What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-01-05 compared with 2025-09-29 · 204 added, 100 removed, 257 unchanged (54% of the section changed)

6 unchanged sentences

The Company's products are sold primarily through independent contract office furniture dealers, direct customer sales, owned and independent retailers and the Company’s eCommerce platforms.

The following is a summary of results for the three months ended August 30, 2025:

• Net sales were $955.7 million and orders were $885.4 million, representing an increase of 10.9% and a decrease of 5.4%, respectively, when compared to the same quarter of the prior year.

On an organic basis, which excludes the impact of foreign currency translation, Net sales were $947.4 million (*) and orders were $877.5 million (*) , representing an organic increase of 10.0% (*) and an organic decrease of 6.2% (*) , respectively, when compared to the same quarter of the prior year.

• Gross margin in the first quarter was 38.5%, a decrease of 50 basis points when compared to the same quarter of the prior year, related primarily to the impact of increased net tariff-related costs in the period, which were offset in part by benefit from leverage on higher sales volume.

• Operating expenses decreased $6.5 million or 2.0% as compared to the same quarter of the prior year.

The decrease was driven primarily by a $27.8 million decrease in integration charges as compared to the same period of the prior year.

This decrease was offset in part by an increase in variable sales expenses, compensation and benefit costs and costs associated with the opening of additional retail stores.

The following is a summary of results for the three months ended November 29, 2025:

• Net sales were $955.2 million and orders were $972.5 million, representing a decrease of 1.6% and an increase of 5.5%, respectively, when compared to the same quarter of the prior year.

On an organic basis, which excludes the impact of foreign currency translation, Net sales were $946.5 million (*) and orders were $963.4 million (*) , representing an organic decrease of 2.5% (*) and an organic increase of 4.5% (*) , respectively, when compared to the same quarter of the prior year.

• Gross margin in the second quarter was 39.0%, an increase of 20 basis points when compared to the same quarter of the prior year, related primarily to the impact of favorable product and channel mix as well as the benefit from price increase actions, which more than offset cost pressures from tariffs and unfavorable leverage of fixed operations costs on lower sales volume.

• Operating expenses increased $9.2 million or 2.9% as compared to the same quarter of the prior year.

The increase was driven primarily from costs associated with the expansion of the retail store footprint in North America and increased fixed and variable compensation costs.

• The effective tax rate was 22.5% compared to 21.8% for the same quarter of the prior year.

The change as compared to the prior year resulted primarily from the level of net income or net loss in the periods as well as the impact of discrete items in each of the periods.

• Diluted earnings per share in the quarter was $0.29 as compared to diluted loss per share of $0.02 in the prior year.

Adjusted diluted earnings per share was $0.45 (*) , a 25.0% (*) increase as compared to the prior year quarter.

• Diluted earnings per share in the quarter was $0.35 as compared to $0.49 in the prior year.

Adjusted diluted earnings per share was $0.43 (*) , a 21.8% (*) decrease as compared to the prior year quarter.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

The following summary includes the Company's view of the economic environment in which it operates:

• The North America Contract segment in the first quarter reported Net sales totaling $533.9 million, up 12.1% compared to the prior year period on a reported and organic basis.

North America Contract had new orders of $492.2 million, which represents a decrease of 8.2% from the prior year on both a reported and organic basis.

• The International Contract segment delivered Net sales in the first quarter of $167.5 million, an increase of 14.4% from the year-ago period on a reported basis and an increase of 11.3% (*) organically.

New orders in this segment totaled $154.5 million, representing a year-over-year decrease of 6.5% on a reported basis and a decrease of 9.2% (*) organically.

• Net sales in the first quarter for the Global Retail segment totaled $254.3 million, an increase of 6.4% over the same quarter last year on a reported basis and an increase of 4.9% (*) organically.

A comparison of Net sales and orders during the second quarter to the prior year quarter by segment is as follows:

• The North America Contract segment in the second quarter reported Net sales totaling $508.5 million, down 3.1% compared to the prior year period on a reported and organic basis.

