From Home Furnishing Business
Tax Cut Boosts Ethan Allen Bottom Line by 39%
Ethan Allen (NYSE: ETH) said sales edged up 2% in the quarter ended Dec. 31, but profits jumped 39% due largely to the corporate tax cut signed into law in late December.
The home furnishings manufacturer and retailer said net income for the quarter – the second quarter of its fiscal year – totaled $14.9 million or 54 cents per share. That was up from $10.7 million or 39 cents per share in the same quarter last year.
The company said its effective tax rate fell to 16% in the most recent quarter from 36.9% in the same quarter a year ago.
Sales totaled $198.5 million in the most recent quarter, up from $194.7 million in last year’s second fiscal quarter.
Ethan Allen said wholesales sales were up 3.8%, driven by increased shipments to domestic and international independent dealers and the State Department. Retail sales, however, fell 2.1% and comparable-store sales were down 2.2%.
In addition, comparable-store written sales, which include merchandise sold but not delivered, fell 6.2%.
The company said its retail segment recorded an operating loss of $600,000, reversing operating income of $2.1 million in the comparable quarter.
Farooq Kathwari, chairman, president and CEO, said the company is boosting advertising spending by about 33% in the third fiscal quarter, which ends March 31, and by about 15% in the fourth fiscal quarter.
"We are pleased to announce a major marketing campaign to help increase traffic to our retail network and to our digital mediums starting from the third quarter,” Kathwari said. “With major improvements in our offerings, strengthened retail network, investments in our technology and improvements in our manufacturing, we plan to increase our advertising.”
For the six months ended Dec. 31, sales fell 2.1% to $379.8 million.
Six-month net income totaled $22.28 million or 81 cents per share. That was less than 1% ahead of the first half of the previous fiscal year, when the totals were $22.23 million or 80 cents per share.