DANBURY, Connect. — Top 100 retailers Ethan Allen It saw orders fall by double digits in the first quarter of its fiscal year but managed to cut expenses by more than $11 million.
Consolidated net sales fell 23.6% to $163.9 million in the first quarter ended September 30. Net income fell by half to $14.94 million, or 62 cents per diluted share. In last year’s quarter, that figure was $29.88, or an adjusted $1.11 per diluted share.
Sales were negatively impacted by $15 million due to severe flooding at Ethan Allen’s Vermont facility in September, resulting in a pre-tax charge of $2.1 million. Retail net sales fell 23.6% to $163.9 million, while wholesale net sales fell 13.3% to $99.4 million.
“We resumed limited operations in the second half of the quarter, and the majority of our employees are now back at work,” said Farooq Kathwari, chairman, president and CEO of Ethan Allen.
On the expense side, Ethan Allen was able to reduce selling, general and administrative expenses to $80,298 million from $91,962 million in last year’s first quarter. The company also reduced inventory levels, which finished the quarter at $149.6 million, down 10.8% from a year ago.
“Despite these challenges, we were able to maintain a strong gross margin of 61.1% and adjusted operating margin of 12.1%. We also continued to generate positive operating cash flow and as of September 30, our total cash and investments were $163.2 million and we were debt-free,” said Kathwari.
Looking ahead, he said the company believes consumers are ready to renovate their homes after the pullback in 2022.
“After consumers focused on their homes during the pandemic, we see consumers focusing more on time in other areas, such as travel. We expect to see more focus on home, although not to the level we saw during the Covid period,” he said.
Ethan Allen is responding by adding new products to its product lines and “we will continue to do so over the next 12 months.”
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