North America Contract had new orders of $506.8 million, which represents an increase of 4.8% from the prior year on both a reported and organic basis.

• The International Contract segment delivered Net sales in the second quarter of $170.9 million, a decrease of 6.3% from the year-ago period on a reported basis and a decrease of 9.2% (*) organically.

New orders in this segment totaled $162.0 million, representing a year-over-year increase of 6.6% on a reported basis and an increase of 3.4% (*) organically.

• Net sales in the second quarter for the Global Retail segment totaled $275.8 million, an increase of 4.7% over the same quarter last year on a reported basis and an increase of 3.4% (*) organically.

Orders in the quarter totaled $303.7 million, up 6.0% compared to the same period last year on a reported basis and up 4.5% (*) organically.

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The fiscal year ending May 30, 2026 ("fiscal 2026") and the fiscal year ended May 31, 2025 ("fiscal 2025") both contain 52 weeks.

The remaining sections within Item 2 include additional analysis of the three months ended August 30, 2025, including discussion of significant variances compared to the prior year periods.

The remaining sections within Item 2 include additional analysis of the three and six months ended November 29, 2025, including discussion of significant variances compared to the prior year periods.

Reconciliation of Non-GAAP Financial Measures

32 unchanged sentences

Three Months Ended

August 30, 2025

November 29, 2025

North America Contract International Contract Global Retail Total

6 unchanged sentences

Three Months Ended

August 31, 2024

November 30, 2024

North America Contract International Contract Global Retail Total

1 unchanged sentence

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

Six Months Ended

November 29, 2025

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,042.4 $ 338.4 $ 530.1 $ 1,910.9

% change from PY 4.1 % 2.9 % 5.6 % 4.3 %

Currency translation effects (1)

(0.1) (9.8) (7.1) (17.0)

Net sales, organic $ 1,042.3 $ 328.6 $ 523.0 $ 1,893.9

% change from PY 4.1 % (0.1) % 4.1 % 3.4 %

Six Months Ended

November 30, 2024

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,000.9 $ 328.8 $ 502.2 $ 1,831.9

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period

The following tables reconcile orders as reported to organic orders for the periods ended as indicated below:

Three Months Ended

August 30, 2025

November 29, 2025

North America Contract International Contract Global Retail Total

6 unchanged sentences

Three Months Ended

August 31, 2024

November 30, 2024

North America Contract International Contract Global Retail Total

1 unchanged sentence

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

Six Months Ended

November 29, 2025

North America Contract International Contract Global Retail Total

Orders, as reported $ 999.0 $ 316.5 $ 542.4 $ 1,857.9

% change from PY (2.0) % (0.2) % 4.1 % — %

Currency translation effects (1)

(0.1) (9.4) (7.5) (17.0)

Orders, organic $ 998.9 $ 307.1 $ 534.9 $ 1,840.9

% change from PY (2.0) % (3.2) % 2.6 % (0.9) %

Six Months Ended

November 30, 2024

North America Contract International Contract Global Retail Total

Orders, as reported $ 1,019.4 $ 317.2 $ 521.2 $ 1,857.8

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

The following table reconciles earnings per share - diluted to adjusted earnings per share - diluted for the periods ended as indicated below:

Three Months Ended

August 30, 2025 August 31, 2024

Earnings (loss) per share - diluted $ 0.29 $ (0.02)

Three Months Ended Six Months Ended

November 29, 2025 November 30, 2024 November 29, 2025 November 30, 2024

Earnings per share - diluted $ 0.35 $ 0.49 $ 0.64 $ 0.47

Amortization of Knoll purchased intangibles 0.09 0.08 0.18 0.16

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Key Highlights

The following table presents certain key highlights from the results of operations for the three months ended:

Three Months Ended

(In millions, except share data) August 30, 2025 August 31, 2024 % Change

The following table presents certain key highlights from the results of operations for the three and six months ended:

