Ethan Allen Profits Tumble as Sales Fall 5.3%

April 27, 2017  by Larry Thomas in Economic News, Industry   

The vertically integrated company said profits were squeezed by weak consumer demand and increased expenses for advertising, the recent launch of the Ethan Allen/Disney line, and a collaboration with Amazon that will launch this summer. 

Comparable-store sales at its 301 Design Centers fell 8.2%. Comparable-store written orders, which include merchandise sold but not delivered, fell 10.9%.

Net income totaled $2.28 million or 8 cents per share. That was down from $10.2 million or 36 cents per share in the same quarter last year.

"The third quarter results were impacted with very strong prior year comparisons when sales increased 10% and EPS increased 89%. In addition, the uncertain political environment and customer expectations of higher discounting contributed to lowering sales,” said Farooq Kathwari, chairman and CEO. “During the quarter, we increased advertising by 21% and plan to increase by about the same amount in our fourth (fiscal) quarter.”

In addition, he said the most recent quarter included a pre-tax charge of $6.4 million to reduce clearance and discontinued inventory in the wholesale and retail segments.

"We are well positioned to grow with our many initiatives, including refreshed and relevant product offerings, the strengthening of our North American manufacturing, logistics and retail network of 200 design centers staffed by 1,500 interior design professionals, investments in technology and increased spend on advertising,” Kathwari said.

For the nine months ended March 31, sales fell 3.4% to $568.5 million. Nine-month net income was $24.5 million or 88 cents per share, down from $39.9 million or $1.49 per share in the first nine months of the previous fiscal year.