global retail, the cohort of stores opened in late FY25 and FY26 is progressing and is expected to reach profitability in FY27, with second-year store ramps ahead of expectations.
"I will say the reports from the from the sales organization are that customers seem to be taking a little bit longer to convert from awarded project to orders." — John Michael (PRESIDENT)
Order patterns, pricing, and cost cuts
Q (Reuben Garner · Stifel): He asked about the quarter cadence and whether orders slowed then recovered, what pricing or surcharges are assumed to offset higher costs, and what cost actions drove margin outperformance and their size.
A: Management said orders improved through the quarter, with August a growth month and the first three weeks of September showing orders up 9% year over year across all three segments. They said April pricing actions flowed through in Q1, price-cost was slightly favorable in Q1, but they expect a small headwind of about 20 to 30 basis points year over year in Q2 as inflation ramps; international contract had a new surcharge of about 4% effective earlier this month. On cost actions, they described an enterprise-wide effort on expense and cost of goods, plant closures (two closed, a third closing), workforce reductions at Holly Hunt, and noted $3 million to $5 million of savings reflected across the business.
"And then as we look through the first 3 weeks of September, we are up 9% in orders year over year and that is growth across each of our 3 segments as well right now." — Kevin J. Veltman (CFO)
Why sales guide was trimmed; retail outlook
Q (Philip Lee · William Blair): He asked what specific trends in North American contract and global retail led to the lowered sales guide, whether the weakness is temporary or structural, and for any pipeline or quarter-to-date retail data. He also asked about capital allocation priorities as profitability improves.
A: Management said contract pipelines remain encouraging but some projects are larger and take longer, and many recent projects are smaller in size requiring similar dealer effort. For global retail, they cut the outlook mainly because of soft June and July (especially outdoor and web due to PFAS-related inventory gaps) but reported a strong August and quarter-to-date strength; new stores opened in 2025–26 should drive profitability into FY27. On capital allocation, priorities remain investing in growth opportunities, paying down debt, maintaining the dividend, and being opportunistic on buybacks; they cited net debt/EBITDA of 2.75 and 2.8 last quarter.
"As such, in August, we leaned more heavily into our direct mail distribution, and we will continue to do that." — Debbie F. Propst (PRESIDENT)
Why international contract margins fell
Q (Water Tower): She asked why international contract operating margin has declined despite modest revenue growth, what specifically impacted margin over recent years, and what will improve margins going forward.
A: Management said they are working to rebalance international product mix, which historically has leaned heavily on high-profit task seating but recently has included more lower gross margin categories to access larger projects and drive top-line and profit dollars. They also cited inflationary pressures such as higher energy costs and regional shifts in production that reduced overhead leverage (notably in European factories). Management added that international is project-driven so margins move quarter to quarter, orders were up nearly 18% this quarter, and there were one-time costs like opening a new Mexico City showroom and sales/marketing events to support growth.
"We have been really working hard to try to try to bring more balance to the overall product mix that is sold through our international contract segment." — Jeffrey Stutz (CEO)