Three Months Ended Six Months Ended

(In millions, except share data) November 29, 2025 November 30, 2024 % Change November 29, 2025 November 30, 2024 % Change

Net sales $ 955.2 $ 970.4 (1.6) % $ 1,910.9 $ 1,831.9 4.3 %

4 unchanged sentences

Other expenses, net 16.0 17.6 (9.1) % 40.8 34.5 18.3 %

Earnings (loss) before income taxes and equity income 28.7 (1.7) N/A

Income tax expense (benefit) 7.6 (1.1) N/A

Equity earnings (loss) from nonconsolidated affiliates, net of tax — 0.1 N/A

Net earnings (loss) 21.1 (0.5) N/A

Earnings before income taxes and equity income 32.5 44.9 (27.6) % 61.2 43.2 41.7 %

Income tax expense 7.3 9.8 (25.5) % 14.9 8.7 71.3 %

Equity earnings (loss) from nonconsolidated affiliates, net of tax — 0.1 (100.0) % — 0.2 (100.0) %

Net earnings 25.2 35.2 (28.4) % 46.3 34.7 33.4 %

Net earnings attributable to redeemable noncontrolling interests 1.0 1.1 (9.1) % 1.9 1.8 5.6 %

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 20.2 $ (1.2) N/A

Earnings (loss) per share - basic $ 0.29 $ (0.02) N/A

Net earnings attributable to MillerKnoll, Inc.

$ 24.2 $ 34.1 (29.0) % $ 44.4 $ 32.9 35.0 %

Earnings per share - basic $ 0.35 $ 0.49 (28.6) % $ 0.65 $ 0.47 38.3 %

Orders $ 972.5 $ 921.9 5.5 % $ 1,857.9 $ 1,857.8 — %

Backlog $ 708.3 $ 709.4 (0.2) %

The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) as a percentage of Net sales, for the three months ended:

Three Months Ended

August 30, 2025 August 31, 2024

The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) as a percentage of Net sales, for the three and six months ended:

Three Months Ended Six Months Ended

November 29, 2025 November 30, 2024 November 29, 2025 November 30, 2024

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

4 unchanged sentences

Other expenses, net 1.7 % 1.8 % 2.1 % 1.9 %

Earnings (loss) before income taxes and equity income 3.0 % (0.2) %

Income tax expense (benefit) 0.8 % (0.1) %

Net earnings (loss) 2.2 % (0.1) %

Earnings before income taxes and equity income 3.4 % 4.6 % 3.2 % 2.4 %

Income tax expense 0.8 % 1.0 % 0.8 % 0.5 %

Equity earnings (loss) from nonconsolidated affiliates, net of tax — % — % — % — %

Net earnings 2.6 % 3.6 % 2.4 % 1.9 %

Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.1 % 0.1 % 0.1 %

Net earnings (loss) attributable to MillerKnoll, Inc.

Net earnings attributable to MillerKnoll, Inc.

2.5 % 3.5 % 2.3 % 1.8 %

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three months ended August 30, 2025.

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and six months ended November 29, 2025.

The amounts presented in the graph are expressed in millions and have been rounded.

Net sales increased $94.2 million or 10.9% in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

The increase was primarily driven by:

• Higher sales volumes in the North America Contract, International Contract, and Global Retail segments, contributed approximately $54 million, $21 million, $9 million, respectively.

Net sales decreased $15.2 million or 1.6% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025.

The decrease was primarily driven by:

• Decreased sales volumes in the North America Contract and International Contract segments contributed approximately $37 million and $13 million, respectively.

These decreases were partially offset by:

• Price increases, net of discounting, which positively impacted net sales by approximately $19 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

• Favorable foreign currency translation, which increased net sales by approximately $9 million.

• Price increases, net of incremental discounting, positively impacted net sales by approximately $2 million.

• Increased sales volumes in the Global Retail segment increased net sales by $7 million.

