EAST GREENVILLE, Pa. – Knoll Inc. said it is well positioned for 2021 after adjusting its marketing and manufacturing strategies to meet the needs of post-pandemic hybrid workplaces.
Knoll, ranked No. 14 in the FDMC 300, reported net earnings of $7.7 million for 2020, a precipitous drop from $59.8 million in 2019. The company’s 2020 sales totaled $1.236 billion in 2020, a 13.4% decrease from 2019. The decline was especially pronounced in the company’s commercial office furniture category. Workplace sales plunged 22% as COVID-19 forced millions of Americans to work from home and prompted many businesses to hit the pause button on office furniture purchases.
Knoll’s total 2020 sales would have suffered an even greater blow if not for the substantial increases it recorded for e-commerce and work from home (WFH) furniture sales. The company said sales to residential end users increased more than 20% to $335 million in 2020.
In addition to growing revenues in the WFH market, Knoll acted to reduce operating expenses by about $10 million annually by closing its manufacturing plant in Grand Rapids, Mich., and initiating consolidation of its North American warehouse locations. Knoll said it trimmed an additional $25 million of operating costs by reducing headcount, travel and entertainment, variable incentive and other discretionary expenses.
In a joint statement, Andrew Cogan, chairman and CEO, and Charles Rayfield, senior vice president and CFO, said, “While we believe our office business will continue to decline over the first half of 2021 as clients hold off on en masse returns to work while vaccines are being disseminated, we are heartened by several factors that suggest a return to more normalized levels of demand and a rebound later in 2021. When we survey our clients on their return to work plans we see most falling in the third and fourth quarter of 2021.
“Our funnel of activity, which has been a good indicator of where demand is heading, shows signs of stabilization of demand three quarters out and the prospect of double-digit growth four quarters out. We think that once there is more clarity on vaccine distribution, companies will start to firm up their return-to-work plans and activate workplace projects now on hold. Our outlook is not that different than the travel industry where bookings for travel in Q3 and Q4 are strong. Once people start returning to the office, the momentum of more people being in versus out will create an additional impetus for return to work and the in-person interaction we know most of us miss and crave.”
The Knoll executives added, “In addition, we know that the workplace people return to won’t be the workplace they left. There will be a more permanent mix of in-person and virtual collaboration - what we call the ‘phygital’ workplace. Spaces will be de-densified and there will be a focus on spaces designed to allow for safe collaboration as well as individual focus. With the office having to compete with other venues now, it will be more important than ever that the office facilitates collaboration and offers features that the home lacks.”
Have something to say? Share your thoughts with us in the comments below.