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Ethan Allen (ETD) Q2 Earnings & Revenues Lag, Margins Fall
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Ethan Allen Interiors Inc. (ETD - Free Report) reported tepid results for the second quarter of fiscal 2024 (ended Dec 31, 2023). In the quarter, earnings and net sales missed the Zacks Consensus Estimate and declined on a year-over-year basis.
The downtrend in the quarterly results is attributable to lower delivered volume, continued softness in economy, lower incoming written orders and reduced available backlog. Also, slow recovery from flooding within the company’s Orleans, VT, wood furniture manufacturing plant caused the downtrend. The impacts from these aspects were reflected in reduced retail sales through the company-operated design centers, along with a decline in wholesale net shipments.
ETD’s prior-year results were recorded high as it witnessed impressive growth in sales thanks to strong consumer demand for housing decor during the pandemic period. The company considered the period between fiscal 2021 and 2023 as the pandemic period. Thus, compared with this period, the reporting quarter’s results were on the lower side.
Following the earnings release, shares of this manufacturer and retailer of home furnishings have declined 8.1% after the trading hours on Jan 24.
Inside the Headlines
In the fiscal second quarter, adjusted earnings per share (EPS) of 67 cents missed the Zacks Consensus Estimate of 76 cents by 11.8%. The metric also declined 39.1% from $1.10 reported a year ago.
Ethan Allen Interiors Inc. Price, Consensus and EPS Surprise
Net sales of $167.3 million missed the consensus mark of $179.2 million by 6.7% and decreased 17.7% year over year.
Segmental Performance
Wholesale: This segment’s quarterly net sales (including intersegment sales to the retail segment) declined 14.7% to $90.6 million compared with the prior year’s reported value of $106.3 million. Under this segment, international net sales were up 8.3% year over year thanks to an increase in net sales to China.
The wholesale written orders, which represent orders booked through all of ETD’s channels, were down 10.9% year over year. This was primarily caused by soft home furnishings market, a slowing economy, inflationary pressures, ongoing high interest rates and a slow housing market.
Furthermore, wholesale backlog as of second-quarter fiscal 2024-end was $54.9 million, down 30.1% from the prior-year quarter, on the back of improved delivery times during fiscal 2024.
Retail: The net sales of this segment declined 19% to $139.2 million compared with the prior year’s reported value of $171.8 million. This downtrend was caused by a decline in net sales of 19.2% within the United States and 10.1% from Canadian design centers.
The retail written orders declined by 9.4% year over year on the back of continued softness in economy, lowered discretionary home-related spending, reduced design center traffic and a slow housing market.
Operating Highlights
The gross margin was 60.2%, down 80 basis points (bps) from the year-ago period. The decrease was due to deleveraging from lower unit volume combined with a change in sales as well as product mix. This was partially offset by lower manufacturing input costs and reduced headcount.
Selling, general and administrative expenses were 47.3% of net revenues, reflecting an increase of 440 bps year over year. Adjusted operating margin declined 530 bps year over year to 12.8%.
Financials
As of Dec 31, 2023, Ethan Allen reported cash and cash equivalents of $55.1 million, down from $62.1 million at fiscal 2023-end.
Net inventories, as of second-quarter fiscal 2024, was $140.9 million, down from $149.2 million reported at fiscal 2023-end
Net cash from operating activities totaled $30.3 million in the first six months of fiscal 2024 compared with $40.9 million a year ago.
Zacks Rank & Key Picks
Ethan Allen currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Retail-Wholesale sector.
WING has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has risen 80.4% in the past year. The Zacks Consensus Estimate for WING’s 2024 sales and EPS suggests an increase of 16.2% and 19.5%, respectively, from the year-ago levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently flaunts a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 28.3%, on average. The stock has risen 44.5% in the past year.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates a rise of 10.6% and 15.5%, respectively, from the year-ago levels.
Casey's General Stores, Inc. (CASY - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 17.8%, on average. The stock has increased 22.3% in the past year.
The Zacks Consensus Estimate for CASY’s fiscal 2024 sales and EPS suggests an improvement of 0.3% and 9%, respectively, from the year-ago levels.
