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Investing.com -- Shares of Ethan Allen Interiors Inc . (NYSE: NYSE:ETD) rose 12.5% today, as investors focused on the company’s positive written order trends, despite a miss on quarterly revenue and earnings expectations. The home furnishings company reported a sequential acceleration in orders that surpassed those of its peers, which seemed to overshadow the lower-than-anticipated financial results for the fiscal 2025 second quarter ended December 31, 2024.
Ethan Allen’s second quarter consolidated net sales were $157.3 million, down from $167.3 million in the same quarter the previous year, while diluted earnings per share (EPS) came in at $0.59, a drop from the prior year’s $0.68. However, the company’s retail segment written orders increased by 15.8%, and wholesale segment written orders rose by 14.3%. This rebound in order trends provided a silver lining for investors amidst a challenging political and economic landscape.
According to Keybanc analyst Bradley Thomas, "ETD reported strong written order trends in F2Q, sequentially accelerating by >22% and outpacing the seq. improvement reported by peers." The company’s performance was attributed to a 25%-off promotion in December, new product offerings, and improved conversion rates. Management noted that while January trends softened due to weather conditions, areas where the weather had improved continued to show encouraging trends.
Ethan Allen’s CEO, Farooq Kathwari, expressed satisfaction with the company’s performance and its position as a vertically integrated enterprise. The company’s manufacturing capabilities, with approximately 75% of its furniture produced in its North American facilities, were highlighted as a significant advantage. Kathwari also mentioned the company’s focus on the future, emphasizing their relevant high-quality products and interior design services supported by advanced technology.
Despite the downturn in net sales and EPS compared to the same period last year, Ethan Allen ended the quarter with a strong balance sheet, boasting total cash and investments of $184.2 million, an increase from the year prior. The company also paid $10.0 million in cash dividends during the quarter and announced a regular quarterly cash dividend of $0.39 per share, payable on February 26, 2025.
Investors appeared to look past the immediate financial discrepancies, focusing instead on the company’s prospects for recovery in housing and home-related spending projected for the years 2025-2027. However, the analyst warned that the industry might still experience volatility in the first half of 2025, given the soft housing market and the erratic spending patterns observed in recent years.
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