Due in part to the impact of Hurricanes Harvey and Irma, net sales at Ethan Allen Interiors Inc. for the three months ended Sept. 30 were $181.3 million, a 6.2 percent decrease from the comparable prior year period.
Gross profit was $100.3 million for the quarter, compared with $108.5 million, while gross margin was 55.3 percent compared with 56.1 percent in the comparable prior year period. The reduction in gross profit was primarily due to the hurricanes and disruptions in the manufacturing operations by first production runs, the company said. Retail sales as a percent of total consolidated sales decreased to 78.1 percent from 78.8 percent.
“Despite the challenges of the hurricanes during the quarter and first-run production of new products, our total written orders in our company-operated retail division increased 1.7 percent, which followed an 8.1 percent increase in the prior year first quarter,” said Farooq Kathwari, chairman and CEO of the Danbury company.
He added that total order backlogs increased 61.6 percent at wholesale and 11.6 percent for the retail division, compared to the conclusion of the previous quarter on June 30.
“The wholesale backlog increase also reflects $12.4 million of orders we have received from the U.S. Department of State, including $10.4 million during our fiscal 2018 first quarter,” Kathwari said.
Harvey and Irma disrupted several key markets in which Ethan Allen operates, including 15 design centers in Florida, including 11 company-operated locations; five company-operated design centers in the coastal Carolinas; and 11 design centers in Texas, with five independently operated locations in the Houston market.
Operating expenses for the quarter were $88.8 million or 49 percent of sales, compared with $90.1 million or 46.6 percent of sales in the comparable prior year period. Operating income for the three months was $11.5 million or 6.4 percent of sales, compared with $18.3 million or 9.5 percent of sales in the comparable prior year period.