What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-09-28 compared with 2026-03-30 · 176 added, 317 removed, 159 unchanged (76% of the section changed)

3 unchanged sentences

References to "Notes" are to the footnotes included in the accompanying Condensed Consolidated Financial Statements.

Business Overview

Business Overview and Quarterly Highlights

The Company researches, designs, manufactures, sells, and distributes interior furnishings for use in various environments including residential, office, healthcare, and educational settings and provides related services that support organizations and individuals all over the world.

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 February 28, 2026:

• Net sales were $926.6 million and orders were $931.6 million, representing an increase of 5.8% and an increase of 9.2%, 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 $909.4 million and orders were $914.8 million, representing an organic* increase of 3.8% and an organic* increase of 7.2%, respectively, when compared to the same quarter of the prior year.

• Gross margin in the third quarter was 38.1%, an increase of 20 basis points when compared to the same quarter of the prior year, related primarily to the impact of favorable leverage on fixed costs on higher sales volumes as well as favorable channel and product mix.

• Operating expenses decreased $106.6 million or 25.7% as compared to the same quarter of the prior year.

The decrease was driven primarily from the impact of non-cash impairment charges in the prior year.

This decrease was partially offset by an increase in fixed and variable compensation costs and incremental costs related to the expanded retail store footprint.

The following is a summary of results for the three months ended August 29, 2026:

• Net sales were $923.4 million and orders were $913.9 million, representing a decrease of 3.4% and an increase of 3.2%, 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 $924.5 million and orders were $916.2 million, representing an organic* decrease of 3.3% and an organic* increase of 3.5%, respectively, when compared to the same quarter of the prior year.

• Gross margin in the first quarter was 41.7%, an increase of 320 basis points when compared to the same quarter of the prior year, related primarily to incremental pricing and the favorable impact of refunds totaling $16.5 million from tariffs previously imposed by the U.S.

government under the International Emergency Economic Powers Act ("IEEPA").

• Operating expenses increased $18.9 million or 6.0% as compared to the same quarter of the prior year.

The increase was driven primarily by higher fixed and variable compensation costs, increased restructuring charges associated with facility consolidation and workforce reduction initiatives, and incremental costs related to new store openings.

These increases were partially offset by savings generated through cost management initiatives implemented across the business.

• The effective tax rate was 21.5% compared to 26.5% for the same quarter of the prior year.

The change compared to the prior year relates primarily to the discrete tax impacts of the impairments recorded in the prior year.

• Diluted earnings per share in the quarter was $0.34 compared to a loss of $0.19 in the prior year.

Adjusted diluted earnings per share* was $0.43, a 2.3% decrease compared to the prior year quarter.

The change compared to the prior year relates primarily to favorable impacts from lower non-deductible officers' compensation, higher export tax incentives, and an increase in foreign tax credits.

• Diluted earnings per share in the quarter was $0.38 compared to $0.29 in the prior year.

Adjusted diluted earnings per share* was $0.53, a 17.8% increase compared to the prior year quarter, which includes the $0.11 impact of net IEEPA tariff refunds.

(*) Non-GAAP measurements;

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

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

• The North America Contract segment in the third quarter reported Net sales totaling $488.6 million, an increase of 4.4% compared to the prior year period on a reported basis and 4.1% on an organic* basis.

North America Contract had orders of $490.9 million, which represents an increase of 13.1% from the prior year on a reported basis and 12.8% on an organic* basis.

• The International Contract segment delivered Net sales in the third quarter of $156.9 million, an increase of 7.8% compared to the prior year period on a reported basis and an increase of 1.9% organically*.

Orders in the segment totaled $160.3 million, representing a year-over-year increase of 0.7% on a reported basis and a decrease of 4.3% organically*.

• Net sales in the third quarter for the Global Retail segment totaled $281.1 million, an increase of 7.1% over the same quarter last year on a reported basis and an increase of 4.4% organically*.

Orders in the quarter totaled $280.4 million, up 7.9% compared to the same period last year on a reported basis and up 5.1% organically*.

A comparison of net sales and orders during the first quarter compared to the prior year period by segment is as follows:

• The North America Contract segment reported first quarter net sales of $505.6 million, representing a decrease of 5.3% on a reported basis and 5.2% on an organic* basis compared to the prior year period.

Orders totaled $483.7 million, a decrease of 1.7% on a reported basis and 1.6% on an organic* basis.

• The International Contract segment reported net sales in the first quarter of $156.8 million, representing a decrease of 6.4% on a reported basis and 6.2% on an organic* basis compared to the prior year period.

Orders totaled $181.2 million, an increase of 17.3% on a reported basis and 17.9% on an organic* basis.

