Herman Miller crushed earnings and revenue estimates when it reported its financials on September 17, 2020.
Herman Miller reported Q1 EPS of $1.24 versus the consensus estimate of 26c. The company reported Q1 revenue of $626.8M versus the consensus estimate of $524.83M.
We have a rich and exciting story to share with you about Herman Miller. Moving forward, we will bring you more of this narrative through a quarterly letter, which will go beyond just a synopsis of our financial performance to share the stories, successes, and challenges we are facing as we strive to create value for all of our stakeholders. We are excited to begin with this inaugural letter.
Our diversified business model coupled with our ability to act quickly and decisively to manage the business drove strong operating performance for the quarter, once again proving our ability to deliver profitable results even in these difficult times. Our strong performance this quarter validates our strategy, as our multi-channel go-to-market approach enabled us to serve customers where, and how, they needed to be served. The investments we have made in people, technology, and products positioned us to capitalize on emerging opportunities as the needs of our customers quickly evolved due to the onset of the COVID-19 crisis.
Our Retail business led the way this quarter, with orders up an impressive 40% over last year. Demand was led by the Home Office category, which increased nearly 300% over last year. Consumers are also investing in their broader home environments, which led to positive year-on-year demand across multiple product categories, notably Upholstery, Outdoor, and Accessories.
The North America segment continued to feel the effects of COVID-19 on overall demand levels, posting a year-over-year decline of 40%. With that said, we were encouraged to see modest improvement in order trends within this segment in the back half of the quarter.
E-commerce drove a significant portion of our Retail growth in the quarter, with overall web sales and orders up 248% and 257%, respectively, across our Herman Miller, DWR, and HAY websites in North America when compared to the prior year. We introduced several new capabilities in the quarter that further improve the customer experience and strengthen our position as a digital retailer:
- We launched our reimagined Design Within Reach website in July, which has delivered on one of our objectives of improving conversion rates. The new platform will be the model for future refreshes of both the Herman Miller and HAY websites.
- We created a Work from Home landing page on Herman Miller’s website to help customers more easily browse and select the home office products that best meet their needs.
- We developed a Work from Home online assessment tool that has been used by more than 12,000 customers to assess their needs. Data from this tool will also inform future investments and strategies for growing the home office furnishings category.
We have also made tremendous progress on improving our digital capabilities and solutions in support of our Contract business. Investments in this category are centered around reducing the complexity of the digital tool sets our dealers utilize and driving greater share of dealer spend to Herman Miller Group products and solutions.
- Our new digital platform that helps Contract customers and design partners visualize, search and select from products across the dealer offerings has seen widespread adoption and is driving increased specification of Herman Miller Group products and solutions.
- Excitement continues to build around our proprietary generative design technology that uses artificial intelligence to create dynamic floor plans populated with Herman Miller Group product. While still in beta testing, we believe this has the potential to be one of the most disruptive technologies the industry has seen in decades. A broader North America release is planned for late in calendar year 2020.