Office Furniture Growth Spurred by Improving Commercial Market

By Michaelle Bradford | Posted: 04/02/2014 12:02PM

 

Growth in the office and commercial market sparked sales and profit increases for large office furniture manufacturers Steelcase, Herman Miller and HNI.

As the economy continues to improve with the pace of hiring picking up and signs of life in commercial construction, office furniture manufacturers are reaping the benefits as commercial clients update and add office space. Key indicators from the American Institute of Architects' (AIA) Architecture Billings Index (ABI) reflect that by showing continued renewed commercial demand for design and contractor services in its monthly surveys.

According to the Wall Street Journal, a report from Reis Inc., a real estate firm providing data and forecasts on commercial properties, indicated that firms during the first quarter of this year were adding office space at a higher rate than any time since 2007 with occupied space growing to 9.8 million square feet over 9 million square feet in the last quarter of 2013. The report also noted that the vacancy rate had inched down to 16.8% from 16.9% in the fourth quarter of 2013 as well, the paper said.

All of these gains in the office market were highlighted in the financial reports of some of the office furniture industry's largest players.

Zeeland, MI-based furniture giant Herman Miller's sales rose 7.7% to $455.9 million during the third quarter and customer orders jumped 21.4% to $464 million during the same period.

Fourth quarter sales for Steelcase, Grand Rapids, MI, climbed to $779.4 million, an 8% increase over the previous year. Net income swung from a loss of $27 million in 2013 to jumped to $23.9 million in the fourth quarter of fiscal 2014 and year-end revenue rose to $3 billion and net income more than doubled to $87.7 million over last year's $38.8 million.

Muscatine, IA-based HNI (HON, Gunlocke, Allsteel) saw its year-end net income spike 30% from $49 million to $63.7 million. Its fourth quarter numbers were also strong with sales increasing 3% over the prior year to $541.3 million and net income jumping to 29% over the prior year to $22.8 million for the quarter.

A Bright Outlook
The Business & Institutional Furniture Manufacturers Association (BIFMA) says U.S. office furniture production/shipments for 2014 will reach $9.6 billion, a 2.8% increase and 2015 production/shipments will reach $10.6 billion, a 10.4% increase.

In their financial outlooks, these office furniture firms reinforce the association's outlook with their forecasts of continued gains into the next fiscal year.

Steelcase projects revenue in the first quarter fiscal 2015 to increase in the range of 7% to 11% over the prior year. Its expectation is that large commercial clients will continue driving that growth. "Steelcase serves leading organizations who share our view that the strategic use of space helps companies stay ahead," said James P. Keane, Steelcase president and CEO.

"We feel good our our momentum and direction," said Herman Miller CEO Brian Walker. "The clear highlight in our results this quarter is the strong order growth across each of our business segments."

HNI Chairman, President and CEO Stan Askren noted in the company's financial report the substantial growth of its business based on increased office sales and said, "I remain positive our markets and our ability to grow sales and increase profits in 2014. Our businesses are strong, competitive, and well-positioned in their markets and the prospects for our businesses are encouraging."

 

Steelcase beat analysts' expectations with fourth quarter sales of $779.4 million, an 8% increase over the previous year. Net income jumped to $23.9 million swinging from a loss of $27 million in the fourth quarter in 2013. Revenue for fiscal 2014 rose to $3 billion and the company more than doubled its net income at $87.7 million over last year's $38.8 million.

- See more at: http://www.woodworkingnetwork.com/wood-market-trends/woodworking-industry-news/production-woodworking-news/Steelcase-Fourth-Quarter-Profits-US-Market-Share-Climb-Europe-Middle-East-African-Sales-Stumble-253392791.html#sthash.oArwkxW3.dpuf

Steelcase beat analysts' expectations with fourth quarter sales of $779.4 million, an 8% increase over the previous year. Net income jumped to $23.9 million swinging from a loss of $27 million in the fourth quarter in 2013. Revenue for fiscal 2014 rose to $3 billion and the company more than doubled its net income at $87.7 million over last year's $38.8 million.

- See more at: http://www.woodworkingnetwork.com/wood-market-trends/woodworking-industry-news/production-woodworking-news/Steelcase-Fourth-Quarter-Profits-US-Market-Share-Climb-Europe-Middle-East-African-Sales-Stumble-253392791.html#sthash.oArwkxW3.dpuf

Prev 1 2 Next All

 

About the Author

Michaelle Bradford

Michaelle Bradford is Managing Editor of Closets magazine, Custom Woodworking Business magazine, Wood Products magazine and Custom Built Interiors Weekly eNewsletter. She can be reached at mbradford@woodworkingnetwork.com or Google+.

Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

 

View all events >
AUG
11

Woodturning Cruise

Stavanger
AUG
25

4-Day Lumber Grading Workshop

Millersburg , OH
Search our database for woodworking equipment, supplies and services:

Select a category:


Feedback Form
Feedback Form