Ethan Allen's net earnings up 8.9% in qtr.
By Furniture Today Staff -- Furniture Today, January 20, 2003
Danbury, Conn. — Improved profit margins helped Ethan Allen to an 8.9% gain in net earnings in its second quarter ended Dec. 31, even though net sales were up just 3.1% from the same period a year earlier.
Farooq Kathwari, the manufacturer and retailer's chairman and chief executive officer, said the company has been able to reduce costs while continuing to sell products at suggested retail prices.
"One of the most important factors that differentiates Ethan Allen is that we have been able to maintain our margins at retail in a very tough environment," he said.
Sales for the fiscal second quarter were reported at $229.7 million, and earnings at $23.1 million. Ethan Allen's 10% net margin remains among the highest in the industry.
Delivered sales in the company's retail division rose by 19% in the second quarter to $139.3 million, mainly because of stores opened or acquired in the past year. Comparable store sales fell 4%.
During the quarter, the company acquired two stores in Houston from a dealer who was retiring, giving it 118 corporate-owned locations out of a total of 314 Ethan Allen stores. Kathwari said the store network would add six or eight more this quarter and may close a couple of small stores.
He said the Townhouse collection introduced last summer has performed well in stores, and he has high hopes for the upcoming Leather Expressions product (arriving in stores now), Tuscany (coming in March) and Ethan Allen Kids (mid to late May). New product has helped the company maintain its average ticket size, with the same-store decline reflecting lower traffic, he said.
"Assuming no further deterioration in the economy or consumer confidence, we still have the opportunity, as stated previously, to generate fiscal year earnings per share increases of 12% to 15%," Kathwari said. "We are pleased we are able to maintain our earnings outlook despite lower than previously expected sales increases."
| Ethan Allen | |||
|---|---|---|---|
| Earnings per share are fully diluted. | |||
| Quarter ended 12/31 | 2002 | 2001 | Change |
| (a) Based on average shares outstanding of 38.8 million in the 2002 quarter, 39.8 million in the 2001 quarter, 38.9 million in the 2002 six months and 40 million in the 2001 six months. | |||
| Sales | $229,713,000 | $222,857,000 | 3.1% |
| Operating income | 37,195,000 | 33,206,000 | 12.0% |
| Net income | 23,086,000 | 21,195,000 | 8.9% |
| Earnings per share (a) | 0.60 | 0.53 | 13.2% |
| 6 months ended 12/31 | 2002 | 2001 | Change |
| Sales | $446,242,000 | $429,582,000 | 3.9% |
| Operating income | 69,038,000 | 59,741,000 | 15.6% |
| Net income | 43,168,000 | 37,926,000 | 13.8% |
| Earnings per share (a) | 1.11 | 0.95 | 16.8% |