• The Global Retail segment reported first quarter net sales of $261.0 million, representing an increase of 2.6% on a reported basis and 2.8% on an organic* basis compared to the prior year period.

Orders totaled $249.0 million, an increase of 4.3% on a reported basis and 4.7% on an organic* basis.

(*) Non-GAAP measurements;

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The fiscal year ending May 29, 2027 ("fiscal 2027") and the fiscal year ended May 30, 2026 ("fiscal 2026") both contain 52 weeks.

The remaining sections within Item 2 include additional analysis of the three and nine months ended February 28, 2026, including discussion of significant variances compared to the prior year periods.

The remaining sections within Item 2 include additional analysis of the three months ended August 29, 2026, including discussion of significant variances compared to the prior year periods.

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

Three Months Ended

(In millions, except share data)

August 29, 2026 August 30, 2025 % Change

Net sales $ 923.4 $ 955.7 (3.4) %

Cost of sales 538.1 587.6 (8.4) %

Gross margin 385.3 368.1 4.7 %

Operating expenses 333.5 314.6 6.0 %

Operating earnings 51.8 53.5 (3.2) %

Other expenses, net 16.6 24.8 (33.1) %

Earnings before income taxes 35.2 28.7 22.6 %

Income tax expense 7.6 7.6 — %

Net earnings 27.6 21.1 30.8 %

Net earnings attributable to redeemable noncontrolling interests 1.0 0.9 11.1 %

Net earnings attributable to MillerKnoll, Inc.

$ 26.6 $ 20.2 31.7 %

Earnings per share - basic $ 0.38 $ 0.29 31.0 %

Earnings per share - diluted

$ 0.38 $ 0.29 31.0 %

Orders $ 913.9 $ 885.4 3.2 %

Backlog $ 669.2 $ 690.9 (3.1) %

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

Three Months Ended

August 29, 2026

August 30, 2025

Cost of sales

Operating expenses

Operating earnings

Other expenses, net

Earnings before income taxes

Income tax expense

Net earnings attributable to redeemable noncontrolling interests

Net earnings attributable to MillerKnoll, Inc.

Reconciliation of Non-GAAP Financial Measures

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Adjusted Earnings per Share - Diluted and Organic Growth (Decline).

Adjusted Earnings per Share - Diluted represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges, debt extinguishment charges and the related tax effect of these adjustments.

Adjusted Earnings per Share - Diluted represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, restructuring charges, debt extinguishment charges, CEO transition costs and the related tax effect of these adjustments.

These adjustments are described further below.

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The adjustments made to arrive at these non-GAAP financial measures are as follows.

We exclude these items from our non-GAAP measures because they are not reflective of our ongoing financial performance:

• Amortization of Knoll purchased intangibles:

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Although we exclude the Amortization of Knoll Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

• Integration charges:

Includes Knoll integration-related costs which include severance, asset impairment charges associated with lease and operations facility consolidation activity, and expenses related to synergy realization efforts and reorganization initiatives.

• Restructuring charges:

Includes costs associated with actions involving targeted workforce reductions, facility consolidation charges, and accelerated depreciation of fixed assets.

• Impairment charges:

Includes non-cash, pre-tax charges for the impairment of the Knoll and Muuto trade names as well as impairment of goodwill attributed to the Global Retail and Holly Hunt reporting units.

• Knoll pension plan termination charges:

Includes expenses incurred associated with the termination of the Knoll pension plan which was completed in the second quarter of fiscal year 2025.

Includes costs associated with actions involving targeted workforce reductions, facility consolidations, and accelerated depreciation of fixed assets.

• Debt extinguishment charges:

Includes expenses associated with the extinguishment of debt.

We excluded these items from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

• CEO transition costs:

Includes one‑time expenses consisting primarily of severance, benefits and advisory fees.

• Tax related items:

Includes the income tax benefit/provision effect of the tax-related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

The following tables reconcile Net sales to Net sales, organic for the periods ended as indicated below:

The following tables reconcile net sales, as reported to net sales, organic for the periods ended as indicated below:

Three Months Ended

February 28, 2026

August 29, 2026

North America Contract International Contract Global Retail Total

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Net sales, organic $ 505.9 $ 157.1 $ 261.5 $ 924.5

Organic Growth 4.1 % 1.9 % 4.4 % 3.8 %

Organic (Decline) Growth (5.2) % (6.2) % 2.8 % (3.3) %

Three Months Ended

March 1, 2025

August 30, 2025

North America Contract International Contract Global Retail Total

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

Nine Months Ended

February 28, 2026

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,531.0 $ 495.3 $ 811.2 $ 2,837.5

% change from PY 4.2 % 4.4 % 6.1 % 4.8 %

Currency translation effects (1)

(1.5) (18.5) (14.2) (34.2)