Net sales increased $79.0 million or 4.3% in the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

The following items contributed to the change:

• Price increases, net of discounting, which positively impacted net sales by approximately $21 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

Gross margin was 38.5% in the first quarter of fiscal 2026 as compared to 39.0% in the first quarter of fiscal 2025.

• Increased sales volumes in the North America Contract, Global Retail and International Contract segments contributed approximately $17 million, $15 million and $9 million, respectively.

• Favorable foreign currency translation, which increased net sales by approximately $17 million.

Gross margin was 39.0% in the second quarter of fiscal 2026 as compared to 38.8% in the second quarter of fiscal 2025.

The year-over-year change in gross margin percentage was primarily driven by the following factors:

• Favorable channel and product mix positively impacted margin by approximately 90 basis points.

• The impact of incremental list price increases, net of contract price discounting, and excluding tariff-based pricing actions, increased gross margin percentage by 50 basis points.

These increases were partially offset by:

• Tariff-related costs, net of pricing actions taken to help offset costs, adversely impacted gross margin by approximately 70 basis points.

• These impacts were partially offset by favorable leverage on fixed costs due to higher sales volumes.

• Unfavorable leverage on fixed costs due to lower sales volumes negatively impacted margin by 50 basis points.

Gross margin was 38.7% in the six months ended November 29, 2025, as compared to 38.9% for the same period in the prior fiscal year.

The following factors summarize the major drivers of the year-over-year change in gross margin percentage:

• Tariff-related costs, net of pricing actions taken to help offset costs, adversely impacted gross margin by approximately 110 basis points.

This increase was partially offset by:

• The impact of incremental list price increases, net of contract price discounting and excluding tariff specific pricing actions, increased gross margin percentage by 50 basis points.

• Favorable channel and product mix which positively impacted margin by approximately 40 basis points.

Operating Expenses

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three months ended August 30, 2025.

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and six months ended November 29, 2025.

The amounts presented in the graphs are expressed in millions and have been rounded.

Operating expenses decreased by $6.5 million or 2.0% in the first quarter of fiscal 2026 compared to the prior year period.

Operating expenses increased by $9.2 million or 2.9% in the second quarter of fiscal 2026 compared to the prior year period.

The following factors contributed to the change:

• A reduction in acquisition-related integration charges, which totaled approximately $28 million .

This benefit was partially offset by:

• Incremental costs of $4 million associated with the expansion of our retail store footprint.

• Increased fixed and variable compensation costs of approximately $4 million.

• Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $1 million compared to the prior year period.

Operating expenses increased by $2.7 million or 0.4% in the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

The following factors contributed to the change:

• Increased fixed and variable compensation costs of approximately $13 million.

• Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $8 million compared to the prior year period.

• Incremental costs of $7 million associated with the expansion of our retail store footprint.

• Foreign currency translation also contributed an unfavorable impact of approximately $2 million relative to the prior year.

• Foreign currency translation also contributed an increase in operating expenses of approximately $2 million relative to the prior year.

• These increases were partially offset by a reduction in acquisition-related integration charges and restructuring charges, which totaled approximately $28 million.

Other Income/Expense

During the three months ended August 30, 2025, net Other expense was $24.8 million, representing an increase of $7.9 million compared to the same period in the prior year.

The change was primarily driven by a loss on extinguishment of debt of approximately $7.8 million incurred in connection with the refinancing of term loan debt during the current period.

During the three months ended November 29, 2025, net Other expense was $16.0 million, representing a decrease of $1.6 million compared to the same period in the prior year.

The change was primarily driven by lower interest expense of $2.5 million resulting from reduced debt levels, partially offset by a decrease in interest income of $0.8 million.

During the six months ended November 29, 2025, net Other expense was $40.8 million, representing an increase of $6.3 million compared to the same period in the prior year.

The change was primarily driven by a loss on extinguishment of debt of approximately $7.8 million incurred in connection with the refinancing of term loan debt during the current year, offset in part by lower interest expense resulting from reduced debt levels.

