EA sales down 4.3%
By Jay McIntosh -- Furniture Today, April 27, 2008
Danbury, Conn. — Ethan Allen's income fell 49.7% in its fiscal third quarter ended March 31 as sales slipped 4.3% in a weaker economy, the company reported.
Earnings came to $8.8 million on sales of $235.9 million. Sales in the company's retail division increased 3% to $172.8 million, while wholesale division sales fell 9.1% from the comparable quarter a year earlier, to $156.3 million.
Part of the earnings decline was attributed to a $2.5 million after-tax restructuring and impairment charge as the company closed seven stores and two distribution centers, consolidating most of the business into other existing operations. The company also converted four of its design center stores into smaller design studios, better suited to the markets they serve.
Excluding such charges in both quarters, earnings were $11.4 million or 39 cents per share in the 2008 period, down 34.5% from $17.4 million or 54 cents per share a year earlier.
"Despite the challenges of a weak economy, we are pleased with the major progress we are making in positioning Ethan Allen as a provider of design solutions and service," said Farooq Kathwari, chairman and CEO.
He said sales in March in particular slowed because of economic concerns, with the Federal Reserve taking extraordinary steps to stabilize financial institutions, and to some extent because Easter fell in March this year.
"With a relatively calmer economic environment in April, and Easter behind us, the decline in sales so far has been considerably reduced," said Kathwari.
Kathwari said that in addition to closing, opening and converting stores, the company has nearly finished implementing Lifestyle presentations in all 153 company-owned stores. In the current quarter, it expects to consolidate the two remaining design centers in New York into a new flagship store in Manhattan, at Third Avenue and 60th Street.
He said the company also will open six other design centers in the current quarter. It expects to take restructuring charges of $3 million to $4 million or $1.9 million to $2.5 million after taxes.
| Ethan Allen | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2008 | 2007 | Change |
| (a) Includes a pretax charge of $4 million in the 2008 quarter, a $180,000 pretax credit in the 2007 quarter, a $4 million pretax charge in the 2008 nine months and a $13.4 million pretax charge in the 2007 nine months, all related to restructuring and impairment. (b) Based on average shares outstanding of 29 million in the 2008 quarter, 32.3 million in the 2007 quarter, 29.7 million in the 2008 nine months and 32.5 million in the 2007 nine months. |
|||
| Sales | $235,901,000 | $246,539,000 | (4.3%) |
| Operating income | 19,573,000 | 27,907,000 | (29.9%) |
| Net income (a) | 8,846,000 | 17,499,000 | (49.4%) |
| Earnings per share (b) | 0.30 | 0.54 | (44.4%) |
| 9 months ended 3/31 | 2008 | 2007 | Change |
| Sales | $744,138,000 | $746,781,000 | (0.4%) |
| Operating income | 80,867,000 | 92,288,000 | (12.4%) |
| Net income (a) | 46,972,000 | 48,743,000 | (3.6%) |
| Earnings per share (b) | 1.58 | 1.50 | 5.3% |
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