Net sales, organic $ 1,529.5 $ 476.8 $ 797.0 $ 2,803.3

Organic Growth 4.1 % 0.5 % 4.2 % 3.5 %

Nine Months Ended

March 1, 2025

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,469.1 $ 474.3 $ 764.7 $ 2,708.1

(1) Currency translation effects represent the estimated net impact of translating current period sales and 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:

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

Three Months Ended

February 28, 2026

August 29, 2026

North America Contract International Contract Global Retail Total

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Orders, organic $ 484.1 $ 182.2 $ 249.9 $ 916.2

Organic Growth (Decline) 12.8 % (4.3) % 5.1 % 7.2 %

Organic (Decline) Growth (1.6) % 17.9 % 4.7 % 3.5 %

Three Months Ended

March 1, 2025

North America Contract International Contract Global Retail Total

Orders, as reported $ 434.0 $ 159.2 $ 259.9 $ 853.1

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

Nine Months Ended

February 28, 2026

North America Contract International Contract Global Retail Total

Orders, as reported $ 1,489.9 $ 476.8 $ 822.8 $ 2,789.5

% change from PY 2.5 % 0.1 % 5.3 % 2.9 %

Currency translation effects (1)

(1.6) (17.4) (14.8) (33.8)

Orders, organic $ 1,488.3 $ 459.4 $ 808.0 $ 2,755.7

Organic Growth (Decline) 2.4 % (3.6) % 3.4 % 1.7 %

Nine Months Ended

March 1, 2025

August 30, 2025

North America Contract International Contract Global Retail Total

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

Three Months Ended Nine Months Ended

February 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025

Earnings (loss) per share - diluted $ 0.34 $ (0.19) $ 0.98 $ 0.29

Three Months Ended

August 29, 2026 August 30, 2025

Earnings per share - diluted $ 0.38 $ 0.29

Amortization of Knoll purchased intangibles 0.08 0.09

Integration charges — — — 0.40

Restructuring charges 0.10 0.01

Impairment charges — 1.91 — 1.85

Debt extinguishment charges — 0.11

Knoll pension plan termination charges — — — 0.01

CEO transition costs 0.02 —

Tax impact on adjustments (0.05) (0.05)

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Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted 70,040,606 69,194,506

Key Highlights

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

Three Months Ended Nine Months Ended

(In millions, except share data)

February 28, 2026 March 1, 2025 % Change February 28, 2026 March 1, 2025 % Change

Net sales $ 926.6 $ 876.2 5.8 % $ 2,837.5 $ 2,708.1 4.8 %

Cost of sales 573.7 543.8 5.5 % 1,744.3 1,662.4 4.9 %

Gross margin 352.9 332.4 6.2 % 1,093.2 1,045.7 4.5 %

Operating expenses 308.0 414.6 (25.7) % 946.3 1,050.2 (9.9) %

Operating earnings (loss) 44.9 (82.2) 154.6 % 146.9 (4.5) 3,364.4 %

Other expenses, net 15.7 18.6 (15.6) % 56.5 53.1 6.4 %

Earnings (loss) before income taxes and equity income 29.2 (100.8) 129.0 % 90.4 (57.6) 256.9 %

Income tax expense (benefit) 5.6 (89.0) 106.3 % 20.5 (80.3) 125.5 %

Equity earnings from nonconsolidated affiliates, net of tax 0.9 0.1 800.0 % 0.9 0.3 200.0 %

Net earnings (loss) 24.5 (11.7) 309.4 % 70.8 23.0 207.8 %

Net earnings attributable to redeemable noncontrolling interests 1.0 1.0 — % 2.9 2.8 3.6 %

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 23.5 $ (12.7) 285.0 % $ 67.9 $ 20.2 236.1 %

Earnings (loss) per share - basic $ 0.34 $ (0.19) 278.9 % $ 0.99 $ 0.29 241.4 %

Earnings (loss) per share - diluted

$ 0.34 $ (0.19) 278.9 % $ 0.98 $ 0.29 237.9 %

Orders $ 931.6 $ 853.1 9.2 % $ 2,789.5 $ 2,710.9 2.9 %

Backlog $ 711.6 $ 686.4 3.7 %

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 nine months ended:

Three Months Ended

Nine Months Ended

February 28, 2026

March 1, 2025

February 28, 2026

March 1, 2025

Cost of sales

Operating expenses

Operating earnings (loss)

Other expenses, net

Earnings (loss) before income taxes and equity income

Income tax expense (benefit)

Equity earnings from nonconsolidated affiliates, net of tax

Net earnings (loss)

Net earnings attributable to redeemable noncontrolling interests

Net earnings (loss) attributable to MillerKnoll, Inc.

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and nine months ended February 28, 2026.

The following chart presents graphically the primary drivers of the year-over-year change in net sales for the three months ended August 29, 2026.

