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Ethan Allen retail division sales rise just 0.5% in Q3FY13
24
Apr '13
Consolidated net sales for the quarter were $168.1 million, a decrease of 4.4% compared with $175.9 million the prior year which grew 8.0%. The Company’s Retail division net sales of $132.1 million increased 0.5% over the 12.3% growth the prior year.

Comparable design center net sales also grew 0.5% this quarter over the 9.4% growth the prior year. Retail division written orders during the quarter were $28 million greater than their net sales during the quarter, but were 2.4% lower than written orders the prior year third quarter which grew 11.0%. Comparable design center written orders were also 2.4% lower than the prior year.

Adjusted earnings for the quarter grew 50% to $0.21 per diluted share or $6.1 million from $0.14 per diluted share or $4.0 million in the prior year quarter. Year to date adjusted earnings grew 44% to $0.98 per diluted share or $28.5 million from $0.68 per diluted share or $19.7 million the prior period.

The Company’s retail division adjusted operating profit improved by $7.3 million in the quarter to $0.7 million or 0.6% of net sales on a 0.5% increase in net sales compared to the prior year quarter. Year to date, the retail division adjusted operating profit improved by $18.9 million to $10.3 million or 2.4% of net sales on a 4.2% increase in net sales over the prior year to date.

Cash and securities as of March 31, 2013 grew to $117.3 million from $99.8 million the prior year while paying $19.6 million in dividends year to date versus $6.0 million the prior year to date period and managing our inventories at $142 million, equal to the prior year. Year to date, we have reduced our inventories by 9% or $13.7 million.

US GAAP net income for the quarter ended March 31, 2013 was $4.4 million or $0.15 per diluted share compared with $27.5 million or $0.94 per diluted share in the prior year quarter which included $23.9 million in non-cash tax benefits. Please refer to the attached reconciliations of our GAAP to non-GAAP measures.

Farooq Kathwari, Chairman and CEO commented, “While our third quarter is historically our seasonally slowest delivered sales quarter, our written and delivered sales growth rates this quarter were affected by several factors including: high prior year prototype product sales, adverse timing of the Easter and Passover holidays falling within the current year quarter, and entering the quarter with lower backlogs due to Hurricane Sandy.

"This quarter, we also had lower shipments to our retailer in China. While their sales of Ethan Allen products have grown nicely, they had accumulated inventory in anticipation of even higher sales and to support a greater number of design center openings.”

Mr. Kathwari continued, “We have continued to aggressively manage our expenses and are pleased that our adjusted earnings this quarter improved 50% to $0.21 per diluted share. This reflects the leverage of our vertically integrated enterprise which we continue to make more efficient.

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