Retail Struggles Lead to Sales, Profit Declines at Ethan Allen

January 26, 2017  by Larry Thomas in Financial Reports, Industry   

The manufacturer and retailer said net sales fell 6.2% to $194.7 million, while net income tumbled more than 35% to $10.7 million or 38 cents per share.

In the same quarter the previous year, net income was $16.5 million or 58 cents per share.

Sales at its retail stores, which Ethan Allen calls design centers, declined 5.1%, and comparable-store sales fell 5.4%.

The company said operating income in its retail segment tumbled to $2.1 million from $6.7 million in the comparable quarter. The decline was due to reduced operating profits from newer retail stores, more discounts and promotions, and expenses from the recent launch of the Ethan Allen/Disney line. In addition, the comparable quarter included a one-time gain from the sale of real estate.

“Despite very tough previous-year comparisons and a challenging retail environment, we had decent results,” said Farooq Kathwari, chairman and CEO. “We are now ready to invest in expanding our marketing, effective the third (fiscal) quarter, as many of our initiatives are in place. These include a major refresh of our product offerings; expansion of our manufacturing capacities; relocation and renovation of our Design Centers; and adding technology at all levels of our enterprise to improve the customer experience.”

For the six months ended Dec. 31, net sales totaled $388 million, a decline of 2.5% from $397.9 million in the same period the previous fiscal year.

Six-month net income was $22.2 million or 79 cents per share. That was down from $29.7 million or $1.04 per share in the first half of the previous fiscal year.