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

Net sales increased $50.4 million or 5.8% in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025.

The increase was primarily driven by:

• Price increases, net of discounting, which positively impacted net sales by approximately $23 million.

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

• Increased sales volumes in the Global Retail, International Contract, and North America Contract segments contributed approximately $5 million, $4 million, and $2 million, respectively.

Net sales increased $129.4 million or 4.8% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

The following items contributed to the change:

• Price increases, net of discounting, which positively impacted net sales by approximately $42 million.

• Favorable foreign currency translation, which increased net sales by approximately $34 million.

• Increased sales volumes in the Global Retail, North America Contract and International Contract segments contributed approximately $23 million, $23 million and $8 million, respectively.

Gross margin was 38.1% in the third quarter of fiscal 2026, compared to 37.9% in the third quarter of fiscal 2025.

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

• Favorable leverage on fixed costs due to higher sales volumes and operational efficiency which positively impacted margin.

Gross margin was 38.5% in the nine months ended February 28, 2026, compared to 38.6% 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:

• Favorable channel and product mix and the impact of incremental list price increases, net of contract price discounting which positively impacted margin.

• Favorable leverage on fixed costs due to higher sales volumes which positively impacted margin.

• These increases were more than offset by tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin.

Net sales decreased $32.3 million, or 3.4%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026.

The decrease was primarily driven by lower sales volumes in the North America Contract and International Contract segments, which reduced net sales by approximately $48 million and $7 million, respectively, as well as unfavorable foreign currency translation of $1 million.

These decreases were partially offset by the favorable impact of price realization, net of discounting, which contributed approximately $23 million to net sales.

Gross margin increased to 41.7% in the first quarter of fiscal 2027 from 38.5% in the first quarter of fiscal 2026.

The year-over-year increase was primarily driven by:

• Favorable pricing, reflecting the impact of incremental list price increases, partially offset by contract price discounting.

• The favorable impact of refunds received from the U.S.

government related to previously incurred IEEPA tariffs, which contributed approximately $16.5 million to gross margin.

These favorable impacts were partially offset by inflationary cost pressures and unfavorable leverage of fixed manufacturing costs resulting from lower sales volumes.

Operating Expenses

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and nine months ended February 28, 2026.

The following chart presents graphically the primary drivers of the year-over-year change in operating expenses for the three months ended August 29, 2026.

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

Operating expenses decreased by $106.6 million or 25.7% in the third quarter of fiscal 2026 compared to the prior year period.

The following factors contributed to the change:

• Impairment charges of $130 million related to goodwill attributed to the Global Retail and Holly Hunt reporting units, as well as related to the Knoll and Muuto indefinite-lived trade name intangible assets that occurred in the prior year period.

This decrease was offset in part by:

• Increased fixed and variable compensation costs of approximately $14 million.

• Incremental costs of $4 million associated with the impact from opening new stores.

• Unfavorable foreign currency translation of $4 million as compared to the prior year period.

• Variable selling costs which rose by approximately $1 million compared to the prior year period.

Operating expenses decreased by $103.9 million or 9.9% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

The following factors contributed to the change:

• Acquisition-related integration charges which totaled approximately $28 million that occurred in the prior year.

These decreases were offset in part by:

◦ Increased fixed and variable compensation costs of approximately $27 million.

◦ Incremental costs of $11 million associated with the impact from opening new stores.

◦ Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $10 million compared to the prior year period.

◦ Foreign currency translation also contributed an increase in operating expenses of approximately $6 million relative to the prior year.

Operating expenses increased $18.9 million, or 6.0%, in the first quarter of fiscal 2027 compared to the prior year period.

The increase was primarily driven by approximately $13 million of higher fixed and variable compensation costs, approximately $6 million of restructuring charges associated with facility consolidation and workforce reduction initiatives, and approximately $5 million of incremental costs related to new store openings.

These increases were partially offset by savings generated through cost management initiatives implemented across the business.

Other Income/Expense

During the three months ended February 28, 2026, net Other expense was $15.7 million, representing a decrease of $2.9 million compared to the same period in the prior year.

The change was primarily driven by lower interest expense of $1.9 million resulting from reduced debt levels and increased interest and investment income in the period ended February 28, 2026 compared to the same period in the prior year.

During the nine months ended February 28, 2026, net Other expense was $56.5 million, representing an increase of $3.4 million compared to the same period in the prior year.

The change was primarily driven by a loss on extinguishment of debt of approximately $8.0 million incurred in connection with the refinancing of term loan debt during the current year, partially offset by lower interest expense resulting from reduced debt levels.