See Note 8 of the Condensed Consolidated Financial Statements for additional information.

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For descriptions of each segment, refer to Note 13 of the Condensed Consolidated Financial Statements.

The charts below present the relative mix of net sales and operating earnings across each of the Company's segments during the three month period ended August 30, 2025.

The charts below present the relative mix of net sales and operating earnings across each of the Company's segments during the three and six month periods ended November 29, 2025.

This is followed by a discussion of the Company's results, by reportable segment.

1 unchanged sentence

North America Contract

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Three Months Ended Six Months Ended

(Dollars in millions) November 29, 2025 November 30, 2024 Change November 29, 2025 November 30, 2024 Change

Net sales $ 508.5 $ 524.7 $ (16.2) $ 1,042.4 $ 1,000.9 $ 41.5

3 unchanged sentences

Operating earnings % 8.7 % 9.4 % (0.7) % 9.7 % 6.6 % 3.1 %

For the three month comparative period, Net sales increased 12.1% (*) on both a reported and an organic basis compared to the prior year period.

For the three month comparative period, Net sales decreased 3.1% (*) on both a reported and organic basis compared to the prior year period due to:

• Decreased sales volumes within the segment, contributing approximately $37 million to the decrease;

offset in part by

• Price increases, net of discounting positively impacted net sales by approximately $21 million.

This includes the favorable impact of tariff-related pricing actions.

For the six month comparative period, Net sales increased 4.1% (*) on both a reported and an organic basis compared to the prior year period.

This growth was primarily driven by:

• Increased sales volumes within the segment, contributing approximately $54 million to the increase;

• Price increases, net of incremental discounting positively impacted net sales by approximately $4 million.

• Price increases, net of discounting positively impacted net sales by approximately $25 million.

This includes the favorable impact of tariff-related pricing actions.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings increased $40.8 million, or 253.4%, over the prior year period due to:

• Increased Gross margin of $24.3 million due to the increase in sales noted above and an increase in gross margin percentage of 60 basis points.

• Increased sales volumes within the segment, contributing approximately $17 million to the increase;

For the three month comparative period, operating earnings decreased $5.5 million, or 11.1%, over the prior year period due to:

• Decreased Gross margin of $4.1 million due to the decrease in sales noted above offset by an increase in gross margin percentage of 30 basis points.

The increase in gross margin percentage was due primarily to:

◦ Favorable leverage on fixed costs due to higher sales volumes, which contributed approximately 110 basis points to gross margin improvement.

◦ Reduced freight and product distribution costs increased margin by approximately 80 basis points.

◦ These were partially offset by the impact of tariff-related costs, which more than offset pricing actions taken to help offset tariffs.

◦ Price increases, net of discounting resulted in a positive impact of approximately 130 basis points.

◦ Favorable product mix which increased margin by 60 basis points.

Offset in part by:

◦ Loss of leverage on fixed costs due to lower sales volumes, which contributed approximately 80 basis points to gross margin decline.

◦ Tariff-related costs, which more than offset pricing actions taken to help offset tariffs.

The net impact of tariffs in the quarter as compared to the prior year adversely impacted gross margin by approximately 50 basis points.

• Decreased Operating expenses of $16.5 million driven primarily by:

◦ Increased freight and product distribution costs increased margin by approximately 30 basis points.

• Increased Operating expenses of $1 million driven primarily by restructuring charges associated with facility consolidation initiatives and elevated compensation and benefit expenses.

For the six month comparative period, operating earnings increased $35.3 million, or 53.8%, over the prior year period due to:

• Increased Gross margin of $20.2 million due to the increase in sales discussed above and an increase in gross margin percentage of 50 basis points.

The increase in gross margin percentage was due primarily to:

◦ The impact of incremental list price increases, net of contract price discounting, that increased gross margin percentage by approximately 70 basis points.

◦ Favorable leverage of fixed costs due to increased production volumes as well as favorable product mix which had a positive impact on margin of approximately 50 basis points.

