Ethan Allen Sales, Profit Declines

October 22, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on October 2008 Ethan Allen saw first-quarter sales decline 17.2 percent as it produced net income of $7.4 million versus $17.5 million a year earlier.

The Danbury, Conn.-based company said sales totaled $205.8 million during the quarter. Net delivered sales by its retail division ($155.9 million) were down 14.7 percent from the first quarter of 2007.

The company’s quarterly profit was aided by a $1 million gain on the sale of one of its properties.

In the announcement, the company that has a network of 292 stores disclosed that it has implemented a “Team Concept” that provides team associates a base salary with an opportunity to earn a team bonus. It had a one-time overlap of selling costs as pre-paid commissions of $4.6 million were expensed.

Chairman and CEO Farooq Kathwari said, “We have been able to maintain decent profitability during these challenging times. While our sales have decreased, our gross margins increased due to many factors including maintaining our every-day-best-price policy. In addition, our many initiatives during the last several years are also a major factor in reducing costs and improving our performance.”

He said performance-boosting initiatives include developing knowledgeable associates, repositioning the brand to focus on a modern attitude with a classic perspective, maintaining a strong national advertising program, and making continued structural changes in its retail, manufacturing and logistics units.

Kathwari said, “While the overall economic environment remains uncertain, we believe that we are well positioned during this period and also ready to grow our business as conditions improve.”