Net other expense decreased $8.2 million to $16.6 million for the three months ended August 29, 2026, primarily due to the absence of the $7.8 million loss on extinguishment of debt incurred in the prior-year period in connection with the refinancing of term loan debt, as well as lower interest expense of $2.2 million.

These benefits were partially offset by higher foreign currency losses.

See Note 9 of the Condensed Consolidated Financial Statements for additional information.

Operating Segment Results

The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States.

These operating segments are determined on the basis of how the Company internally reports and how the chief operating decision maker ("CODM") evaluates financial information used to make operating decisions.

Effective as of March 1, 2025, the last day of the third quarter of fiscal 2025, the Company implemented an organizational change that resulted in a change in the reportable segments.

The Company has recast historical results to reflect this change.

Below is a description of each reportable segment.

The Company has three reportable segments:

North America Contract, International Contract and Global Retail.

The Company's operating segments are determined based on the manner in which management organizes the business for making operating decisions and assessing performance.

A description of each reportable segment is below.

The North America Contract segment includes the operations associated with the design, sourcing, manufacture, and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout the United States and Canada, as well as the global operations of the Spinneybeck, FilzFelt, Maharam, Edelman, and Knoll Textile brands.

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For descriptions of each segment, refer to Note 14 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 and nine month periods ended February 28, 2026.

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 29, 2026.

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

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Three Months Ended

Nine Months Ended

(Dollars in millions)

February 28, 2026

March 1, 2025

February 28, 2026

March 1, 2025

Gross margin %

August 29, 2026

August 30, 2025

Operating earnings

Operating earnings %

For the three month comparative period, Net sales increased 4.4%, or 4.1% on an organic* basis, compared to the prior year period due to:

• Price increases, net of discounting positively impacted net sales by approximately $17 million.

• Increased sales volumes within the segment, contributed approximately $2 million to the increase.

• Favorable foreign currency translation, which increased net sales by approximately $1 million.

For the nine month comparative period, Net sales increased 4.2%, or 4.1% on an organic* basis, compared to the prior year period.

This growth was primarily driven by:

• Price increases, net of discounting positively impacted net sales by approximately $38 million.

• Increased sales volumes within the segment, contributing approximately $23 million.

• Favorable foreign currency translation, which increased net sales by approximately $1 million.

For the three month comparative period, operating earnings increased $24.9 million, or 146.5%, over the prior year period due to:

• Increased Gross margin of $14.4 million due to the increase in sales noted and an increase in gross margin percentage of 150 basis points.

The increase in gross margin percentage was due primarily to:

◦ Fa vorable product mix and operational efficiency which increased margin .

◦ Price increases, net of discounting resulted in a positive impact to margin.

◦ Favorable leverage on fixed costs due to increased sales volumes contributed to gross margin improvement.

• Decreased Operating expenses of $10.5 million.

The following factors contributed to the change:

◦ Decreased non-cash intangible impairment charges of approximately $20 million as compared to the prior year.

This decrease was offset in part by:

◦ Elevated compensation and benefit expenses of approximately $7 million in the current year period.

◦ Variable selling costs which rose by approximately $2 million compared to the prior year period.

For the nine month comparative period, operating earnings increased $60.2 million, or 72.9%, over the prior year period due to:

• Increased Gross margin of $34.6 million due to the increase in sales discussed above and an increase in gross margin percentage of 80 basis points.

The increase in gross margin percentage was due primarily to:

◦ Favorable product mix and operational efficiency which increased margin.

◦ Price increases, net of discounting resulted in a positive impact to margin.

◦ Favorable leverage on fixed costs due to increased sales volumes contributed to gross margin improvement.

◦ These increases were partially offset by tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin.

• Decreased Operating expenses of $25.6 million.

The following factors contributed to the change:

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

◦ Decreased non-cash intangible impairment charges of approximately $20 million.

These decreases were partially offset by:

◦ Increased variable selling costs, including sales-based commissions and royalty expenses of approximately $9 million.

◦ Increased compensation and benefits of approximately $9 million.

◦ Increase of approximately $1 million driven primarily by restructuring charges associated with facility consolidation initiatives.

(*) Non-GAAP measurements;

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

For the three month comparative period, net sales decreased 5.3%, or 5.2% on an organic* basis, compared to the prior year period, primarily due to:

• Decreased sales volumes within the segment, which negatively impacted net sales by approximately $48 million.

• Favorable price realization, reflecting the impact of price increases, net of discounting, which positively impacted net sales by approximately $20 million.

For the three month comparative period, operating earnings decreased $9.4 million, or 16.5%, compared to the prior year period.

The decrease was driven by higher operating expenses, which more than offset an increase in gross margin.

Gross margin increased by $0.8 million, and gross margin percentage increased 220 basis points.

The increase in gross margin percentage was primarily driven by:

• The favorable impact of refunds received from the U.S.

government related to previously incurred IEEPA tariffs, which contributed approximately $4.6 million to gross margin.

