Ethan Allen Reports Positive Fiscal 2025 Third Quarter Results

Ethan Allen Interiors Inc., a leading interior design destination, has released its financial results for the fiscal 2025 third quarter ended March 31, 2025. The company has demonstrated resilience in a challenging economic environment, marked by high interest rates and a sluggish housing market.

Financial Highlights

For the third quarter of fiscal 2025, Ethan Allen reported consolidated net sales of $142.7 million, a slight decrease from $146.4 million in the same period last year. The gross margin remained stable at 61.2%, compared to 61.3% in the previous year. Adjusted operating income was $11.3 million, with an adjusted operating margin of 8.0%, down from 10.0% last year. Adjusted diluted EPS stood at $0.38, a decrease from $0.48 in the prior year.

The company generated $10.2 million in cash from operations, contributing to a total cash and investments balance of $183.0 million, with no outstanding debt. This financial strength allowed Ethan Allen to continue its tradition of returning capital to shareholders, paying a regular quarterly cash dividend of $10.0 million during the third quarter.

Business and Operational Highlights

Ethan Allen's vertically integrated business model, which includes manufacturing approximately 75% of its furniture in North American facilities, has been a strategic advantage. The company operates 174 retail design centers in North America, including 143 company-operated and 31 independently owned locations. During the quarter, new retail design centers were opened in Middleton, Wisconsin, and Toronto, Canada.

Despite a decline in written orders, with wholesale segment orders down 11.2% and retail segment orders down 13.0%, the company maintained a strong gross margin. Inventory levels increased to $150.4 million, reflecting the introduction of new products and the opening of new design centers.

Strategic Initiatives and Corporate Developments

Ethan Allen has focused on strengthening various areas of its enterprise, including talent, product offerings, marketing, retail network, manufacturing, logistics, technology, and social responsibility. The company has reduced its headcount by 35.7% since 2019, benefiting from ongoing investments in technology. Additionally, Ethan Allen's upholstery operations in Silao, Mexico, were recognized as "Empresa Socialmente Responsible" for the sixth consecutive year.

The company has a history of returning capital to shareholders, having paid cash dividends totaling $711.3 million and repurchased $625.1 million of common stock since going public in 1993. The Board of Directors recently approved a regular quarterly cash dividend of $0.39 per share, payable on May 29, 2025.

Management's Perspective

Farooq Kathwari, Ethan Allen’s Chairman, President, and CEO, expressed satisfaction with the third quarter results, highlighting the company's ability to operate effectively despite industry challenges. He emphasized the strategic advantage of Ethan Allen's vertically integrated enterprise and the continued investments in various areas of the business.

Mr. Kathwari also noted the company's strong financial position, with significant cash reserves and no outstanding debt, which supports ongoing capital returns to shareholders and future growth initiatives.

Future Outlook

Looking ahead, Ethan Allen remains cautiously optimistic about its future prospects. The company plans to continue strengthening its enterprise and leveraging its strategic advantages to navigate the challenging economic environment. The focus will remain on enhancing product offerings, expanding the retail network, and maintaining financial stability.

SEC Filing: ETHAN ALLEN INTERIORS INC [ ETD ] - 8-K - May. 05, 2025