Financial Performance Overview

Steelcase Inc. reported improved earnings in fiscal year 2025 despite flat revenue, driven by a gain from the sale of land and favorable tax items. The company’s gross margin improved by 110 basis points, benefiting from cost reduction initiatives. Revenue growth in the Americas, driven by large corporate, government and education customers, was mostly offset by soft demand across many of Steelcase’s major international markets.

In fiscal 2025, orders grew 4% on an adjusted basis, including 6% growth in the Americas partially offset by a 4% decline in the International segment. The company’s order backlog of approximately $694 at the end of fiscal 2025 was around 11% higher than at the end of the prior year. Steelcase continues to invest in its business transformation initiative and planned implementation of a new enterprise resource planning (ERP) system, which is expected to begin amortization in calendar year 2026.

The company’s liquidity, comprised of cash, short-term investments and the net cash surrender value of company-owned life insurance (COLI), increased $72.8 during fiscal 2025 to $558.3. Total debt remained flat at $447.1.

Revenue and Profit Trends

Steelcase reported revenue of $3,166.0 million in fiscal 2025, an increase of $6.4 million compared to the prior year. The increase was driven by $58.5 million from an additional week in the current fiscal year, mostly offset by lower volume in the International segment and the impact of a prior year divestiture in the Americas.

On an organic basis, revenue in fiscal 2025 was flat, with 2% growth in the Americas offset by a 7% decline in International. The Americas segment, which represented 77.9% of consolidated revenue, grew 2% organically, while the International segment declined 7% organically.

Operating income improved to $158.1 million in fiscal 2025, up $40.3 million compared to the prior year. The improvement was driven by higher gains on the sale of fixed assets, increased revenue in the Americas, and lower restructuring costs, partially offset by higher variable compensation expense.

Adjusted operating income, which excludes amortization of purchased intangible assets, restructuring costs, and gains on land sales, was $158.4 million in fiscal 2025 compared to $156.7 million in the prior year. Adjusted earnings per share increased to $1.12 in fiscal 2025 from $0.92 in the prior year.

Strengths and Weaknesses

Strengths:

• Improved gross margin and operating income driven by cost reduction initiatives and gains on asset sales
• Strong liquidity position with $558.3 million in total liquidity sources
• Continued growth in the Americas segment, particularly from large corporate, government and education customers
• Successful implementation of price increases and tariff recovery charges to offset inflationary pressures

Weaknesses:

• Soft demand and declining revenue in the International segment, particularly in Western Europe and most Asia Pacific markets (except India)
• Ongoing investment and costs associated with the business transformation initiative and new ERP system implementation
• Restructuring actions required in EMEA and Asia Pacific in response to macroeconomic conditions

Outlook and Future Prospects

Steelcase’s outlook remains cautious amid uncertain macroeconomic conditions, particularly in its International markets. The company has implemented restructuring actions in EMEA and Asia Pacific in response to the soft demand environment.

To address increasing inflationary costs in the Americas, Steelcase has announced a list price increase effective in the second quarter of fiscal 2026, as well as a tariff recovery charge that took effect in the first quarter of fiscal 2026. These actions are intended to help offset the impact of rising costs.

The company continues to invest significantly in its business transformation initiative and the implementation of a new ERP system, which is expected to begin amortization in calendar year 2026. While these investments are expected to drive long-term operational improvements, they will continue to result in development and project costs throughout fiscal 2026.

Steelcase’s strong liquidity position, with $558.3 million in total liquidity sources, provides the company with financial flexibility to navigate the current environment and invest in strategic initiatives. The company’s total debt remained flat at $447.1 million, suggesting a prudent capital structure.

Overall, Steelcase’s fiscal 2025 results demonstrate the company’s ability to improve profitability through cost management and strategic actions, despite facing headwinds in certain markets. The company’s focus on the Americas segment, price/cost management, and continued investment in its business transformation provide a foundation for future growth, though the uncertain macroeconomic conditions, particularly in International markets, remain a key risk factor.