DANBURY, Conn.—M. Farooq Kathwari, Chairman, President, and CEO of Ethan Allen (NYSE:ETD) Interiors Inc. (NYSE:ETD), has sold shares in the company amounting to a total value of $330,309. The transactions were executed on October 17, 2024, at a price of $30.87 per share.
The sales included 10,000 shares of common stock, reducing Kathwari's direct ownership to 1,698,905 shares following the transactions. Additionally, smaller transactions involved trusts benefiting Kathwari's family members, with each trust selling 175 shares at the same price.
This activity was conducted under a pre-established Rule 10b5-1 trading plan, adopted by Kathwari on March 14, 2024, and effective from June 17, 2024. The plan had been previously disclosed in Ethan Allen's quarterly report filed in April 2024. Furthermore, the Irfan Kathwari Foundation, which Kathwari is deemed to beneficially own but has no pecuniary interest in, also sold 8,000 shares as part of this trading plan.
In other recent news, Ethan Allen demonstrated robust financial performance in its fiscal 2024 fourth quarter and full-year results, achieving a gross margin of 60.9% and an adjusted operating margin of 13.1%. Despite decreased demand and backlogs, the company concluded the year with $195.8 million in cash and equivalents and a 12.5% reduction in inventory rates. The company's retail division showed signs of improvement, even as international sales and wholesale orders faced challenges due to COVID-19 and geopolitical issues.
Ethan Allen has plans to enhance its existing retail design centers and prioritize new product development, with a significant product introduction anticipated by next April. The company is strategically focusing on technology, talent, and social responsibility in the upcoming year. However, the company experienced a decrease in international sales by around 30%, a 20% decrease in wholesale sales, and a 9% drop in wholesale orders, reflecting international market weakness.
Despite these challenges, Ethan Allen managed to minimize the reduction in written orders and has shown signs of progress with its State Department contract. The company's strong manufacturing base supports its confidence in introducing more new products in the next year. These recent developments underscore Ethan Allen's resilience and its strategic focus on quality, value, service, and technological integration.
InvestingPro Insights
In light of M. Farooq Kathwari's recent stock sale, it's worth examining Ethan Allen Interiors Inc .'s (NYSE:ETD) financial health and market position. According to InvestingPro data, the company boasts a market capitalization of $792.4 million and trades at a P/E ratio of 12.52, suggesting a relatively modest valuation compared to industry peers.
Ethan Allen's financial strength is underscored by two key InvestingPro Tips. First, the company "holds more cash than debt on its balance sheet," indicating a solid financial foundation. This conservative approach to leverage may provide reassurance to investors concerned about the insider selling activity. Second, Ethan Allen "pays a significant dividend to shareholders," with a current dividend yield of 6.31%. This generous payout policy demonstrates the company's commitment to returning value to shareholders, which could help maintain investor confidence despite the CEO's stock sale.
The company's revenue for the last twelve months as of Q4 2024 stands at $646.22 million, with a gross profit margin of 60.82%, reflecting Ethan Allen's ability to maintain pricing power in the competitive home furnishings market. While revenue growth has slowed, with a -18.34% decline over the same period, the company's strong margins and dividend policy suggest a focus on profitability and shareholder returns.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights, with 7 more tips available for Ethan Allen Interiors Inc. These tips could provide valuable context for understanding the company's long-term prospects beyond recent insider transactions.
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