◦ Reduced freight and distribution charges positively impacted margin by 20 basis points.

These changes were offset in part by:

◦ Tariff-related costs, which more than offset pricing actions taken to help offset tariffs.

The net impact of tariffs in the current period as compared to the prior year adversely impacted gross margin by approximately 90 basis points.

• Decreased Operating expenses of $15.1 million.

The following factors contributed to the change:

◦ A reduction in acquisition-related integration charges, which totaled approximately $ 25 million.

This benefit was partially offset by increased variable selling costs, including sales-based commissions and royalty expenses.

This benefit was partially offset by:

◦ Increased variable selling costs, including sales-based commissions and royalty expenses of approximately $6 million.

◦ Increase of $2 million driven primarily by restructuring charges associated with facility consolidation initiatives.

◦ Increased compensation and benefits of approximately $2 million.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

International Contract

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Three Months Ended Six Months Ended

(Dollars in millions) November 29, 2025 November 30, 2024 Change November 29, 2025 November 30, 2024 Change

Net sales $ 170.9 $ 182.4 $ (11.5) $ 338.4 $ 328.8 $ 9.6

3 unchanged sentences

Operating earnings % 9.3 % 12.2 % (2.9) % 8.7 % 9.6 % (0.9) %

For the three month comparative period, Net sales increased 14.4%, or 11.3% (*) on an organic basis compared to the prior year period.

For the three month comparative period, Net sales decreased 6.3%, or 9.2% (*) on an organic basis, over the prior year period due to:

• Decreased sales volumes within the segment, contributing approximately $13 million to the decrease.

• Incremental discounting attributable to regional sales mix, net of price increases, which adversely impacted net sales by approximately $4 million.

• These decreases were partially offset by favorable foreign currency translation, which increased net sales by approximately $5 million.

For the six month comparative period, Net sales increased 2.9% and decreased 0.1% (*) on an organic basis compared to the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, contributing approximately $21 million to the increase;

• Favorable foreign currency translation, which increased net sales by approximately $10 million.

• Higher sales volumes within the segment, contributing approximately $9 million to the increase.

• These gains were partially offset by incremental discounting attributable to regional and product sales mix, net of price increases, which adversely impacted net sales by approximately $9 million.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings increased $4.0 million or 42.1%, over the prior year period due to:

For the three month comparative period, operating earnings decreased $6.3 million or 28.4%, over the prior year period due to:

• Decreased Gross margin of $4.6 million driven by the lower sales volumes explained above and a decline in gross margin percentage of 30 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Tariff-related costs adversely impacted gross margin by approximately 70 basis points.

◦ Unfavorable foreign currency translation further reduced margin by approximately 40 basis points.

◦ These pressures were partially offset by favorable product material performance which contributed approximately 80 basis points to margin improvement.

• Increased Operating expenses of $1.7 million driven primarily by increased fixed and variable compensation costs.

For the six month comparative period, operating earnings decreased $2.3 million, or 7.3%, over the prior year period due to:

• Increased Gross margin of $0.7 million driven by the higher sales volumes explained above, which more than offset a decline in gross margin percentage of 80 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Incremental discounting, net of price increases attributable to regional and product sales mix, resulted in a negative impact of approximately 240 basis points.

◦ Tariff-related costs adversely impacted gross margin by approximately 60 basis points.

3 unchanged sentences

The following factors contributed to the change:

◦ Increased fixed and variable compensation costs of $3 million.

◦ Increased fixed and variable compensation costs of approximately $4 million.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $1 million relative to the prior year.

◦ These increases were partially offset by a reduction in acquisition-related integration charges, which totaled approximately $3 million.

