Ethan Allen Responds to Sandell Requests

August 28, 2015  by in Financial Reports, Furniture Retailing, Industry   

Sandell has said it intends to nominate a slate of directors for consideration at this fall’s annual meeting and has requested a sale of the company and real estate leaseback strategy.

In the letter from Farooq Kathwari, CEO and chairman, the company repeats its policy and practice of engaging with its shareholders to discuss objectives.

Kathwari outlines the company’s shareholder returns over the last five years.

“The company, despite coming out of a severe recession, reduced $210 million of debt, invested $96 million in capital expenditures, paid $61 million in dividends, and repurchased $20 million of the Company's common stock,” he wrote. “Since going public, the Company has returned to shareholders $549 million in share buyback, paid $348 million in dividends, and reduced debt of $391 million.”

The letter disagrees with Sandell’s proposed sale-leaseback strategy of the company’s real estate, including retail and manufacturing facilities.

That strategy “would impose a burden of significant lease expenses which would serve to weaken its finances, restrict its continuing strategic repositioning of its retail footprint, limit its flexibility and erode its profitability,” Kathwari wrote. “However, the company will continue to evaluate its capital structure to enhance our strong financial position and continued strong shareholder returns."