DANBURY, Conn. — Top 100 retailer Ethan Allen’s sales and orders fell by double digits across the board during the second quarter.
For the quarter ended Dec. 31, 2023, total consolidated net sales dropped 17.7% to $167.3 million. Retail net sales took the biggest tumble, down 19% to $139.2 million. Wholesale net sales declined 14.7% to $90.6 million.
Orders fell back in both sectors: down 9.4% in retail and down 10.9% in wholesale.
The company also reduced its inventory carrying levels during the quarter, bringing them down 11.9% to $140.9 million. Farooq Kathwari, Ethan Allen’s Chairman, President and CEO, noted that the Covid era’s record-high backlogs are now returning to pre-pandemic levels.
Although Q2 was marked by lower sales, Ethan Allen cash flows from operating activities soared to $13.59 million from $2.52 million in the year-ago period.
The company reported a consolidated gross margin of 60.2%, down 80 basis points. Lower unit volumes and sales in the product mix were partially offset by lower input costs, including inbound freight, raw material costs and a 31% reduction in headcount.
Operating margin came in at 13%, with the adjusted operating margin at 12.8% compared with 18.1% in last quarter’s quarter. The metric was impacted by fixed cost deleveraging on lower sales as well as incremental costs from the company’s new design centers and the launch of Ethan Allen’s Interior Design Destination initiative.
Kathwari noted that compared to the pre-pandemic Q2 of 2018, investments totaled $167.8 million, up from $38.8 million five years ago.
“We strengthened our balance sheet during the pandemic period, enabling us to return additional capital to shareholders. We have returned $137.9 million to shareholders in the form of cash dividends, an increase of $41.4 million or 42.9% during the three-year period leading up to the pandemic,” he added.