◦ These increases were partially offset by a reduction in acquisition-related integration charges.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

Global Retail

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Three Months Ended Six Months Ended

(Dollars in millions) November 29, 2025 November 30, 2024 Change November 29, 2025 November 30, 2024 Change

Net sales $ 275.8 $ 263.3 $ 12.5 $ 530.1 $ 502.2 $ 27.9

3 unchanged sentences

Operating earnings % 1.5 % 3.2 % (1.7) % 1.0 % 2.7 % (1.7) %

For the three month comparative period, Net sales increased 6.4%, and 4.9% (*) on an organic basis compared to the prior year period.

For the three month comparative period, Net sales increased 4.7%, and 3.4% (*) on an organic basis, over the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, supported by our North America retail store expansion strategy, contributed approximately $7 million to the increase.

• Favorable foreign currency translation, which increased net sales by approximately $4 million.

• Price increases, net of discounting positively impacted net sales by approximately $2 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

For the six month comparative period, Net sales increased 5.6%, and 4.1% (*) on an organic basis compared to the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, contributing approximately $15 million to the increase.

• Favorable foreign currency translation, which increased net sales by approximately $7 million.

• Price increases, net of incremental discounting positively impacted net sales by approximately $3 million.

• Price increases, net of discounting positively impacted net sales by approximately $6 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, Operating earnings decreased $4.2 million or 50.6% as compared to the prior year period due to:

1 unchanged sentence

The decrease in gross margin percentage was due primarily to:

◦ Increased freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year which reduced margin by approximately 160 basis points.

◦ Tariff-related costs, net of pricing actions taken to help offset costs, which adversely impacted gross margin by approximately 110 basis points.

3 unchanged sentences

The following factors contributed to the change:

◦ Incremental costs of $4 million associated with the expansion of our retail store footprint.

◦ Increased fixed and variable compensation costs of approximately $2 million.

◦ Variable selling costs, including sales-based commissions and royalty expenses which increased by approximately $1 million compared to the prior year period.

◦ Unfavorable foreign currency translation.

For the six month comparative period, Operating earnings decreased $8.1 million over the prior year period due to:

• Increased Gross margin of $6.1 million driven by the higher sales volumes explained above, which more than offset a decline in gross margin percentage of 130 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Tariff-related costs, net of pricing actions taken to help offset costs, which adversely impacted gross margin by approximately 120 basis points.

◦ Unfavorable foreign currency translation further reduced margin by approximately 30 basis points.

◦ These decreases were offset in part by leverage on fixed costs attributable to higher sales volumes as compared to the prior year which had a favorable impact on gross margin percentage of approximately 20 basis points.

• Increased Operating expenses of $14.2 million.

The following factors contributed to the change:

◦ Incremental costs of $7 million associated with the expansion of our retail store footprint.

Corporate unallocated expenses totaled $18.3 million for the first quarter of fiscal 2026, an increase of $2.6 million from the first quarter of fiscal 2025 related primarily to fixed and variable compensation expense.

◦ Increased fixed and variable compensation costs of approximately $5 million.

◦ Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $2 million compared to the prior year period.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

Corporate unallocated expenses totaled $15.5 million for the second quarter of fiscal 2026, a decrease of $2.0 million from the second quarter of fiscal 2025 related primarily to lower fixed and variable compensation expense.

Corporate unallocated expenses totaled $33.8 million for the first six months of fiscal 2026, an increase of $0.6 million from the same period of fiscal 2025 related primarily to higher fixed and variable stock based compensation expense.

Liquidity and Capital Resources

The table below summarizes the net change in Cash and cash equivalents for the three months ended as indicated.

(In millions) August 30, 2025 August 31, 2024

The table below summarizes the net change in Cash and cash equivalents for the six months ended as indicated.

(In millions) November 29, 2025 November 30, 2024

Cash provided by (used in):

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The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture, distribute, and market our products.

Net cash provided by operating activities for the three months ended August 30, 2025, totaled $9.4 million compared to $21.1 million in the same period of the prior year.

Net cash provided by operating activities for the six months ended November 29, 2025, totaled $74.0 million compared to $76.4 million in the same period of the prior year.

The decrease in cash inflow is due primarily to a net increase in working capital.

