Ethan Allen sales slip 5.5%
By Janice Chamberlain -- Furniture Today, April 24, 2005
Danbury, Conn. — Retailer-manufacturer Ethan Allen reported sales of $231.2 million in its third quarter, off 5.5% from sales of $244.6 million in the comparable quarter a year ago. Net income plummeted 22.5% to $17.9 million from $23.1 million a year ago, as same-store sales decreased 6%.
The vertically integrated Top 100 company said delivered sales in the quarter ended March 31 in its retail division were down 4.7% to $137.3 million, while wholesale sales dropped 5.6% to $168.8 million.
For the nine months, Ethan Allen recorded sales of $706.8 million, nearly even with the comparable year-earlier period. Delivered sales in the retail division were up 2% to $434.8 million and wholesale sales dipped 2% to $491.4 million. Same-store delivered sales inched up 0.2%.
Net income in the latest nine-month period slipped 9.4% to $59.8 million from $66 million last year.
Total written orders in the latest quarter were down 8.1% from a year ago and off 4.2% for the year to date.
In a conference call with analysts, Chairman and CEO Farooq Kathwari said gross margin in the latest quarter was 47.8%, compared with 48.8% a year ago. He attributed the slight decrease to a variety of factors, including a decline in wholesale shipments, $700,000 in charges related to plant closings, and raw material price increases.
He noted that consumer confidence remains an issue, as does the "decline in the stock market and the rise in gas prices."
"The retail environment in recent months has been challenging," Kathwari said. "In addition, we faced difficult comparables, with prior-year third-quarter sales having increased 9% and our total written sales up 14%."
Ethan Allen employs about 3,000 design consultants and more than 500 retail management associates. Kathwari said it was the company's intention to "create an umbrella to allow these professionals to provide the best service and convert customers into long-term plans" to buy home furnishings.
He added this approach provides major differentiation for the company and is hard to replicate by other retailers.
In the latest quarter, Ethan Allen opened three U.S. stores — in Chicago, metro Washington and Reno, Nev. — and two stores in China. For the first nine months, the company has opened 17 stores and expects to open 15 in the next 12 months.
Over a third of its 300-plus stores are company owned.
| Ethan Allen | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2005 | (a)2004 | Change |
| (a) Restated. (b) Based on average shares outstanding of 36.1 million in the 2005 quarter, 38.6 million in the 2004 quarter, 36.6 million in the 2005 nine months and 38.4 million in the 2004 nine months. (c) Includes pretax restructuring and impairment credits of $219,000 in the 2005 nine months and $264,000 in the 2004 nine months. |
|||
| Sales | $231,154,000 | $244,592,000 | (5.5%) |
| Operating income | 29,298,000 | 37,569,000 | (22.0%) |
| Net income | 17,935,000 | 23,131,000 | (22.5%) |
| Earnings per share (b) | 0.50 | 0.60 | (16.7%) |
| 9 months ended 3/31 | 2005 | (a)2004 | Change |
| Sales | $706,752,000 | $708,507,000 | (0.2%) |
| Operating income | 96,610,000 | 104,264,000 | (7.3%) |
| Net income (c) | 59,827,000 | 66,018,000 | (9.4%) |
| Earnings per share (b) | 1.63 | 1.72 | (5.2%) |
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