by Company also ends the quarter with reduced inventory levels and a total of $167.8 million in cash and investments with no debt outstanding
DANBURY, Conn. — Ethan Allen Interiors reported a decrease in retail and wholesale sales that the company said reflects a post-pandemic economy.
Meanwhile, the company said it had strong margins and a robust balance sheet resulting from cost savings including reduced inbound freight and raw materials costs and a reduced headcount.
The company reported consolidated net sales of $167.3 million for the quarter ended Dec. 31, 2023, down 17.7% from the $203.2 million the same period last year. For the six-month period, it reported net sales of $331.2 million, down 20.7% from the $417.7 million reported the same period last year.
Its retail sales fell 19% during the second quarter to $139.2 million, while wholesale net sales fell 14.7% to $90.6 million.
Written retail orders during the quarter decreased 9.4% and written wholesale orders decreased 10.9%.
Net income was $17.4 million, or 68 cents per share, compared to $28.2 million, or $1.10 per share, the same period last year, a 38.2% decline. For the six-month period, it reported net income of $32.4 million, or $1.26 per share, compared with $58 million, or $2.27 per share, a 44.3% decrease.
The company also reported a consolidated gross margin of 60.2%, which it said was 80 basis points lower than last year because of “deleveraging from lower unit volumes combined with changes in both sales and product mix, partially offset by lower input costs, including reduced inbound freight, raw material costs and headcount.”
It reported an operating margin of 13% and an adjusted operating margin of 12.8%, compared to 18.1% last year. This resulted from fixed cost deleveraging from lower consolidated net sales, gross margin erosion as well as incremental costs from its new design centers and expenses incurred with the launch of its Interior Design Destination initiative. It said this was partially offset by lower headcount and reduced variable expenses including lower delivery and commissions and the “ability to maintain a disciplined approach to cost savings and expense control.”
Farooq Kathwari, Ethan Allen’s chairman, president and chief executive officer, said the operating results were marked by lower sales, strong gross and operating margins and a robust balance sheet.
“The pandemic period, defined by us as fiscal years 2021 through 2023, had strong consumer focus on the home, high demand and major increases in sales,” he said. “We had record high backlogs, which are now returning to pre-pandemic levels. During this pandemic period, we undertook many important initiatives within our vertically integrated enterprise, including strengthening our talent, marketing, service, technology and social responsibility.”
He added that compared to the company’s second quarter ended Dec. 31, 2018, each of these following areas “contributed to the strengthening of our enterprise. Gross margin increased to 60.2% in our just-completed second quarter compared to 55.2% for the quarter ending Dec. 31, 2018. Cash and investments totaled $167.8 million, up from $38.8 million five years ago. Inventory levels are down 11.5% to $140.9 million, while headcount has been reduced by 31.1%. We strengthened our balance sheet during the pandemic period, enabling us to return additional capital to shareholders. We have returned $137.9 million to shareholders in the form of cash dividends, an increase of $41.4 million or 42.9% during the three-year period leading up to the pandemic.”
