Ethan Allen Profit Dives in Q3
April 24, 2013,
DANBURY, Conn.-A drop in sales along with the absence of an income-tax benefit from last year drove Ethan Allen's third-quarter net income down 84.1 percent, to $4.4 million.
Net sales in the quarter, which ended on March 31, were down 4.4 percent to $168.1 million. Farooq Kathwari, Ethan Allen's chairman and CEO, noted that the third quarter is historically the slowest of the year for the manufacturer/retailer. In addition, the top line in this year's third quarter was affected by high prototype product sales last year, the fact that both Easter and Passover occurred in this year's quarter and lower backlogs due to Hurricane Sandy, Kathwari said.
Also, Ethan Allen posted income tax expense of $2.1 million, as opposed to the $21.8 million non-cash income-tax benefit recorded in last year's third quarter.
Gross margin rose 98 basis points to 54.6 percent. Selling, general and administrative expenses fell 3.9 percent in dollars but rose 26 basis points as a percentage of sales, to 49.4 percent.
Kathwari said Ethan Allen remains focused on increasing sales and improving its cash position. "We remain cautiously optimistic about our performance in our fourth fiscal quarter and next fiscal year, due to the many strong programs already in place and others we will introduce in the coming months," he said.