• Favorable pricing, reflecting the impact of incremental list price increases, partially offset by contract price discounting.

These favorable impacts were partially offset by inflationary cost pressures and unfavorable leverage of fixed manufacturing costs resulting from lower sales volumes.

Operating expenses increased by $10.2 million compared to the prior year period.

The increase was primarily driven by:

• Higher fixed and variable compensation costs.

• Higher restructuring charges associated with facility consolidation initiatives

These increases were partially offset by savings generated through cost management initiatives implemented across the segment.

International Contract

Three Months Ended

Nine Months Ended

(Dollars in millions)

February 28, 2026

March 1, 2025

February 28, 2026

March 1, 2025

Gross margin %

August 29, 2026

August 30, 2025

Operating earnings

Operating earnings %

For the three month comparative period, Net sales increased 7.8%, or 1.9% on an organic* basis, over the prior year period due to:

• Favorable foreign currency translation, which increased net sales by approximately $8 million.

• Increased sales volumes within the segment, contributing approximately $4 million to the increase.

• These increases were partially offset by incremental discounting attributable to product mix, net of price increases, which adversely impacted net sales by approximately $1 million.

For the nine month comparative period, Net sales increased 4.4% or 0.5% on an organic* basis compared to the prior year period.

This growth was primarily driven by:

• Favorable foreign currency translation, which increased net sales by approximately $18 million.

• Higher sales volumes within the segment, contributing approximately $8 million to the increase.

• These increases were partially offset by incremental discounting attributable to regional and product sales mix, net of price increases, which adversely impacted net sales by approximately $5 million.

For the three month comparative period, operating earnings increased $2.2 million or 22.2%, over the prior year period due to:

• Increased Gross margin of $3.3 million driven by the higher sales volumes explained above, partially offset by a decline in gross margin percentage of 50 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Unfavorable foreign currency translation which negatively impacted gross margin.

◦ Regional and product sales mix which had an unfavorable impact to gross margin.

◦ These pressures was partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes.

• Increased Operating expenses of $1.1 million driven primarily by:

◦ Increased compensation and benefits of approximately $3 million.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year.

These increases were offset in part by decreased restructuring charges and impairment charges as compared to the prior year period.

For the nine month comparative period, operating earnings decreased $0.1 million, or 0.2%, over the prior year period due to:

• Increased Gross margin of $4.0 million driven by the higher sales volumes explained above, and a decline in gross margin percentage of 70 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Unfavorable foreign currency translation which negatively impacted gross margin.

◦ Regional and product sales mix which had an unfavorable impact to gross margin.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes and favorable material performance.

• Increased Operating expenses of $4.1 million driven primarily by:

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

◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year.

These increases were offset in part by decreased acquisition-related integration charges and impairment charges during the prior year period.

(*) Non-GAAP measurements;

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

For the three month comparative period, net sales decreased 6.4%, or 6.2% on an organic* basis, compared to the prior year period, primarily due to:

• Decreased sales volumes within the segment, which unfavorably impacted net sales by approximately $7 million.

• Incremental discounting, net of price increases, which unfavorably impacted net sales by approximately $4 million.

For the three month comparative period, operating earnings decreased $9.8 million or 72.6%, compared to the prior year period.

This decrease was driven by higher operating expenses, which more than offset an increase in gross margin percentage.

Gross margin decreased by $2.2 million, while gross margin percentage increased 110 basis points.

The increase in gross margin percentage was primarily driven by favorable regional and product sales mix.

This was partially offset by unfavorable leverage of fixed manufacturing costs resulting from lower sales volumes.

Operating expenses increased by $7.6 million compared to the prior year period.

The increase was primarily driven by:

• Higher fixed and variable compensation costs.

• Higher restructuring charges associated with facility consolidation initiatives.

• Increased showroom investments and the timing of marketing and sales events.

Global Retail

Three Months Ended

Nine Months Ended

(Dollars in millions)

February 28, 2026

March 1, 2025

February 28, 2026

March 1, 2025

Gross margin %

Operating earnings (loss)

August 29, 2026

August 30, 2025

Operating earnings

For the three month comparative period, Net sales increased 7.1%, or 4.4% on an organic* basis, over the prior year period.

This growth was primarily driven by:

• Price increases, net of discounting positively impacted net sales by approximately $7 million.

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

• Higher sales volumes within the segment, supported by our North America retail store expansion strategy, contributed approximately $5 million to the increase.

For the nine month comparative period, Net sales increased 6.1%, or 4.2% on an organic* basis compared to the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, contributing approximately $23 million to the increase.

• Favorable foreign currency translation, which increased net sales by approximately $14 million.

