Good afternoon, and welcome to the Ethan Allen Fiscal 2019 First Quarter Analyst Conference Call. At this time, all lines are in a listen only mode. Later we will conduct a question-and-answer session and instructions will be provided at that time. (Operator Instructions)
It is now my pleasure to introduce your host, Corey Whitely, EVP of Administration and CFO. Thank you. You may begin.
Thank you, James. Good afternoon and welcome to Ethan Allen's Conference Call for our First Quarter ended September 30, 2018. This conference call is being recorded and webcast live on ethanallen.com, where you will also find our press release, which contains supporting details, including reconciliations of non-GAAP information referred to in the release and on this call.
(Forward-Looking Cautionary Statements)
After, I provide some brief details on the financial results, our Chairman and CEO, Farooq Kathwari, will provide updates on the business and our ongoing growth initiatives. We'll then open up the telephone lines for questions.
We had our fourth consecutive quarter consolidated net sales increases with our fiscal 2019 first quarter sales of $187.8 million, increasing 3.6% compared to the prior year period. Our improved manufacturing efficiencies helped drive the 5.8% increase in wholesale sales and 2.6% increase in retail sales. The wholesale increase reflected strong shipments to our retail network and increased contract business, including strong GSA orders and shipments during the quarter. Our wholesale backlogs are current and reflect normalized levels. Our consolidated gross margin for the quarter was 54%, primarily reflecting increased raw material costs in our upholstery programs and 77.3% mix of retail sales as a percent of consolidated sales compared to the higher 78.1% mix in the prior year.
We are closely watching the current international trade dispute situation to assess the potential impact on our gross margins. Because we currently make 75% of what we sell in our North American workshops, we believe we are fairly well positioned to minimize the impact from the international trade disputes.
Our first quarter operating expenses were $89.7 million, an increase of 2%. The increase is primarily driven by variable costs related to increased sales and our advertising expense, which increased 12.8% during the quarter as we continue to expand our marketing programs.
For the quarter, the operating margin was 6.3%, net income of $8.8 million with EPS of $0.33, an increase of 17.9% over prior year adjusted EPS.
Turning to the balance sheet. We generated $24.4 million of cash from our operating activities during the quarter. We paid $5.1 million of dividends, and we ended the quarter with cash and securities of $39.6 million. We had no debt outstanding under our credit facility. Our effective tax rate was 24.9% in the quarter as a result of the Tax Cut and Jobs Act. We expect our effective rate for the 2019 fiscal year will be in the range of 24.5% to 25.5%.
With that, I will turn the call over to Farooq.
Thank you, Corey. As we mentioned in our press release, our focus
EVP of Administration and CFO
Chairman, President & CEO
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