MW Office-furniture maker Steelcase cut jobs in the first quarter. And more cuts could be coming.

By Bill Peters

Company cites 'weak macroeconomic factors and lower demand in Germany and France'

Shares of Steelcase Inc. fell after hours on Wednesday, after the office-furniture maker's second-quarter outlook disappointed investors, amid weaker demand from its government customers and in Europe that could bring more cuts after a recent round of layoffs.

The results came as corporate demand remains strong, and after company executives this year called out a rebound in the commercial real-estate market and office leases. That market suffered after the pandemic led to a boom in remote work, irritating some workplace managers.

However, Steelcase (SCS) on Wednesday said demand for furniture had slowed in Germany and France. More broadly, companies that do business with the U.S. government have been bracing for the fallout of aggressive spending cuts

Shares of Steelcase were down 2.5% after hours.

"During the first quarter, we initiated restructuring actions in the Americas (including salaried headcount reductions and the elimination of open job requisitions targeting approximately $20 million of annualized spending)," Chief Financial Officer Dave Sylvester said in a statement. The company's Americas segment makes up most of its sales.

He added: "In addition, we have initiated procedures with applicable unions and works councils in Europe as part of actions which are targeted to further reduce our cost structure in response to weak macroeconomic factors and lower demand in Germany and France."

Management said it expects $860 million to $890 million in sales for the second quarter, with adjusted earnings of 36 cents to 40 cents a share. Analysts polled by FactSet expected $878.8 million in sales, with adjusted earnings per share of 41 cents.

For the first quarter, Steelcase's revenue rose 7% year over year to $779 million. The company reported adjusted earnings of 20 cents a share. Both topped Wall Street's estimates.

Chief Executive Sara Armbruster said in the company's earnings release that the quarter's sales growth was "led by our large corporate customers who are investing to reimagine their workplaces."

She added that while "external factors are impacting a few parts of our business, the majority of our businesses and geographies are performing well." The company said orders from big corporate customers increased, but that its government and education customers had pulled back.

Sylvester, in the release, said that the lower costs from the staff reductions were reflected in the full-year targets the company laid out in March. During the company's earnings call that month, Sylvester said that forecast had also factored in "negative sentiment in Canada" about buying U.S. products, as well as government cuts through the so-called Department of Government Efficiency, or DOGE.

Steelcase on Wednesday said that first-quarter gross margin of 33.9% marked an improvement from the prior year, helped by demand in the Americas and cost cuts.

However, the company saw $7 million worth of higher tariff costs in the Americas. In Steelcase's most recent annual report, the company said that around 38% of the products it sold to U.S. customers were made outside of the U.S., largely by factory operators in Mexico.

At a conference this month, Sylvester said the company saw a bigger opportunity to win over smaller business customers. He also saw bigger opportunities in education, even amid the government cutbacks.

"I think with the DOGE efforts and some of the pullback in funding from the government in higher education, that could impact kind of short-term or mid-term opportunities in the education world," he said. "But the fundamental reason of why we're there, which is education needs, educational spaces need to change to recognize how pedagogy is changing, that still exists. So, we're staying invested in that vertical."

He added: "And healthcare is a similar reason. We've got good demographics with an aging population that is putting a lot of pressure on healthcare."

-Bill Peters

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June 25, 2025 18:09 ET (22:09 GMT)

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