Ethan Allen closing Eldred, Pa., upholstery plant
January 7, 2009-- Furniture Today,
Work done in Eldred will be transferred to plants in North Carolina and California, the company said.
Business handled by the retail service centers, which are local distribution facilities that package products for home delivery to customers, will be shifted to other company facilities serving the same general market areas. The company did not say how many service centers would close.
Ethan Allen said it will take a pretax charge of $8 million to $9 million for the moves, with about 80% of the charge coming in the current quarter and the rest in the fiscal fourth quarter, which ends June 30. The charges, mainly non-cash, will amount to $5.1 million to $5.7 million after taxes or 18 to 20 cents per share, the company said.
About 350 employees will be affected by the consolidations, officials said.
"We sincerely regret the impact that this decision will have on the affected employees," said Farooq Kathwari, chairman and CEO. "We believe, however, that this action will improve the efficiency of our logistical capabilities and strengthen our U.S. manufacturing operations."
He said the company has been able to streamline its operations and realize greater capacities in its logistics and manufacturing facilities.
In its latest quarterly earnings report, for the fiscal first period ended Sept. 30, Ethan Allen said its sales were down 17.2% from a year earlier and profits fell 57.6%.
Ethan Allen said it currently operates nine U.S. manufacturing plants, including two sawmills, and one plant in Mexico. It has five wholesale distribution centers and 29 retail service centers, and sells its product through a network of 292 dedicated stores - 162 of which are company-owned.
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