Ethan Allen (ETH) Misses Q3 EPS by 4c

Ethan Allen (NYSE: ETH) reported Q3 EPS of $0.02, $0.04 worse than the analyst estimate of $0.06. Revenue for the quarter came in at $149.8 million versus the consensus estimate of $152.09 million.

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “It has been now almost eight weeks since the Company temporarily closed the Company-operated retail design centers and some of its North American manufacturing operations. I am pleased and proud of the work and attitude of our associates throughout our vertical enterprise during this unprecedented crisis.”

“As we mentioned in our April 22, 2020 press release, our fiscal third quarter results were negatively impacted as a result of the lower order backlog entering the quarter from our transition to a membership model combined with disruptions due to COVID-19. While our third quarter revenues of $150 million were lower than forecasted, we saw strong growth in orders for the first two months of our fiscal third quarter, until the significant disruption in March. In April, with almost all our design centers closed, we were still able to generate about 35% of written orders compared to April 2019. This was due to our interior design associates working remotely utilizing technology we deployed over the last few years, including the Ethan Allen inHome augmented reality app, 3D room planner tool, Live Chat on ethanallen.com and communications tools including Skype and FaceTime,” Mr. Kathwari continued. “We are excited that our design centers are reopening in many markets around the country and we have begun a phased recall of some of our furloughed associates. We are also pleased that we have restarted most of our manufacturing in North America – again phasing in associates and keeping the safety of our teams uppermost in our decisions.”

Mr. Kathwari further stated, “Our vertical integration provides us strong gross margins and operating leverage. During the third quarter ended March 31, 2020, we returned value to stockholders through regular quarterly dividends of $5.5 million and share repurchases of $14 million representing 3.8% of our outstanding shares. In view of the COVID-19 challenges, the Company has decided to temporarily suspend its regular cash dividends and the share repurchase program. We also took other steps to conserve cash including the furlough of approximately 70% of the global workforce, reductions in salaries and elimination of all non-essential operating expenses.”

“Crisis creates opportunity. We are reviewing every aspect of our vertically integrated operations and are confident we will come out stronger. At March 31, 2020 we had cash of $117 million, which included $100 million drawn from our revolving credit facility. We believe our liquidity will be sufficient to fund our operations for at least the next twelve months,” Mr. Kathwari concluded.

For earnings history and earnings-related data on Ethan Allen (ETH) click here.

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