Miller Knoll reported a better-than-expected performance in its Q2 fiscal 2025 earnings, surpassing analyst expectations with an EPS of $0.55 against a forecast of $0.53. The company's revenue also exceeded forecasts, contributing to a positive outlook, although the full-year EPS guidance midpoint was lowered.
Key Takeaways
- EPS of $0.55 beat the forecast of $0.53.
- Revenue reached $970 million, a 2.2% increase year-over-year.
- Full-year EPS guidance midpoint lowered.
- Strategic product launches and innovation initiatives underway.
- Concerns over tariff exposure and supply chain challenges.
Company Performance
Miller Knoll demonstrated robust performance in Q2 fiscal 2025, with consolidated net sales rising to $970 million, a 2.2% increase compared to the same period last year. The company continues to leverage its diverse business channels and global brand collective to maintain a strong market position. Despite challenges such as tariff exposure and supply chain issues, Miller Knoll remains resilient with positive order growth in key markets like the Middle East and Asia.
Financial Highlights
- Revenue: $970 million, up 2.2% year-over-year.
- Earnings per share: $0.55, exceeding the forecast of $0.53.
- Gross margin: 38.8%.
- Cash flow from operations: $55 million.
- Share repurchases: Approximately 1 million shares worth $23 million.
Earnings vs. Forecast
Miller Knoll's EPS of $0.55 surpassed the forecast of $0.53, marking a positive surprise of approximately 3.8%. This earnings beat is consistent with the company's recent trend of meeting or exceeding expectations, which bodes well for investor sentiment.
Market Reaction
While specific stock price movements were not available, the earnings beat and strategic initiatives likely contribute to a cautiously optimistic market sentiment. The company's performance aligns with broader industry trends, suggesting resilience amidst external pressures.
Company Outlook
Looking ahead, Miller Knoll anticipates improved demand in the second half of the fiscal year. The company projects Q3 net sales between $903 million and $942 million, with adjusted earnings per share expected to range from $0.41 to $0.47. Strategic initiatives include launching new products, expanding retail presence, and eliminating PFAS from its product portfolio by 2027.
Executive Commentary
CEO Andy Owen expressed optimism for the upcoming year, citing positive momentum. John Michael, President of Americas Contract, noted that customers are seeking ways to attract employees back to the office. Debbie Probst, VP Global Retail, highlighted the success of new product launches, emphasizing their strong performance.
Q&A
During the earnings call, analysts inquired about the company's tariff exposure, particularly in China and Canada. Miller Knoll's management outlined mitigation strategies, including alternative supply sources and pricing adjustments. The discussion also touched on large projects and retail momentum, underscoring the company's focus on growth amidst challenges.
Risks and Challenges
- Tariff exposure in key markets like China and Canada.
- Supply chain disruptions could impact operational efficiency.
- Macroeconomic pressures may affect demand and profitability.
- Market saturation in certain regions could limit growth opportunities.
- Currency fluctuations pose a risk to international revenue streams.
Full transcript - MillerKnoll Inc (MLKN) Q2 2025:
Conference Operator: Good evening, and welcome to Miller Knoll's Quarterly Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Wendy Watson, Vice President of Investor Relations. Please go ahead.
Wendy Watson, Vice President of Investor Relations, Miller Knoll: Good evening, and welcome to our Q2 fiscal 2025 conference call. On with me are Andy Owen, Chief Executive Officer and Jeff Stutz, Chief Financial Officer. Joining them for the Q and A session are John Michael, President of Americas Contract and Debbie Probst, Vice President of Global Retail. We issued our earnings press release for the quarter ended November 30, 2024 after market close today and it is available on our Investor Relations website at millernoll.com. A replay of the call will be available on our website within 24 hours.
Before I turn the call over to Andy, please remember our Safe Harbor regarding forward looking information. During the call, management may discuss information that is forward looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward looking information in the context of these factors, which are detailed in today's press release. The forward looking statements are made as of today's date and except as may be required by law, we assume no obligation to update or supplement these statements. We will also refer to certain non GAAP financial metrics and our press release includes the relevant non GAAP reconciliations.
With that, I'll turn the call over to Andi. Thanks,
Andy Owen, Chief Executive Officer, Miller Knoll: Wendy. Good evening, everyone. Thank you so much for joining us tonight. As you may hear from my voice, I'm recovering from a little bit of a respiratory infection, so please bear with me. I'm very pleased to report Millenol delivered strong performance in the Q2 of fiscal year 2025.
