Ethan Allen Q1 Net Down 10.2 Percent
DANBURY, Conn.-Declines in sales and gross margin dragged down Ethan Allen's first-quarter net income by 10.2 percent, to $9 million.
Net sales in the quarter, which ended on Sept. 30, were off 3.1 percent, finishing at $181.7 million. Farooq Kathwari, Ethan Allen's chairman and CEO, attributed the sales drop to lower backlogs at the beginning of the quarter, a comparison to a strong first quarter of last year and higher clearance sales to make room for the October launch of new products. On a more positive note, Kathwari said, "Our written business by our retail division increased 11.4 percent with comparable written increasing 13.8 percent despite the uncertainty expressed by our clients as a result of the recent government shutdown."
Gross margin was down 126 basis points to 54.4 percent. Selling, general and administrative expenses fell 4.1 percent in dollars and 46 basis points as a percentage of sales, to 45.6 percent.
Kathwari said Ethan Allen is making progress in its attempt to reintroduce itself as a fashion brand and reach a larger customer base. He added that the company's business in the quarter could have been stronger, if not for the "bickering" in Washington resulting in the government shutdown. "We now see our clients starting to get more focused on decorating their homes and, as a result, we remain cautiously optimistic as we move forward," he said.