Ethan Allen earnings drop 49.2%
By Powell Slaughter -- Furniture Today, April 27, 2003
Danbury, Conn. — Full-line manufacturer and retailer Ethan Allen reported fiscal third-quarter sales of $224.6 million, off 1.5%, and net income of $11.7 million, down 49.2%.
Previously announced pretax charges of $13.2 million for plant closings contributed to the plunge in net income. Excluding the restructuring and impairment charges, net income dropped 13.5%.
Through nine months of fiscal 2003, sales are up 2% to $670.8 million, compared to the first three quarters of fiscal 2002, and net income of $54.8 million is off 9.9%. Excluding the previously mentioned charges, net income would have been up 3.5% to $63 million.
In the retail division, delivered sales in the quarter ended March 31 increased 9.9% to $127.3 million, compared to prior-year numbers, and written sales were up 4.4%, while same-store delivered and written sales were down 4.3% and 9.2%, respectively.
Year-to-date delivered sales were up 16.7% to $387.1 million, and written sales were up 17.2%. Same-store delivered sales and written sales fell 3.7% and 3.2%, respectively, compared to performance through last year's third quarter.
"Despite the difficult economic conditions, we are pleased that we have maintained healthy margins, earnings and cash flow," said Farooq Kathwari, chairman and chief executive officer.
He said the recent introduction at retail of Ethan Allen's Tuscany collection had been well received by consumers, and that last year's introduction, Townhouse, "continues to exceed expectations."
Youth furniture will get a lot of attention this year. Along with the store rollout of Ethan Allen's new youth program in July, the company will open five to six standalone youth stores starting in July or August.
Those locations will have 2,000 to 3,000 square feet each, with some planned for shopping malls and two or three in other high-traffic locations.
At the end of the third quarter, Ethan Allen's store network consisted of 312 units, 120 of them company-owned. This year, the company expects to open four stores, three of them relocations of existing operations.
Ethan Allen plans to close stores in Egypt, Brazil, South Korea and Japan. Kathwari said the four units totaled less than $300,000 of business at wholesale.
That doesn't mean Ethan Allen will give short shrift to overseas business, Kathwari said. United Kingdom stores are profitable, and a second location in China is scheduled to open in May, with others planned for Shanghai and Beijing, he said.
"We're opening larger stores in better markets," Kathwari said. "We're encouraging (dealers) to consolidate in larger operations."
| Ethan Allen | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 3/31 | 2003 | 2002 | Change |
| (a) Includes a $13.2 million pretax charge in both periods for restructuring and asset impairment. |
|||
| Sales | $224,574,000 | $227,917,000 | (1.5%) |
| Operating income | 32,061,000 | 36,002,000 | (10.9%) |
| Net income | (a)11,672,000 | 22,969,000 | (49.2%) |
| Earnings per share | 0.30 | 0.58 | (48.3%) |
| 9 months ended 3/31 | 2003 | 2002 | Change |
| Sales | $670,816,000 | $657,499,000 | 2.0% |
| Operating income | 101,099,000 | 95,743,000 | 5.6% |
| Net income | (a)54,840,000 | 60,895,000 | (9.9%) |
| Earnings per share | 1.42 | 1.52 | (6.6%) |
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