We continue to be optimistic for the year ahead based on momentum we're seeing in several of our businesses along with leading indicators, which vary by segment, strengthening our overall demand picture. While orders are trending nicely ahead of last year, they've recovered at a slower pace than we expected at this point in the year. This is reflected in our guidance for the balance of the year that Jeff will discuss later in the call. Moving on to some highlights and trends by segment. Americas contract continues to be a key growth driver from Lernoll with sales and orders up year over year in the Q2, our 3rd consecutive period of order growth.
And looking forward, the leading indicators in this segment such as project funnel additions, customer mock up requests and pricing activity are all up year over year. Within the International and Specialty segment, we continue to see strong order growth in the Middle East and parts of Asia. We're thrilled to see the excitement that is building for our brands internationally. One of our key competitive advantages is the power of our collective of brands alongside our global scale and reach. As I mentioned last quarter, in September, we opened our Miller Knoll flagship in London.
And to date, we have more than doubled client appointments compared to the same period last year. We have some great initiatives that are building momentum in this segment as well. For example, with the opening of a new fulfillment center in Belgium, we now have the ability to offer our full complement of tech stuff in Europe, making it more efficient to utilize them across our portfolio of European brands. Turning to our retail segment. We saw a mid single digit year over year increase in orders during a very important 12 day Black Friday holiday cyber promotional period.
This period runs from the Friday before Thanksgiving through Giving Tuesday and fell in both our 2nd and third fiscal quarters this year. Additionally, we're pleased with several positive trends in the business, including strength of the complementary concierge design services we offer our customers, new product launches performing above expectations and a very positive response to our promotion, with all product categories performing better than prior year and the holiday cyber promotional period. This gives us confidence to continue to invest in new stores and our product assortment. In early 2025, we plan to open Design Within Reach Studios in Palm Springs, California and Las Vegas, Nevada as well as the Herman Miller (NASDAQ:MLKN) store in Fairfax, Virginia. We're also very excited to introduce an expanded product assortment in spring 2025 with new product launches up over 100% compared to spring 2024.
Moving to supply chain and the topic of tariffs. We're paying very close attention to the tariff proposals. We've managed through similar tariff policy changes in the past and are looking to a number of options to mitigate if needed. These could include identifying alternative sources of supply, options for advanced purchasing of imported goods and materials and possible future price adjustments in response to tariff driven cost increases. We know from experience that our global manufacturing footprint and supply chain agility is an advantage and we will determine which combination of these responses is appropriate as more details and tariff actions become available.
We're also closely watching other proposals from the new administration that could have a positive impact on our business and that of our customers. The extension of the 2017 tax cuts and in particular, the reinstatement of bonus depreciation could result in higher free cash flow for us and for many of our customers. We made impressive strides in sustainability this quarter. We announced the elimination of added PFAS from our North American product portfolio by May of 2025 and globally by May of 2027. Our products currently meet or exceed global PFAS regulations, but we aim to go beyond minimum safety standards.
We also continue to roll out more sustainable product options. Herman Miller launched a refreshed version of the popular Meritur chair made with more recycled content and a lower carbon footprint. As a design innovation leader, we support our customers through global research and insights team. With more and more industries recognizing the need to return to and personally connect within workspaces, this team is constantly evaluating ways to create spaces that support relationship based work. Through our design with impact programs, we have the tools to help customers do that.
To close, while macroeconomic improvement is progressing more slowly than we had expected at the start of our fiscal year, we're encouraged by many of the trends we're seeing across our businesses and the building momentum we continue to expect in the second half of the year. Our diverse business channels and global collective of brands continue to be a strong competitive advantage and we have cash flow and balance sheet strength that will allow us to capitalize on opportunities and drive continued momentum. And finally, December always brings a chance to reflect on the year and where we're headed next. I want to thank our associates across Miller Knoll for all that we've accomplished in calendar year 2024. This past year has been about coming together to inspire our customers and clients, collaborating with our colleagues and partners and supporting one another.
I appreciate every moment we've worked together and I'm proud of the milestones we've achieved. I'll now turn it over to Jeff to discuss our results in more detail and share our outlook for the remainder of fiscal 2025.
