Office furniture orders are weak
 HNI Corp. which makes office furniture and fireplaces, reported lower-than-expected quarterly sales and earnings, hurt by weak office furniture orders.
Analysts’ average earnings forecast was 45 cents a share, according to Reuters Estimates.
Chief Executive Stan Askren said during a conference call, the U.S. housing market downtown took a toll on the company’s hearth business, and the office furniture section did not work as predicted.
Huge contracts meet up or go over expectations, but sales of desks, chairs and filing products through catalogs and big-box retailers slowed, he said. That business segment accounts for about 50 percent of the company’s office furniture business, Askren said “What we don’t know yet is whether this is a temporary slowdown or reflective of a longer-term trend,” he said. First-quarter sales at the Muscatine, Iowa-based company fell 5.6 percent to $609.2 million, missing analysts’ average forecast of $639.9 million.
HNI said it expects second-quarter sales to be down slightly from the year-earlier $671.3 million. Analysts, on average, expect $664.34 million, according to Reuters Estimates.
HNI forecast 2007 office furniture sales growth in the low single digits.
Increase in the U.S. office furniture industry has been unpredictable in recent times, with a 14 percent spike in February orders following a 1 percent drop in January. The January decline was the first drop since July 2004, and capped five months of reduced order growth, according to data from the Business and Institutional Furniture Manufacturers’ Association.
While slowing growth in the industry has affected all the major companies, players like Steelcase Inc. (SCS.N: Quote, Profile , Research) and Herman Miller Inc. (MLHR.O: Quote, Profile , Research) have posted strong international sales, Morningstar analyst John Gabriel said.
HNI needs more strength in that segment, Gabriel said.
“The contract business is really what’s keeping them afloat,” he said. “International is really driving the growth in this industry. They’re not participating in that strong market.”
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