Ethan Allen Q4 sales up 5%

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DANBURY, Conn. – Vertically integrated home furnishings manufacturer and retailer Ethan Allen Interiors reported fiscal 2018 fourth-quarter sales of $205.6 million, a 5.5% increase over the comparable prior-year period.

Net income for the period ended June 30 was down slightly to $11.5 million, or 42 cents per diluted share, from $11.7 million in the prior year comparable period.

Sales rose very slightly for the full 2018 fiscal year, up 0.4% compared with 2017 to $766.8 million, while net income crept up $200,000 to $36.4 million.Fourth-quarter net sales for Ethan Allen’s retail segment rose 1.9% from the prior-year period to $156 million. Comparative-store net sales of $153.9 million were up 2.2% from fiscal 2018’s last three months.

Total written orders for the retail division for the fourth quarter of fiscal 2018 were down 10.8% compared to the same prior year period, and comparable Design Center written orders were down 11.4% over the same period.

Fourth-quarter retail segment operating income of $4.6 million was off 1.5% compared with the same prior-year period.

Fourth quarter net sales in Ethan Allen’s wholesale segment were up 11.4% from fourth-quarter 2017 to $127.3 million, primarily due to increased shipments to the GSA and Ethan Allen’s international independent retailers.

Wholesale fourth-quarter operating income of $11.5 million fell 12.2% from the prior-year quarter, largely due to the increase in current period operating expenses, primarily advertising, partly offset by increased sales volume.

“Fiscal 2018 has been a year of major changes and improvements,” said Chairman and CEO Farooq Kathwari in an earnings release. “We strengthened our leadership in our vertically integrated business, undertook major product innovation, continued our retail transformation and increased our spend in advertising, which reduced our EPS by about 9 cents over the third and fourth quarters.”

He pointed to infrastructure and technology investments for operational excellence and an expanded digital presence, which he said enabled Ethan Allen to integrate personal services with technology-all under the umbrella of a socially responsible approach to business.

While he was pleased that Ethan Allen was awarded a contract from the General Service Administration in fiscal 2018, new products for the contract and short delivery times pressured gross margins for the wholesales segment.

“In addition, raw material costs increased during the year, further impacting our gross margins,” Kathwari said. “Fortunately, these disruptions stabilized during the fourth quarter. We ended the fiscal year with our backlogs well-positioned, with the wholesale backlog increasing 19.3% compared to the prior year end and retail division backlog decreasing by 2.3% due to improvements in shipments.

“We are pleased with both our increase in sales and our earnings in the fourth quarter.  Although our retail division written orders were lower in the fourth quarter, we believe we are well positioned to grow our sales and earnings as we move forward.”

Click here for the entire Ethan Allen earnings release.

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