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Ethan Allen Interiors Inc. (ETD - Free Report) has seen sales plunge as the market conditions in the furniture industry are challenging. This Zacks Rank #5 (Strong Sell) has missed on earnings three quarters in a row.
Ethan Allen is a furniture retailer that operates design centers throughout the United States which offer complimentary interior design service.
It manufactures 75% of its custom products in North America.
Another Earnings Miss in the Fiscal Third Quarter
On Apr 24, 2024, Ethan Allen reported its fiscal third quarter 2024 earnings. It missed on the Zacks Consensus by $0.18 reporting $0.48 versus the consensus of $0.66.
It was the third earnings miss in a row.
Sales fell 21.4% to $146.4 million. Retail sales were down 18.8% to $122.6 million while wholesale net sales fell 21.3% to $89.8 million.
Written orders also continue to decline, with retail falling 8.6% and wholesale tumbling 14.6%.
But Ethan Allen is seeing light at the end of the tunnel as furniture sales return to "normal" following the pandemic furniture buying frenzy.
The company said they are seeing "incremental consumer interest returning back to the home" after consumers had been spending in other areas, especially in travel.
Technology gains has allowed Ethan Allen to reduce its headcount. Compared to the end of the fiscal third quarter in 2019, which was pre-pandemic, it has reduced its headcount by 32.7% to 3,448. Headcount is also down 9.6% year-over-year.
Earnings Estimates Cut Again
But even if there are some green shoots in the business, the analysts are still bearish.
One estimate has been cut in the last month which has pushed the Zacks Consensus down to $2.32 from $2.70 in the last 30 days. That is an earnings decline of 42.4% compared to last year, when it made $4.03.
The analysts don't see much of a turnaround in 2025 either. 1 estimate has been cut for fiscal 2025 in the last month as well. The Zacks Consensus has fallen to $2.45, which indicates just 5.6% earnings growth compared with this year.
Image Source: Zacks Investment Research
Shares Under Pressure
Ethan Allen shares have fallen 6.2% year-to-date on the uncertainty as to the rebound in the furniture industry.
It has an amazing balance sheet, however. Ethan Allen had no debt outstanding as of Mar 31, 2024 and cash on hand of $181.1 million.
It's shareholder friendly. In the third quarter, the company paid $40.3 million in cash dividends to shareholders, including a special cash dividend of $12.7 million, or $0.50 per share paid in Aug 2023, and regular cash dividends totaling $27.6 million, or $0.36 per share.
And even with the challenging macro environment in the furniture industry, Ethan Allen's board recently raised the quarterly cash dividend by 8.3% to $0.39 per share.
That's a dividend yield of 5.2%.
The furniture industry is seeking to return to "normal" levels of activity following the pandemic frenzy. Investors may want to wait for a clear bottom in the sales and earnings to hit before jumping in on Ethan Allen. Although, it's paying the juicy dividend to reward you for your patience.
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Bear of the Day: Ethan Allen (ETD)
Ethan Allen Interiors Inc. (ETD - Free Report) has seen sales plunge as the market conditions in the furniture industry are challenging. This Zacks Rank #5 (Strong Sell) has missed on earnings three quarters in a row.
Ethan Allen is a furniture retailer that operates design centers throughout the United States which offer complimentary interior design service.
It manufactures 75% of its custom products in North America.
Another Earnings Miss in the Fiscal Third Quarter
On Apr 24, 2024, Ethan Allen reported its fiscal third quarter 2024 earnings. It missed on the Zacks Consensus by $0.18 reporting $0.48 versus the consensus of $0.66.
It was the third earnings miss in a row.
Sales fell 21.4% to $146.4 million. Retail sales were down 18.8% to $122.6 million while wholesale net sales fell 21.3% to $89.8 million.
Written orders also continue to decline, with retail falling 8.6% and wholesale tumbling 14.6%.
But Ethan Allen is seeing light at the end of the tunnel as furniture sales return to "normal" following the pandemic furniture buying frenzy.
The company said they are seeing "incremental consumer interest returning back to the home" after consumers had been spending in other areas, especially in travel.
Technology gains has allowed Ethan Allen to reduce its headcount. Compared to the end of the fiscal third quarter in 2019, which was pre-pandemic, it has reduced its headcount by 32.7% to 3,448. Headcount is also down 9.6% year-over-year.
Earnings Estimates Cut Again
But even if there are some green shoots in the business, the analysts are still bearish.
One estimate has been cut in the last month which has pushed the Zacks Consensus down to $2.32 from $2.70 in the last 30 days. That is an earnings decline of 42.4% compared to last year, when it made $4.03.
The analysts don't see much of a turnaround in 2025 either. 1 estimate has been cut for fiscal 2025 in the last month as well. The Zacks Consensus has fallen to $2.45, which indicates just 5.6% earnings growth compared with this year.
Image Source: Zacks Investment Research
Shares Under Pressure
Ethan Allen shares have fallen 6.2% year-to-date on the uncertainty as to the rebound in the furniture industry.
It has an amazing balance sheet, however. Ethan Allen had no debt outstanding as of Mar 31, 2024 and cash on hand of $181.1 million.
It's shareholder friendly. In the third quarter, the company paid $40.3 million in cash dividends to shareholders, including a special cash dividend of $12.7 million, or $0.50 per share paid in Aug 2023, and regular cash dividends totaling $27.6 million, or $0.36 per share.
And even with the challenging macro environment in the furniture industry, Ethan Allen's board recently raised the quarterly cash dividend by 8.3% to $0.39 per share.
That's a dividend yield of 5.2%.
The furniture industry is seeking to return to "normal" levels of activity following the pandemic frenzy. Investors may want to wait for a clear bottom in the sales and earnings to hit before jumping in on Ethan Allen. Although, it's paying the juicy dividend to reward you for your patience.