Ethan Allen Reports First Quarter Fiscal Results for 2025

October 30, 2024  by Karen Parrish in Business Strategy, Industry   

Farooq Kathwari, Ethan Allen’s chairman, president and CEO commented, “We are pleased with our first quarter financial and operating results amid the challenging economic environment. We continue to strengthen various areas of our vertically integrated enterprise, including our talent, product offerings, marketing, retail network, manufacturing, logistics, technology and social responsibility.”

“For the quarter ended September 30, 2024, we reported consolidated net sales of $154.3 million, gross margin of 60.8%, operating income of $17.6 million, operating margin of 11.4% and adjusted diluted EPS of $0.58. We continued strong cash generation and ended the quarter with total cash and investments of $186.4 million, up $23.2 million from a year ago. During the first quarter of fiscal 2025, we paid $20.2 million in cash dividends, which included $10.2 million in special cash dividends. We are also pleased to announce that yesterday our Board approved a regular quarterly cash dividend of $0.39 per share, payable on November 27, 2024.”

Mr. Kathwari continued, “Strengthening our team and investing in technology is a game changer. These two important factors have helped us to operate more efficiently. As of September 30, 2024, our headcount was 8.5% lower than a year ago and has been reduced by 27.9% since September 30, 2019.”

“As previously disclosed, one of our distribution centers located in Old Fort, North Carolina was impacted in September by significant flooding from Hurricane Helene. The disruption impacted shipments, and we suffered a loss of $0.3 million related to damaged inventory and remediation costs. Restoration efforts have helped our distribution center resume normal shipping and receiving capacity.” “We look forward to continued progress and remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2025 FIRST QUARTER HIGHLIGHTS*
— Consolidated net sales of $154.3 million compared with $163.9 million a year ago 

Retail net sales of $132.8 million compared with $133.6 million 

Wholesale net sales of $86.1 million compared with $99.4 million

— Written order trends

Retail segment written orders were lower by 6.8% 

Wholesale segment written orders declined by 4.8%

— Consolidated gross margin of 60.8% compared with 61.1% last year

— Operating margin of 11.4%; adjusted operating margin of 11.5% compared with 12.1% last year primarily due to fixed cost deleveraging from lower sales

— Advertising expenses were equal to 2.3% of consolidated net sales, up from 2.0% in the prior year

— Diluted EPS of $0.57 compared with $0.58; adjusted diluted EPS of $0.58

— Generated $15.1 million of cash from operating activities compared with $16.7 million a year ago

— Paid cash dividends totaling $20.2 million, which included a $0.40 per share special cash dividend and a regular quarterly cash dividend of $0.39 per share

— Ended the quarter with $186.4 million in total cash and investments with no debt outstanding

— Reduced inventory carrying levels to $143.2 million at September 30, 2024, down $6.4 million from a year ago

— Ended the quarter with 3,347 total employees, down 8.5% from a year ago and 27.9% less than at September 30, 2019

— Named America’s Best Premium Furniture Retailer for the second consecutive year by Newsweek

— Operated 173 Ethan Allen retail design centers in North America as of September 30, 2024, including 142 Company-operated and 31 independently owned and operated locations; the Company also has design centers outside of North America

— Ethan Allen’s western North Carolina distribution center sustained flooding from Hurricane Helene in September 2024 that resulted in a pre-tax charge of $0.3 million and a temporary disruption in shipments; employees have returned to work and normal operating capacity has resumed with an expected recovery from the delayed shipments during the second quarter of fiscal 2025 

* See reconciliation of GAAP to adjusted key financial measures in the back of this release. Comparisons are to the fiscal 2024 first quarter.

CONFERENCE CALL

Ethan Allen will host a conference call with investors and analysts. The conference call will be webcast live from the Company’s Investor Relations website at https://ir.ethanallen.com.

For those unable to listen live, an archived recording of the call will be made available on the Company’s website referenced above for up to six months.