• Price increases, net of discounting positively impacted net sales by approximately $9 million.

For the three month comparative period, Operating earnings increased $100.7 million or 106.7% compared to the prior year period due to:

• Increased Gross margin of $2.8 million driven by the higher sales volumes explained above, which was offset by a decline in gross margin percentage of 200 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Targeted incremental promotional actions to offset adverse weather conditions which negatively impacted gross margin.

◦ Unfavorable foreign currency translation negatively impacted gross margin.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes.

• Decreased Operating expenses of $97.9 million driven primarily by decreased non-cash intangible impairment charges of $109.0 million compared to the prior year.

This decrease was offset in part by:

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

◦ Incremental costs of $4 million associated with the impact from opening new stores.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year.

For the nine month comparative period, Operating earnings increased $92.6 million over the prior year period due to:

• Increased Gross margin of $8.9 million driven by the higher sales volumes explained above, which was offset by a decline in gross margin percentage of 150 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin.

◦ Unfavorable foreign currency translation negatively impacted gross margin.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes.

• Decreased Operating expenses of $83.7 million driven primarily by decreased non-cash intangible impairment charges of $109.0 million compared to the prior year.

This decrease was offset in part by:

◦ Increased fixed and variable compensation costs of approximately $12 million.

◦ Incremental costs of $11 million associated with the impact from opening new stores.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $4 million compared to the prior year.

(*) Non-GAAP measurements;

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

Corporate unallocated expenses totaled $15.4 million for the third quarter of fiscal 2026, an increase of $0.7 million from the third quarter of fiscal 2025 related primarily to higher fixed and variable compensation expense.

Corporate unallocated expenses totaled $49.2 million for the first nine months of fiscal 2026, an increase of $1.3 million from the same period of fiscal 2025 related primarily to higher fixed and variable stock based compensation expense.

Operating earnings %

For the three month comparative period, net sales increased 2.6%, or 2.8% on an organic* basis, compared to the prior year period, primarily due to:

• Favorable price realization, reflecting the impact of price increases, net of discounting, which positively impacted net sales by approximately $7 million.

• Unfavorable foreign currency translation, which decreased net sales by approximately $1 million.

For the three month comparative period, operating earnings increased $14.6 million or 1,042.9% compared to the prior year period.

The increase was driven by higher gross margin percentage.

Gross margin increased by $18.6 million, and gross margin percentage increased 600 basis points.

The increase in gross margin and gross margin percentage was primarily driven by:

• The favorable impact of refunds received from the U.S.

government related to previously incurred IEEPA tariffs, which contributed approximately $11.8 million to gross margin.

• Favorable pricing, reflecting the impact of incremental list price increases, partially offset by discounting.

Operating expenses increased by $4.0 million compared to the prior year period.

The increase was primarily driven by :

• Incremental costs related to new store openings

• Higher fixed and variable compensation costs.

• These increases were partially offset by savings generated through cost management initiatives implemented across the business.

Corporate unallocated expenses were $15.4 million in the first quarter of fiscal 2027, a decrease of $2.9 million compared to the first quarter of fiscal 2026.

The decrease was primarily attributable to lower long-term incentive compensation and reduced health care costs.

Liquidity and Capital Resources

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

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

(In millions)

February 28, 2026

March 1, 2025

August 29, 2026

August 30, 2025

Cash provided by (used in):

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Cash Flows - Operating Activities

Net cash provided by operating activities for the nine months ended February 28, 2026, totaled $135.1 million compared to $138.4 million in the same period of the prior year.

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 and changes in working capital.

Working capital remained a use of cash in the current year but decreased compared to the prior year.

Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses.

The following all affect these account balances:

• Fluctuations in inventory levels;

• The timing of collection of our receivables;

• Changes in accruals related to variable compensation.

Cash provided by operating activities for the three months ended August 29, 2026 was $49.1 million, compared to $9.4 million in the prior year period.

The increase was primarily driven by higher net earnings and a lower use of cash for working capital.

Working capital used $22.4 million of cash during the current year period, compared to $63.0 million in the prior year period.

The improvement in working capital was primarily attributable to a lower use of cash related to current liabilities, driven primarily by accrued variable compensation, and other accrued liabilities, as well as improved collections of trade receivables.

These favorable impacts were partially offset by higher inventory levels.

Cash Flows - Investing Activities

Cash used in investing activities for the nine months ended February 28, 2026, was $77.8 million, as compared to $60.3 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 third quarter of fiscal 2026, there were outstanding commitments for capital purchases of $22.7 million.

Cash used in investing activities for the three months ended August 29, 2026, was $32.1 million, compared to $30.5 million in the prior-year period.

The slight increase in cash used in investing activities was primarily attributable to higher capital expenditures during the current-year period.

