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Financial, Retail

Ethan Allen Reports Fiscal 2024 and Fourth Quarter Results

8/1/2024
DANBURY, Conn. -- Ethan Allen Interiors Inc.  (NYSE: ETD), a leading interior design destination, today reported its results for the fiscal 2024 full year and fourth quarter ended June 30, 2024 and announced a special cash dividend.

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “We are pleased to report our strong performance in this post-pandemic period. Despite lower demand and reductions in high backlog, we did well. While sales were lower, our consolidated gross margin remained strong at 60.8% compared with 61.5% a year ago and 54.8% for the fourth quarter ended June 30, 2019.”

“We continued strong cash generation and ended the quarter with total cash and investments of $195.8 million, up from $172.7 million a year ago and significantly higher than $20.8 million five years back. Our inventories have been reduced by 12.5% since June 30, 2019 and totaled $142.0 million at June 30, 2024. We continue to strengthen our teams while also reducing headcount, which is down 28.1% since June 30, 2019.”

Mr. Kathwari continued, “During our fiscal year ended June 30, 2024, we distributed $50.3 million of cash dividends bringing our total to $209.6 million in paid regular and special cash dividends over the last five years. We are also pleased to announce that yesterday our Board approved a special cash dividend of $0.40 per share and a regular quarterly cash dividend of $0.39 per share, both payable on August 29, 2024.”

“During the just completed fiscal 2024 year we launched the very important initiative of projecting the Interior Design Destination, which involved major enhancements to our design center projections throughout North America and internationally. We were also recently named as America’s #1 premium furniture retailer by Newsweek for the second year in a row. We look forward to continuing our progress and remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2024 FOURTH QUARTER HIGHLIGHTS*

-- Consolidated net sales of $168.6 million decreased 10.0%
• Retail net sales of $145.1 million were lower by 7.1%
• Wholesale net sales of $91.2 million were lower by 20.3%

-- Written order trends
• Retail segment written orders were lower by 1.3%
• Wholesale segment written orders rose 0.4%

-- Consolidated gross margin of 60.8% was 70 basis points lower than last year due to deleveraging from lower delivered sales, higher inbound freight and a change in product mix partially offset by lower manufacturing raw material input costs, reduced headcount, disciplined promotional activity, a change in sales mix and fewer designer floor sample sales

-- Operating margin of 13.4%; adjusted operating margin of 13.1% compared with 16.3% last year due to fixed cost deleveraging from lower delivered sales, gross margin erosion and incremental advertising partially offset by lower headcount, less variable expenses including lower delivery and commissions, and the ability to maintain a disciplined approach to cost savings and operating expense control; the Company’s selling, general and administrative expenses were down 4.9% and equaled 47.7% of net sales, an increase from 45.1% last year due to lower sales volume relative to fixed costs

-- Advertising expenses were equal to 2.8% of consolidated net sales in the current fourth quarter, up from 1.9% in the prior year period due to additional direct mail campaigns, including the mailing of the Company’s 2024 style book; promotional pricing levels remained disciplined and consistent with a year ago

Other Highlights:

-- Diluted EPS of $0.72 compared with $0.99; adjusted diluted EPS of $0.70

-- Ended the quarter with $195.8 million in total cash and investments with no debt outstanding

-- Generated $26.2 million of cash from operating activities compared with $26.3 million a year ago

-- Paid regular quarterly cash dividends of $0.39 per share, up 8.3% from last year, totaling $10.0 million

FISCAL 2024 FULL YEAR HIGHLIGHTS

-- Consolidated net sales of $646.2 million decreased 18.3%
• Retail net sales of $540.6 million were lower by 18.4%
• Wholesale net sales of $371.1 million were lower by 17.5%

-- Written order trends
• Retail segment written orders decreased 8.4%
• Wholesale segment written orders declined 10.9%

-- Consolidated gross margin rose to 60.8%; adjusted operating margin of 12.1%

-- Diluted EPS of $2.49 compared with $4.13 last year

-- Generated $80.2 million of cash from operating activities compared with $100.7 million a year ago

-- Increased the Company’s regular quarterly cash dividend by 8.3% in April 2024 and paid a $0.50 per share special cash dividend in August 2023; paid total cash dividends of $50.3 million during fiscal 2024

-- Reduced inventory carrying levels by 4.8%; totaled $142.0 million at June 30, 2024

-- Ended the year with 3,404 total associates, down 9.2% from a year ago and 28.1% less than June 2019
For the second year in a row Ethan Allen was named one of America’s Top 10 Retailers by Newsweek, including recognition as the #1 retailer of Premium Furniture

-- Hosted grand reopening events in many of its design centers as part of a series of events unveiling the Company’s next reinvention as the Interior Design Destination; images from each celebration are featured at www.ethanallen.com/grandreopenings

-- New state-of-the-art design centers in The Villages, FL, Avon, OH, New York, NY and Louisville, KY were opened during fiscal 2024 that showcase the Company’s unique vision of American style while combining complimentary interior design services with technology
Ended the fiscal year with 172 retail design centers in North America, including 142 Company-operated and 30 independently owned and operated locations; the Company also has design centers outside North America

-- Announced plans to open additional design centers during fiscal 2025, including in Albuquerque, New Mexico and Watchung, New Jersey
Held the Company’s annual Ethan Allen Day celebration in June to honor the pioneering spirit of its namesake and celebrate the 92-year heritage of Ethan Allen as a proud American brand

-- For the fifth year in a row, the Mexican Center for Corporate Philanthropy and the Alliance for Corporate Social Responsibility recognized Ethan Allen’s upholstery manufacturing operations in Silao, Mexico as environmentally and socially responsible 

For comparison purposes, the Company reported the following financial measures during the pre-pandemic fourth quarter of fiscal 2019:

• Consolidated net sales of $183.9 million
• Consolidated gross margin of 54.8%; adjusted gross margin of 55.9%
• Operating margin of -2.5%; adjusted operating margin of 8.6%
• Diluted loss per share of $0.12; adjusted diluted EPS of $0.46
• Cash and investments of $20.8 million
• Generated $10.9 million of cash from operating activities
• Inventories, net totaled $162.4 million

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