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Ethan Allen (ETD) Q2 Earnings & Revenues Lag, Margins Fall
Ethan Allen Interiors Inc. (ETD - Free Report) reported tepid results for the second quarter of fiscal 2024 (ended Dec 31, 2023). In the quarter, earnings and net sales missed the Zacks Consensus Estimate and declined on a year-over-year basis.
The downtrend in the quarterly results is attributable to lower delivered volume, continued softness in economy, lower incoming written orders and reduced available backlog. Also, slow recovery from flooding within the company’s Orleans, VT, wood furniture manufacturing plant caused the downtrend. The impacts from these aspects were reflected in reduced retail sales through the company-operated design centers, along with a decline in wholesale net shipments.
ETD’s prior-year results were recorded high as it witnessed impressive growth in sales thanks to strong consumer demand for housing decor during the pandemic period. The company considered the period between fiscal 2021 and 2023 as the pandemic period. Thus, compared with this period, the reporting quarter’s results were on the lower side.
Following the earnings release, shares of this manufacturer and retailer of home furnishings have declined 8.1% after the trading hours on Jan 24.
Inside the Headlines
In the fiscal second quarter, adjusted earnings per share (EPS) of 67 cents missed the Zacks Consensus Estimate of 76 cents by 11.8%. The metric also declined 39.1% from $1.10 reported a year ago.
Ethan Allen Interiors Inc. Price, Consensus and EPS Surprise
Ethan Allen Interiors Inc. price-consensus-eps-surprise-chart | Ethan Allen Interiors Inc. Quote
Net sales of $167.3 million missed the consensus mark of $179.2 million by 6.7% and decreased 17.7% year over year.
Segmental Performance
Wholesale: This segment’s quarterly net sales (including intersegment sales to the retail segment) declined 14.7% to $90.6 million compared with the prior year’s reported value of $106.3 million. Under this segment, international net sales were up 8.3% year over year thanks to an increase in net sales to China.
The wholesale written orders, which represent orders booked through all of ETD’s channels, were down 10.9% year over year. This was primarily caused by soft home furnishings market, a slowing economy, inflationary pressures, ongoing high interest rates and a slow housing market.
Furthermore, wholesale backlog as of second-quarter fiscal 2024-end was $54.9 million, down 30.1% from the prior-year quarter, on the back of improved delivery times during fiscal 2024.
Retail: The net sales of this segment declined 19% to $139.2 million compared with the prior year’s reported value of $171.8 million. This downtrend was caused by a decline in net sales of 19.2% within the United States and 10.1% from Canadian design centers.
The retail written orders declined by 9.4% year over year on the back of continued softness in economy, lowered discretionary home-related spending, reduced design center traffic and a slow housing market.
Operating Highlights
The gross margin was 60.2%, down 80 basis points (bps) from the year-ago period. The decrease was due to deleveraging from lower unit volume combined with a change in sales as well as product mix. This was partially offset by lower manufacturing input costs and reduced headcount.
Selling, general and administrative expenses were 47.3% of net revenues, reflecting an increase of 440 bps year over year. Adjusted operating margin declined 530 bps year over year to 12.8%.
Financials
As of Dec 31, 2023, Ethan Allen reported cash and cash equivalents of $55.1 million, down from $62.1 million at fiscal 2023-end.
Net inventories, as of second-quarter fiscal 2024, was $140.9 million, down from $149.2 million reported at fiscal 2023-end
Net cash from operating activities totaled $30.3 million in the first six months of fiscal 2024 compared with $40.9 million a year ago.
Zacks Rank & Key Picks
Ethan Allen currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Retail-Wholesale sector.
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
WING has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has risen 80.4% in the past year. The Zacks Consensus Estimate for WING’s 2024 sales and EPS suggests an increase of 16.2% and 19.5%, respectively, from the year-ago levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently flaunts a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 28.3%, on average. The stock has risen 44.5% in the past year.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates a rise of 10.6% and 15.5%, respectively, from the year-ago levels.
Casey's General Stores, Inc. (CASY - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 17.8%, on average. The stock has increased 22.3% in the past year.
The Zacks Consensus Estimate for CASY’s fiscal 2024 sales and EPS suggests an improvement of 0.3% and 9%, respectively, from the year-ago levels.