KNL: Grass Not Growing Under Knoll

This article is a reprint of my 29 July 2008 RealMoney column.

These are tough times for office furniture makers, which have seen their shares fall 20% to 50% over the last year. A difficult economic environment and poor showings from office retailers such as Office Depot (ODP) have investors worried.

Customers, on the other hand, appear relatively unfazed. Last month, Herman Miller (MLHR) kicked off earnings season with a positive surprise. Last week, HNI (HNI) and Knoll (KNL) followed suit. Only Steelcase (SCS) posted disappointing numbers.

The one that looks most attractive to me is Knoll. The company managed to grow sales by 7.5% compared with last year, and its backlog grew at an even faster 9.7% rate. The growth is significantly higher than that of the industry, which is basically flat. Andrew Cogan, Knoll’s CEO, said, “The str