Jeff Stutz, Chief Financial Officer, Miller Knoll: Terrific. Thanks, Andy, and good evening, everyone. As Andy just mentioned, we're pleased with our 2nd quarter results and despite what has remained a challenging environment from a demand perspective, we continue to be optimistic that the table is set for improved activity in each of our business segments moving forward. Consistent with our expectations, consolidated
: net sales
Jeff Stutz, Chief Financial Officer, Miller Knoll: for the Q2 were $970,000,000 representing a 2.2% increase year over year on a reported basis and a 2.4% organic increase. 2nd quarter consolidated orders of $922,000,000 were down 2.3% as reported and 1.9% lower on an organic basis. Now one important reminder as you digest our numbers is that order entry levels this quarter were impacted by that timing shift that Andy mentioned in the Thanksgiving and subsequent cyber promotional period within our retail business. Whereas last fiscal year this entire 2 week promotional period landed within the 2nd quarter, This year it is equally split between Q2 and Q3. We are pleased to have maintained the gross margin expansion that we delivered in 2024 while strategically managing operating expenses and positioning ourselves for profitable growth.
In the quarter, our consolidated gross margin was 38.8 percent which was down just slightly to last year mainly due to product and channel mix. Turning to 2nd quarter cash flows and the balance sheet. We generated $55,000,000 in cash flow from operations and we repurchased approximately 1,000,000 shares for a total investment of $23,000,000 in the 2nd quarter. And through the 1st 6 months of the fiscal year, we've returned approximately $93,000,000 to our shareholders through dividends and share buybacks. We finished the quarter with a net debt to EBITDA ratio as defined in our lending agreement of 2.94 turns.
And with that, I'm going to move to our performance by segment. Within our Americas contract segment, net sales for the quarter were $504,000,000 up 6.2% organically from the same quarter a year ago. While new orders of $457,000,000 in the quarter were lower than we expected, they were up nicely coming in 4.9% over last year on an organic basis marking as Andy highlighted our 3rd consecutive quarter of order growth in the Americas segment. Order growth trends improved as the quarter progressed and overall funnel, funnel additions, customer mock up requests and pricing activity all continue to remain well ahead of last year strengthening our confidence in a supportive demand environment entering the second half of the fiscal year. 2nd quarter operating margin in the Americas segment was 9.4% compared to 7.4% in the prior year.
And on an adjusted basis, operating margin was a strong 10.2% in the quarter, up 80 basis points compared to last year, primarily due to leverage on fixed overhead costs from higher net sales and benefit from incremental price increases. In the International Contract and Specialty segment, net sales in the 2nd quarter were $246,000,000 up 2.1% on a reported basis and up just over 1% on an organic basis year over year. Orders during the quarter were $219,000,000 a year over year decrease of 6.5% on a reported basis and down just over 7% organically. Order growth in the AP Mia region continues to be strong, but was offset by lower orders in other regions and softness in textiles and with luxury clients at Holly Hunt during the quarter. The operating margin in the International and Specialty segment continues to be strong as we are maintaining the benefits of past actions to reduce expenses.
In the 2nd quarter, operating margin was 9.7% on a reported basis compared to 9.9% last year and adjusted operating margin was 10.5 percent which is down 80 basis points year over year primarily from deleverage on lower sales in some of our specialty businesses. Turning to our retail segment, we reported net sales in the 2nd quarter of 220,000,000 dollars and relative to the same quarter last year, this is a reported decrease of 5.3% and down 4% on an organic basis. New orders in the quarter were $246,000,000 down 9.6% to last year on a reported basis and down 8.4% organically compared to the last year. As I mentioned, it's important to note that this organic sales and order decrease was expected given a shift in the timing of this year's holiday promotional period versus a year ago. And after adjusting for this shift, both sales and orders in the 2nd quarter would be up low single digits to last year.
And thus far in December, the improvement in year over year order rates has only increased. Operating margin in the retail segment was 4% in the 2nd quarter compared to 6.3% a year ago. And on an adjusted basis, operating margin was 4.2%, which is 2.90 basis points lower than the prior year, driven by reduced leverage on seasonal marketing spend for the holiday promotional period. Now I'll turn to our near term guidance and outlook. As Andy mentioned in her opening remarks, most of the leading indicators in our Americas contract business are pointing to improved market conditions.
Additionally, important external indicators including the Architectural Billings Index, CEO and dealer sentiment measures and luxury home sales are showing improvement. And as I just mentioned, we're very encouraged by the December month to date trends in our global retail segment. We believe both the internal and external indicators support our expectation of improving demand in most of our markets in the second half of the fiscal year. While we expect our fiscal Q3 to be impacted by typical seasonal softness in our Americas and international contract businesses, as the calendar year comes to a close and by the timing of the Chinese New Year holiday, our full year guide reflects our confidence that our business is poised for growth. And with that being said, given the fact that order rates during the Q2 developed slower than we initially expected, we have narrowed our full year adjusted earnings per share range to between $2.11 $2.17 lowering the midpoint to accommodate our expectation of a softer Q3.
