HNI Corporation announced today revised revenue and earnings expectations for the second quarter and fiscal year 2017. The Corporation is experiencing slower than anticipated sales in its supplies-driven office furniture business. HNI now expects second quarter non-GAAP earnings per diluted share to be in the range of $0.41 to $0.46 compared to its prior guidance of $0.65 to $0.72. Second quarter consolidated organic sales growth is expected to be in the range of 0 to 1 percent compared to the previous guidance of 4 to 7 percent.
"We are navigating an increasingly dynamic environment in our supplies-driven business. In the short term, our results are being negatively impacted by accelerating channel shifts and timing of orders. We continue to respond to the changing environment by investing in new products and selling capabilities and accelerating our initiatives around quick ship, direct fulfillment.
"Many of our large dealer-distributors are transitioning to more direct fulfillment from us. We're seeing destocking of wholesalers' inventory, which is contributing to a faster than expected sales decline in the wholesale channel. In addition to this channel disruption, we're also experiencing unfavorable order timing. Orders in the supplies-driven business started the quarter slowly. Although they are recovering, more of our second quarter orders will ship in the third quarter than previously expected. Despite this volatility, we remain optimistic about our market momentum. Our backlog in the supplies-driven business is up substantially compared to the beginning of the quarter. In addition, our contract office furniture businesses have strong momentum, and our hearth business is performing well.
"We are in a unique position to take advantage of these channel shifts. We had previously started several initiatives to reposition our supplies-driven model and are now accelerating our moves, which will be implemented over the next year. We remain confident our supplies-driven business will continue to excel and drive long-term value. We are the best total cost producer with the strongest brands and broadest product offering in this segment," said Stan Askren, HNI Corporation Chairman, President, and Chief Executive Officer.
HNI now estimates full year non-GAAP earnings per diluted share to be in the range of $2.40 to $2.70 and consolidated organic sales to grow 2 to 5 percent versus the prior year. This compares to prior guidance of non-GAAP earnings per diluted share of $2.80 to $3.10 on organic sales growth of 3 to 6 percent. Slower demand in the supplies-driven office furniture business, and to a lesser extent, greater investment in direct fulfillment capability, higher inflation, and competitive pricing pressure are driving the reduced outlook.
HNI expects to issue a press release reporting the second quarter 2017 financial results after market close on Monday, July 24, 2017 and hold a conference call on Tuesday, July 25, 2017 to discuss second quarter financial results and third quarter 2017 outlook.