Tariff Resilience and Strategic Pricing: Why MillerKnoll's FY 2026 Guidance Signals a Buying Opportunity

The furniture industry has long been a battleground for trade wars, with tariffs acting as both a headwind and a catalyst for innovation. In this environment, MillerKnoll (MLKN) stands out as a company that's not just weathering the storm but actively engineering a path to resilience. With its FY 2026 guidance, the firm has laid out a compelling case for how it intends to offset tariff-driven costs through strategic pricing, operational efficiency, and a deftly managed supply chain. For investors, this represents a rare combination of short-term pragmatism and long-term vision-a recipe that could unlock significant value in the coming year.

Tariff Mitigation: A Blueprint for Resilience

MillerKnoll's approach to tariffs is a masterclass in proactive problem-solving. The company has already implemented surcharges and price increases to offset the $1 million in net tariff-related costs reported in Q2 2026. These actions are not just reactive; they're part of a broader strategy to fully absorb cost pressures by the second half of the fiscal year. What's more, MillerKnoll's sourcing strategy gives it a critical edge. By sourcing 70% of its North America retail cost of goods domestically, the company minimizes exposure to the 25%–30% tariffs on imported upholstered furniture-a stark contrast to competitors who rely heavily on overseas manufacturing. This domestic focus isn't just a defensive play; it's a strategic lever that positions MillerKnoll to capitalize on the broader shift toward nearshoring in the U.S. furniture sector.

Operational Efficiency: The Unsung Hero of Margin Recovery

Beyond pricing, MillerKnoll is leveraging operational improvements to bolster its margins. The consolidation of its Muskegon, Michigan facility is expected to generate $10 million in annual savings by fiscal 2028, while automation and agile production models are reducing waste and inventory costs. These initiatives align with industry trends, where companies like Hooker Furnishings are achieving $3.7 million in expense reductions through similar restructuring efforts. For MillerKnoll, the result is a gross margin of 39.0% in Q2 2026-a slight improvement from 38.8% in the prior year. Analysts project that these efficiencies, combined with pricing actions, will stabilize gross margins even as tariffs persist.

Retail Expansion: A Catalyst for Long-Term Growth

MillerKnoll's retail strategy further strengthens its case as a buy. The company plans to open 14–16 new stores in the coming year, a move that management believes will eventually boost operating income as initial costs are absorbed. This expansion isn't just about scale; it's about deepening customer relationships in a market where discretionary spending remains sensitive to economic shifts. While some analysts caution that weaker contract orders and persistent margin pressures could derail this growth, MillerKnoll's diversified approach-balancing retail and contract segments-mitigates these risks.

Institutional Sentiment and Analyst Price Targets

The market is taking notice. Despite Q2 revenue falling short of expectations at $955 million, MillerKnoll's adjusted EPS of $0.43 beat forecasts, and analysts have set a high price target of $35.00. Institutional ownership has also trended upward, driven by confidence in the company's ability to execute its tariff mitigation and retail expansion plans. This optimism is well-founded: MillerKnoll's liquidity of $548 million and its track record of generating operating cash flow provide a financial buffer that few peers can match.

Why This Is a Buying Opportunity

The key to MillerKnoll's appeal lies in its ability to turn challenges into opportunities. Tariffs, which once threatened to erode margins, are now being offset by pricing discipline and operational agility. Meanwhile, its domestic sourcing strategy and retail expansion position it to benefit from long-term industry tailwinds. For investors, the company's FY 2026 guidance isn't just a roadmap to stability-it's a signal that MillerKnoll is outmaneuvering its peers in a high-stakes game of chess.

Of course, no investment is without risk. A prolonged economic slowdown or a sudden spike in material costs could test MillerKnoll's resilience. But for those willing to look beyond short-term volatility, the company's strategic clarity and financial strength make it a compelling addition to a diversified portfolio. In a sector where many are merely surviving, MillerKnoll is thriving-and that's a rare and valuable thing.