This updated guidance continues to reflect our expectation of full year sales and EPS growth over fiscal 2024. For the Q3 specifically, we expect net sales to range between $903,000,000 $942,000,000 Adjusted diluted earnings are expected to range between $0.41 $0.47 per share. Our Q3 guidance takes the 3rd quarter's typical seasonal slowdown into consideration along with the shift in the holiday promotional period for our retail business which we estimate shifted approximately $12,000,000 in net sales and $27,000,000 in orders from our fiscal Q2 into the Q3. For all other details related to our guidance, please refer to our press release. Now with that overview of our financial performance and the outlook for the remainder of the year, we'll turn the call over to the operator.
We'll take your
Conference Operator: questions. Thank Our first question comes from the line of Greg Burns with Sidoti. Please go ahead.
Greg Burns, Analyst, Sidoti: Good afternoon. I appreciate that the tariff question or issue is kind of still up in the air. No one knows exactly how that's going to shape up. But when you look at your business, can you maybe just give us a little bit more color on where you might have the most exposure, whether it's specific product lines or with maybe manufacturing that's coming out of Mexico or just any additional color you might give us on how we should think about the potential impact on the business and the business's profitability going forward?
Jeff Stutz, Chief Financial Officer, Miller Knoll: Sure, Greg. This is Jeff. I'll keep my comments fairly high level, but I will highlight the fact that and as you well know and remember, we've been through this one round previously in 2018. So as Andy highlighted in her comments, we do have a playbook of actions to take and maybe before I get into the exposures, I'll just reiterate those. We've got opportunities and we've taken action to identify alternative sources of supply.
Now we can't do that everywhere, but we're certainly doing it where we can. We're buying in advance component parts that we think are very low risk in advance of any tariff impacts. And we also have potential pricing actions that we will consider depending on the level of the kind of details that come out here after the 1st of the year. Additionally, we've got options around duty drawback and applying for exclusions which we had some success in the last round as well as transfer pricing strategies that we think can help limit the impact. So that's the if you will the playbook and we'll pick the combination of those things as necessary.
But in terms of exposures, not a lot of exposure to Mexico in our business, but the 2 big regions of the world would be China and Canada and the Canada exposure really came to us through the Knoll acquisition. As you know, we've got manufacturing in Toronto for some of our wood case goods. So those are the two areas that we will be watching most closely as we move forward.
Andy Owen, Chief Executive Officer, Miller Knoll: And I would say just to add on to that, Greg, based on our last round of experience with tariffs, we spent a lot of time and effort making sure that we rationalize our manufacturing and our supply chain so that we mostly build for region and region now. So we are a lot less exposed to places like China than we have been in the past. But to Jeff's point, we have a playbook ready depending on what those tariffs end up being.
Greg Burns, Analyst, Sidoti: Okay, great. Thanks. And then in terms of maybe the slower order development you saw on the Americas or maybe more broadly, maybe it was elsewhere also. But can you just talk about that a little bit more? I think on the last call, you mentioned that kind of book to ship times were extending, maybe there was longer sales cycles.
Is that part of maybe what you're still seeing this quarter?
Andy Owen, Chief Executive Officer, Miller Knoll: I don't think the book to ship has changed too much, Greg. But I think this last quarter was unique for us in that we really saw in all of our businesses. And I think a little bit throughout the country, a little bit of a slowdown pre election. And so I think when you look at how the quarter started off, it really was related to that. Post election, we started to see things pick up.
So I don't think it's something to be concerned about or repeatable. And then John, I don't know if you want to add to just order to ship or nothing has really changed there since our last call, I don't think.
John Michael, President of Americas Contract, Miller Knoll: No, I think it's pretty similar. Customers are still planning for planning in advance perhaps more than they did pre COVID for some longer lead times with everything that goes into a construction project, but it's been pretty steady and consistent throughout the quarter.
Greg Burns, Analyst, Sidoti: Okay. And then internationally, the orders, I guess, were down a little bit more than we were expecting. Can you just talk about the demand dynamics there? It sounds like it's different across different markets. But also, I just was wondering in terms of maybe some of the integration in terms of Knoll and the dealer network and some of the growth investments you've been making internationally, where are you at with those and how are those impacting the business right now?