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Cash Flows - Investing Activities

Cash used in investing activities for the three months ended August 30, 2025, was $30.5 million, as compared to $22.3 million in the same period of the prior year.

Cash used in investing activities for the six months ended November 29, 2025, was $60.3 million, as compared to $44.8 million in the same period of the prior year.

The increase was primarily driven by higher capital expenditures in the current year.

At the end of the first quarter of fiscal 2026, there were outstanding commitments for capital purchases of $14.9 million.

At the end of the second quarter of fiscal 2026, there were outstanding commitments for capital purchases of $17.6 million.

The Company plans to fund these commitments through a combination of cash on hand and cash flows from operations.

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This compares to full-year capital spending of $107.6 million in fiscal 2025.

Capital expenditures for the first three months of fiscal 2026 were $30.7 million compared to $22.6 million for the three months ended August 31, 2024.

Capital expenditures for the first six months of fiscal 2026 were $61.3 million compared to $44.9 million for the six months ended November 30, 2024.

Cash Flows - Financing Activities

Cash used in financing activities for the three months ended August 30, 2025, was $9.2 million, as compared to $20.3 million in the same period of the prior year.

Cash used in financing activities for the six months ended November 29, 2025, was $28.6 million, as compared to $33.9 million in the same period of the prior year.

The decrease in cash used in the current year, compared to the prior year, was primarily due to:

• The Company repurchased 698,514 shares at a cost of $12.2 million in the current period as compared to 2,500,379 share repurchases totaling $66.9 million in the same period of the prior year.

• Net borrowings on the credit agreement of $68.9 million in the current period compared to net borrowings of $43.1 million in the same period of the prior year.

• During the current period the Company entered into a three-year accounts receivable securitization facility.

Net proceeds from the facility totaled $54.3 million in the current period.

This was offset in part by:

• Net borrowings on the credit agreement of $14.2 million in the current period compared to net borrowings of $73.1 million in the same period of the prior year.

• The refinancing of Term Loan B resulted in a net cash outflow of $61.2 million in the current period.

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The Company maintains an open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors.

At the end of the first quarter of fiscal 2026, the Company had a well-positioned balance sheet and liquidity profile.

At the end of the second quarter of fiscal 2026, the Company had a well-positioned balance sheet and liquidity profile.

The Company has access to liquidity through credit facilities as well as cash and cash equivalents.

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For additional information, refer to Note 11 to the Condensed Consolidated Financial Statements.

(In millions) August 30, 2025 May 31, 2025

(In millions) November 29, 2025 May 31, 2025

Cash and cash equivalents $ 180.4 $ 193.7

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Total liquidity $ 548.3 $ 575.9

Of the Cash and cash equivalents noted above at the end of the first quarter of fiscal 2026, the Company had $158.6 million of Cash and cash equivalents held outside the United States.

Of the Cash and cash equivalents noted above at the end of the second quarter of fiscal 2026, the Company had $173.2 million of Cash and cash equivalents held outside the United States.

The Company’s syndicated revolving line of credit, which matures in April 2030, provides the Company with up to $725 million in revolving variable interest borrowing capacity and allows the Company to borrow incremental amounts, at its option, subject to negotiated terms as outlined in the agreement.

Outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, SOFR or negotiated terms as outlined in the agreement.

As of August 30, 2025, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $399.7 million with available borrowings on this facility of $313.3 million.

As of November 29, 2025, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $345.0 million with available borrowings on this facility of $367.9 million.

The Company intends to repatriate $137.3 million of undistributed foreign earnings all of which is held in cash in certain foreign jurisdictions with the remainder of undistributed earnings outside the U.S.

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The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S.

which is estimated to be approximately $382.9 million on August 30, 2025.

which is estimated to be approximately $382.9 million on November 29, 2025.

The Company believes cash on hand, cash generated from operations, and borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, upcoming debt maturities, future dividends and share repurchases, subject to financing availability in the marketplace.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis