Ethan Allen Interiors Reports Results for Fiscal 2024 Third Quarter

April 24, 2024  by HFBusiness Staff in Business Strategy, Industry   

Farooq Kathwari, Ethan Allen’s chairman, president and CEO commented, “We are pleased with our financial performance and the continued strengthening of our enterprise. We are also seeing incremental consumer interest returning back to the home after being previously diverted to other areas such as travel.”

“We have launched a number of important initiatives including strengthening of our talent, introduction of new products, stronger marketing campaigns, continued investments in our North American manufacturing, which make about 75% of our furniture, and our logistics network providing white glove delivery service to our clients at one cost throughout North America.”

“We also introduced and implemented our important initiative as a leading Interior Design Destination, which elevated a consistent level of presentation across our retail network,” continued Mr. Kathwari.

“Combining technology with our interior design talent has been a game changer. Compared to the pre-pandemic third quarter ended March 31, 2019, we have reduced headcount by 32.7%, expanded our adjusted consolidated operating margin by 380 basis points to 10.0%, reduced inventories by 12.2% and increased our cash and investments to $181.1 million, up from $25.7 million.”

“In addition during the pandemic period, defined by us as fiscal years 2021 through 2023, we paid $137.9 million in dividends, including the payment of special cash dividends in each of the past three years. While there are current economic challenges and international conflicts, we remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2024 THIRD QUARTER HIGHLIGHTS*

• Consolidated net sales of $146.4 million decreased 21.4%

• Retail net sales of $122.6 million were lower by 18.8%
• Wholesale net sales of $89.8 million were lower by 21.3%

• Written order trends

• Retail segment written orders decreased 8.6%
• Wholesale segment written orders decreased 14.6%

• Consolidated gross margin of 61.3% was 140 basis points higher than last year due to a change in sales mix, lower manufacturing input costs and reduced headcount partially offset by lower unit volumes and higher sales of designer floor samples
• Operating margin of 10.5%; adjusted operating margin of 10.0% compared with 15.2% last year due to fixed cost deleveraging from lower consolidated net sales partially offset by gross margin improvement, lower headcount, less variable expenses and the ability to maintain a disciplined approach to cost savings and operating expense control
• Advertising expenses were equal to 3.4% of net sales in the current third quarter, up from 2.2% in the prior year period due to additional direct mail campaigns; promotional activity remained disciplined and consistent with a year ago
• Diluted EPS of $0.50 compared with $0.87; adjusted diluted EPS of $0.48; reported diluted EPS for the third quarter ended March 31, 2019, was $0.31
• Ended the quarter with $181.1 million in cash and investments with no debt outstanding
• Generated $23.7 million of cash from operating activities compared with $33.4 million a year ago
• Paid regular quarterly cash dividend of $0.36 per share totaling $9.2 million
• Reduced inventory carrying levels by 4.7%; totaled $144.5 million as of March 31, 2024
• Ended the quarter with total employee count of 3,448, down 9.6% from a year ago and 32.7% less than March 31, 2019

For the fifth year in a row, the Mexican Center for Corporate Philanthropy and the Alliance for Corporate Social Responsibility recognized Ethan Allen’s upholstery manufacturing operations in Silao, as “Environmentally and Socially Responsible” for the Company’s ongoing commitment to socially responsible management.