Shares of office furniture maker Steelcase (NYSE: SCS) are down 13% as of 1:25 p.m. EDT, despite beating earnings in last night's Q4 report.
Expected to report $0.26 per share in pro forma profit for the fiscal fourth quarter 2019, Steelcase instead reported $0.29 per share (but only $0.19 GAAP).
Revenue growth was also pretty great -- up 18% year over year in Q4 to $912.4 million.
This was even better growth than for the year as a whole, in which Steelcase grew sales only 13% (to $3.4 billion). Full-year GAAP profits powered 54% higher, to $1.05 per share. CEO Jim Keane observed that "fiscal 2019 represented one of the best years Steelcase has reported in over a decade."
So why are the shares down then?
The answer, I fear, can be found in management's guidance for the current fiscal first quarter of 2020 and for 2020 as a whole. In Q1, Steelcase told investors to expect better sales than the $829 million that Wall Street is forecasting -- anywhere from $830 million to $855 million -- but worse profits. Whereas analysts are forecasting Steelcase will earn about $0.20 per share this quarter, all management is promising is from $0.16 to $0.20 (which is $0.18 at the midpoint).
Similar story for the year. The Street wants Steelcase to earn about $1.32 per share on $3.66 billion in sales in fiscal 2020. Steelcase thinks it can make the sales number (5.5% to 9.5% sales growth works out to full-year sales of about $3.655 billion). Management forecasts only $1.20 to $1.35 per share in profit, however -- about a nickel short of analysts' projections.
Judging from today's stock price action, though, that miss is going to cost Steelcase investors a whole lot more than a nickel.
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