Ethan Allen(US:ETD)2023-04-27 00:01Financial Data and Key Metrics Changes - Consolidated net sales totaled $186.3 million, with a gross margin of 59.9% and an operating margin of 15.5% [34][36] - Adjusted diluted EPS was $0.86, down from $0.93 last year, with SG&A expenses decreasing by 5.7% to 44.7% of net sales [38][39] - Cash and investments stood at $156.2 million with no outstanding debt, and cash generated from operating activities was $33.4 million for the quarter [39][31] Business Line Data and Key Metrics Changes - Retail sales accounted for 81% of consolidated sales, down from 84.4% last year, while wholesale segment written orders decreased by 9.3% compared to last year [6][37] - Retail written orders declined 12.3% due to strong prior year comparisons, but were up 3.6% compared to the third quarter of 2019 [42] - The wholesale backlog was $73.3 million, down 42.2% from a year ago, indicating improved order fulfillment [42] Market Data and Key Metrics Changes - The company noted that demand is softening, with a cautious consumer environment impacting sales trends [19][20] - Backlogs remain approximately 30% higher than pre-pandemic levels, although they are down nearly 40% from the previous year [5][20] Company Strategy and Development Direction - The company launched an interior design destination initiative aimed at enhancing customer engagement and driving traffic to design centers [4][12] - Continued investment in technology and manufacturing efficiency is a priority, with a focus on maintaining strong gross margins and operational efficiency [9][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic environment, emphasizing the need for effective cost management and marketing strategies [60] - The company is prepared to adapt to changing market conditions and consumer behavior, with a focus on maintaining high gross margins [64] Other Important Information - The Board increased the regular quarterly cash dividend by 13% to $0.36 per share, reflecting a commitment to returning capital to shareholders [11][31] - The company has reduced its workforce by 12% since fiscal 2019 while increasing sales, indicating improved operational efficiency [9] Q&A Session Summary Question: What are the sources of SG&A expense reductions? - Management highlighted technology and stronger interior designers as key factors in reducing operating expenses while maintaining sales levels [16][17] Question: How is demand trending, and are there regional differences? - Demand is softening, with cautious consumer behavior observed, but backlogs remain higher than pre-pandemic levels [19][20] Question: What is the company's approach to pricing and dividends? - The company has been selective with price increases, primarily due to fluctuating freight costs, and aims for a dividend yield between 5% and 6% [50][51][84]