Andy Owen, Chief Executive Officer, Miller Knoll: Yes. I think we continue to increase our dealer distribution internationally across the board, Greg. We continue to add a full line Miller Knoll dealers. We've had great success with that so far. I think when you look at the international business in general compared to the Americas contract business, it tends to be a much more project based business.
And therefore, to use a technical term, it's a little lumpier than what we see in Americas contract. We're still seeing strong demand. We're still seeing a very active funnel. I think there's a certain amount of uncertainty with everything that's going on in Europe right now, macroeconomically and politically. And we ride those waves out, but I think the nature of the business is that it tends to be a little lumpier.
Jeff, would you add anything?
Jeff Stutz, Chief Financial Officer, Miller Knoll: No, I think that's spot on.
Greg Burns, Analyst, Sidoti: Okay, great. Thank you.
Conference Operator: Your next question comes from the line of Reuben Garner with The Benchmark Company. Please go ahead.
Reuben Garner, Analyst, The Benchmark Company: Thank you. Good evening, everybody.
Andy Owen, Chief Executive Officer, Miller Knoll: Good evening.
Reuben Garner, Analyst, The Benchmark Company: Let's see. So, our dealer survey, the last few months has been pretty positive, especially the 2 readings post the election. I was wondering if you could kind of comment on any feedback you've gotten from your customers. I know you said it was softer before the election and maybe started to pick up since then, but any kind of feedback on what things are looking like as we get closer to 2025?
John Michael, President of Americas Contract, Miller Knoll: Sure. Hi, Ruben. This is John. I would say dealer sentiment as it shows in your survey is definitely continues to improve. There's a fair amount of market activity really across the board.
And if you think about the leading indicators that we track to try and anticipate what demand will be going forward, they are all pointing in the right direction. Things like additions to our 12 month funnel were up over 64% this quarter over the same time last year. Mock up activity, those things that happen right before customers make decisions are up almost 30%. So all in all, all the indicators we're tracking are healthy and that's consistent with what we're hearing from the dealer network as well.
Reuben Garner, Analyst, The Benchmark Company: Okay, great. And then, Jeff, some clarifications on the guidance. I think that if I'm doing the math right, the Q3 kind of implies a little bit more of the same that we saw in the first half in terms of year over year, a little bit of margin or flattish to maybe a little bit of margin pressure at the operating, incline. The Q4, depending on what your revenue number assumes, it looks like it implies a pretty big surge in margins. Am I doing that right?
Is there something that's going to drive that? Or is that another kind of expectation that this acceleration is going to come in the form of a big move in the top line in the Q4?
Jeff Stutz, Chief Financial Officer, Miller Knoll: Yes, Ruben, I think it's our expectation would be more the latter than the former. We would expect with as you saw even this quarter and in our Q3 guide, you can see that we are sensitive to shifts in the top line in terms of leverage. And so that's the big reason we're seeing a slight tick down in margins in Q3 because we've got lower revenue and to some degree you've got some channel mix that's moving around and some of our higher gross margin businesses. But our expectation based on what you heard from John, the fairly positive indicators that we're seeing internally relative to our retail business would tell us that we should expect an acceleration in revenue. So I don't think it's a massive surge in margin that we're expecting.
It's more would be more typical improved leverage on higher sales, but it's more of a top line story in our view.
Reuben Garner, Analyst, The Benchmark Company: And can you tell us what that top line assumption is so that if we think it's trending differently than that we can adjust?
Jeff Stutz, Chief Financial Officer, Miller Knoll: Well, Ruben, we haven't provided a full year revenue guide. So, I'm not going to quantify it for you. But what I can tell you is that the gross margin expectation would be modestly improved from the 2nd quarter. And we're going to do everything we can and just real quick Ruben by the way we're going to do of course everything we can to manage those operating expenses prudently, so that we don't expect beyond variability on higher sales, we don't expect a significant uptick in OpEx.
Reuben Garner, Analyst, The Benchmark Company: Okay. And just to clarify, you said the 4th quarter gross margin would be modestly better than what I think you said 2nd quarter, but I don't think that's what you meant.
Jeff Stutz, Chief Financial Officer, Miller Knoll: That is what I meant. Yes, yes, I think you'd expect it to be modestly better because we would expect better revenue. Got it. Okay.
Reuben Garner, Analyst, The Benchmark Company: All right. I'll jump back in queue. Thank you, guys.
Jeff Stutz, Chief Financial Officer, Miller Knoll: Thanks, Ruben.
Conference Operator: Your next question comes from the line of Brian Gordon with Water Tower Research. Please go ahead.