At the end of the first quarter of fiscal 2027, there were outstanding commitments for capital purchases of $26.5 million.

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

The Company expects full-year capital purchases to be between $120 million and $130 million which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.

The Company expects full-year capital purchases to be between $125.0 million and $135.0 million which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment.

This compares to full-year capital spending of $122.3 million in fiscal 2026.

Capital expenditures for the first nine months of fiscal 2026 were $83.4 million compared to $68.1 million for the nine months ended March 1, 2025.

Capital expenditures for the first three months of fiscal 2027 were $32.5 million compared to $30.7 million for the three months ended August 30, 2025.

Cash Flows - Financing Activities

Cash used in financing activities for the nine months ended February 28, 2026, was $83.8 million, compared to $127.6 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 705,141 shares, including shares withheld to satisfy tax withholdings, at a cost of $12.3 million in the current period as compared to 3,286,029 share repurchases, including shares withheld to satisfy tax withholding totaling $84.8 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 $70.2 million in the current period.

This was offset in part by:

• Net payments on the credit agreement of $37.3 million in the current period compared to net borrowings of $24.0 million in the same period of the prior year.

• The refinancing of Term Loan B resulted in a net cash outflow of $65.6 million in the current period.

In the prior year, term loan debt was reduced by $29.7 million through scheduled principal payments.

• Deferred financing costs of $2.2 million were incurred in the current period in connection with the refinancing of Term Loan B.

Cash used in financing activities for the three months ended August 29, 2026, was $4.8 million, compared to $9.2 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 attributable to:

• The absence of significant refinancing-related cash outflows incurred in the prior-year period.

During the current period, the Company made scheduled principal payments of $3.9 million on its term loan debt, compared to net cash outflows of $58.7 million in the prior year period related to scheduled principal payments and the refinancing of Term Loan B.

• Net proceeds of $13.6 million received under the Company's accounts receivable securitization facility during the current period.

These decreases were partially offset by:

• Lower net borrowings under the Company's revolving credit facility, which totaled $2.3 million during the current period, compared to net borrowings of $68.9 million during the prior year period.

• Higher share repurchases and related tax withholding payments, which totaled $9.5 million during the current period, compared to $7.2 million during the prior year period.

Sources of Liquidity

The Company closely manages spending levels, capital investments, and working capital.

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

At the end of the first quarter of fiscal 2027, 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.

2 unchanged sentences

(In millions)

February 28, 2026

August 29, 2026

Cash and cash equivalents

1 unchanged sentence

Total liquidity

Of the Cash and cash equivalents noted above at the end of the third quarter of fiscal 2026, the Company had $161.4 million of Cash and cash equivalents held outside the United States.

Of the Cash and cash equivalents noted above at the end of the first quarter of fiscal 2027, the Company had $169.3 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 February 28, 2026, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $293.5 million with available borrowings on this facility of $419.4 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.

recorded in working capital.

As of August 29, 2026, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $311.5 million with available borrowings on this facility of $401.8 million.

The Company intends to repatriate $119.9 million of undistributed foreign earnings, all of which is held in cash in certain foreign jurisdictions.

The Company has recorded a $1.4 million deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S.

3 unchanged sentences

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 February 28, 2026.

which is estimated to be approximately $377.8 million on August 29, 2026.

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.

21 unchanged sentences

These forward-looking statements involve certain risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including, but not limited to:

• The effects of the ongoing conflict and broader geopolitical instability in the Middle East, including with respect to negative impacts on our supply chain, decreased sales within the region or beyond due to supply chain constraints, and broader inflationary and macroeconomic effects;

• The effects of the ongoing conflict in the Middle East and broader geopolitical instability, including with respect to negative impacts on our supply chain, decreased sales within the region or beyond due to supply chain constraints or other factors, energy prices, and broader inflationary and macroeconomic effects;

• Changes to U.S.

and international trade policies, including new or increased tariffs and changing import/export regulations, which impact both the cost and availability of materials and components used to manufacture our products as well as demand for our products;

and international trade policies, including new or increased tariffs, developments relating to tariff refunds (including the risk of clawback or reversal or tariff refunds or the discontinuation of any additional tariff refunds), and changing import/export regulations, which impact both the cost and availability of materials and components used to manufacture our products as well as demand for our products;

• Challenges in implementing our growth strategy and the possibility that the assumptions on which that strategy was built prove inaccurate;

• Consumer spending levels, which have a significant impact on demand for our products within our Global Retail segment;

• Global and national economic conditions such as heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, the escalating conflict in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events;

• Global and national economic conditions such as heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, geopolitical instability, and potential governmental responses to these events;

• Transition in the Company's executive leadership, which may result in changes to our strategy or operations;

• Cybersecurity threats and risks;

9 unchanged sentences

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