DANBURY, Conn. — Top 100 retailer Ethan Allen saw orders drop off by double digits during its fiscal first quarter but managed to slice expenses by more than $11 million.
For the first quarter ended Sept. 30, consolidated net sales fell 23.6% to $163.9 million. Net income was halved, coming in at $14.94 million, or 62 cents adjusted per diluted share, compared with $29.88, or $1.11 adjusted per diluted share, in the year-ago quarter.
Sales were negatively impacted by $15 million due heavy flooding at Ethan Allen’s Vermont facility in September, which resulted in a pre-tax charge of $2.1 million. Retail net sales fell 23.6% to $163.9 million while wholesale net sales declined 13.3% to $99.4 million.
“We resumed limited operations during the second half of the quarter, and at this time, the majority of our associates are back at work,” said Farooq Kathwari, Ethan Allen’s chairman, president and CEO.
On the expense side, Ethan Allen managed to slash sales, general and administrative expenses down to $80.298 million compared with$91.962 million in last year’s first quarter. The company also reduced inventory levels, which ended the quarter at $149.6 million, 10.8% lower than a year ago.
“Despite these challenges, we were able to maintain a strong gross margin of 61.1% and an adjusted operating margin of 12.1%. We also continued to generate positive operating cash flow and as of Sept. 30, we had total cash and investments of $163.2 million and no debt,” said Kathwari.
Looking ahead, he said the company believes consumers are ready to begin refreshing their homes again following the 2022 pullback.
“After the major focus on consumers on their homes during the pandemic, we see consumers have spent more focus on time in other areas, such as travel. We expect to see that moderate (with) more focus on the home, although not at the level we saw during the COVID period,” he said.
Ethan Allen is responding by introducing new products into its assortments, “and we will continue to do so in the next 12 months.”