Brian Gordon, Analyst, Water Tower Research: Hey, good morning or good afternoon everybody. In your discussions with customers and partners, have there been any kind of meaningful directional trends in terms of what you're hearing in terms of like work from home or hybrid policies? And how are you thinking that could potentially affect business over the next couple of quarters?
Andy Owen, Chief Executive Officer, Miller Knoll: Actually, John, why don't you start?
John Michael, President of Americas Contract, Miller Knoll: Sure. This is John. I'd be happy to take that. I think what's been consistent for the last few quarters is conversations we're having with executives at companies. They're looking for ways, right, to get their people, attract their people back to the office.
And they're seeking ways to connect in person in the ways that technology doesn't facilitate nearly as well, whether that's informal connection, learning and mentoring, problem solving, right, all the things that are just a lot harder to do virtually than they are in person. And in that regard, they're beginning to engage a larger section of their employees to help with that planning. So that there's some ownership in terms of how the space develops and people's desire to want to participate and use it. And obviously, I think common in our industry is everybody wants the ability to adapt and flex over time. So we all know that the work environment is going to change over time and people want to make sure they've got space that allows them to do that.
So I would say that in general, the conversations with customers are robust. They're very targeted and focused in terms of how they engage their associates and get them back in the office, particularly to focus on those things that are not as effective from a virtual perspective.
Andy Owen, Chief Executive Officer, Miller Knoll: Yes. I think the conversation, Brian, has really shifted to getting people back in the office, not so much if, but when and how quickly. And I think another encouraging sign for us is to see how much our large projects have increased over the last several quarters, which typically means that people are looking to actually really revitalize their environment versus just a small area here and there. So we're encouraged by both of those things.
Brian Gordon, Analyst, Water Tower Research: That definitely makes sense. I was actually going to follow-up with that question. Last quarter, you guys had noted that those larger orders, the greater than $5,000,000 category was up quite strongly. I was wondering if you could kind of give us a little bit of color on how that segment of the business has been performing over the last quarter?
Jeff Stutz, Chief Financial Officer, Miller Knoll: Yes, Brian, Jeff here. Same, we were really encouraged. That was the highest category of growth for us again this quarter was projects above $5,000,000 So that trend has continued.
Brian Gordon, Analyst, Water Tower Research: Great. Excellent. Thank you very much.
Conference Operator: Your next question comes from the line of Alex Fuhrman with Craig Hallum Capital Group. Please go ahead.
Alex Fuhrman, Analyst, Craig Hallum Capital Group: Hey guys, thanks for taking my question. It was nice to see that orders for retail were up during the really important Thanksgiving weekend and beyond period. I'm curious how we should think about that given that the retail business has been down year over year for a little while now. Is this potentially the beginning of turning a corner and starting to get retail back to growth? Or was this just a matter of a well executed promotional strategy around Thanksgiving?
Andy Owen, Chief Executive Officer, Miller Knoll: Yes. Alex, I think it's both, but Debbie is here. So I'm going to let Debbie answer with
Wendy Watson, Vice President of Investor Relations, Miller Knoll: some details. Hi, Alex.
Andy Owen, Chief Executive Officer, Miller Knoll: Thanks for the
: question. So I think it's your latter point. I think we well executed our promotional period. However, it is that combined with many of the initiatives we have been working towards driving momentum as they deliver. So just a few examples of those, our newness continues to grow and is performing better than ever.
Our marketing capabilities have been honed over the last few years with new tools like our customer data platform and now the add of data attribution. So we're seeing significant results from that. I'll just give you one data point. Our return on ad spend for the quarter was up 5% last year, while cost to acquire customers was up 15% because of the election noise. And so we're seeing really nice marketing economics.
Our selling initiatives such as our design services, our small business outreach, those things are driving average order values 10% above last year. And then we have more initiatives across these three factors in the pipeline in addition to new stores in the last quarter. So we do expect continued momentum and we expect to see growth beyond what's happening in the macroeconomic trends.
Alex Fuhrman, Analyst, Craig Hallum Capital Group: Okay, that's really helpful. Thank you very much.
Conference Operator: As there are no further questions, we turn the floor back to President and CEO, Andy Owen, for any closing remarks.
Andy Owen, Chief Executive Officer, Miller Knoll: Thanks again, everyone, for joining us on the call. Hope everyone has a lovely holiday season. We appreciate your continued support of Eleur Knoll and we look forward to updating you on our next quarterly conference call. Thank you.
Conference Operator: Thank you for joining our call today. This now concludes our conference call. You may now disconnect.
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