DANBURY, Conn. — Although current year sales are continuing to show the impact of lower production and supply chain disruptions related to COVID-19, Ethan Allen reported increases in it operating margins, earnings per share and retail written orders for the first fiscal quarter of 2021.
Consolidated net sales for the period ended Sept. 30 were $151.1 million, down 13.1% compared with $173.9 million in the year-ago period.
“Production levels throughout our manufacturing increased steadily during the first quarter, and by the end of the second quarter we expect to return back to pre-COVID-19 pandemic levels, which should reduce our high undelivered order backlogs and provide us an opportunity to increase operating margin,” said Farooq Kathwari, chairman, president and CEO, in the earnings report.
“Our unique vertical structure, whereby we produce about 75% of what we sell, mostly on a custom made-to-order basis in our own North American manufacturing plants, allows us to maintain stronger service levels with greater control over inventory. We continued our marketing efforts and growth with our relevant offerings as well as our complimentary personal interior design service combined with technology and in-home white-glove delivery.”
Still, consolidated gross margin edged up from 56.3% last year to 56.8% in this year’s first quarter. Adjusted diluted EPS also were up slightly, at 36 cents per share compared with 35 cents per share in last year’s first quarter.
Retail written order increased 10.8%, including 11.8% growth in September along, and the company ended the quarter with cash on hand of $62 million, having paid off all of its remaining $50 million in debt.
“Our retail written orders in October also continue to be very strong compared to the previous year, increasing over 50% month-to-date,” noted Kathwari.
The wholesale segment saw net sales decrease 3.9% to $97.3 million, primarily due to a 24.9% decline in sales from a government contract combined with lower sales to the international retail network.
For the company-operated design centers, net sales decline 14% to $118.1 million, which Ethan Allen attributed to COVID-19 impact. There were 144 design centers as of Sept.30, compared with 145 a year ago.
“We continue to see increased demand for our products in our design centers and online. We will continue to focus on our advantages, including a strong retail network, our vertical structure and increasing the use of technology in all aspects of our enterprise, while also maintaining our focus on strong governance and social responsibility.”
Kathwari noted that the company is “cautiously optimistic” heading into the fall and winter months, balancing current demand trends against the ongoing impact of the pandemic.