Steelcase says big corporate customers are ordering less office furniture

By Bill Peters

'Orders from large corporate customers declined compared to the prior year after several quarters of strong year-over-year growth,' company says

Shares of Steelcase Inc. fell after hours on Wednesday after the office-furniture maker's third-quarter sales outlook came up short of Wall Street's estimates, amid weaker demand from big corporate customers and from China.

Steelcase (SCS) - which sells chairs, desks and other accessories to companies, schools and government agencies - said it expects third-quarter sales of $785 million to $810 million, below FactSet analyst estimates for $812 million.

The company said it expects adjusted earnings per share of between 21 cents to 25 cents, compared with FactSet forecasts for 23 cents.

Shares slid 10.7% after hours on Wednesday, after gaining 0.7% in regular trading. As of Wednesday's close, the stock was up 34.3% over the past 12 months.

The company reported the results as employers navigate the rise - and, in some cases, the decline - of remote and hybrid work since the pandemic.

Online retail giant Amazon.com Inc. (AMZN), which had more than 1.5 million employees at the end of last year, recently ordered its corporate staff back to the office five days a week. Still, some observers say more flexible work arrangements are here to stay.

Steelcase, which has tried to stay on top of those trends and focus on smaller customers, said on Wednesday that during its second quarter, "orders from large corporate customers declined compared to the prior year after several quarters of strong year-over-year growth."

However, it added that it expects "order patterns from our largest corporate customers to return to growth in the second half of the year." The company said demand from government, education and healthcare customers drive its order growth in the Americas.

During the quarter, "continued weakness in China" weighed on international demand, Steelcase executives said. Trends in India, they added, were a bright spot for its international business.

Steelcase reported second-quarter net income of $63.1 million, or 53 cents a share, compared with $27.5 million, or 23 cents a share, in the same quarter last year. Adjusted for gains on the sale of land and other matters, Steelcase earned 39 cents a share.

The company reported revenue of $855.8 million, compared with $854.6 million in the prior-year quarter.

Analysts polled by FactSet expected Steelcase to report adjusted earnings of 37 cents a share and sales of $846 million for the second quarter.

-Bill Peters

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09-18-24 1720ET

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