Ethan Allen Interiors Inc. (NYSE:ETH) Q1 2019 Earnings Conference Call Transcript

Oct 24, 2018 • 05:00 pm ET

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Ethan Allen Interiors Inc. (NYSE:ETH) Q1 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) Budd Bugatch, Raymond James.

Executive
Farooq Kathwari

Name, but a lot -- you got to, we got to fix your name.

Analyst
Budd Bugatch

Well, I think we'll have to, we'll have to work on that Farooq, we have an extra syllable in the names today, so that was all good. Talk to us a little bit about order rates. You talk in the release about the fact that rates were down because order rates were down overall in retail because of the Canada situation. Can you give us a little bit of a feel of how that developed over the quarter as well? I think you may have ended better than you began because of the introduction of the lifestyle product.

Executive
Farooq Kathwari

Yes. We did mention that our order -- you're talking about orders in our Retail Division?

Analyst
Budd Bugatch

Yes, sir.

Executive
Farooq Kathwari

And there, what we see is that we increased them -- they overall increased by about 0.9%. As I said, the Canadian design centers were down about 25%. But again, in July, our orders -- written orders decreased 8.9%, August increased by 4.1% and increased by 5.2%.

Analyst
Budd Bugatch

And so far, we're in October now, and can you -- is the momentum continuing? Or is it -- has it subsided?

Executive
Farooq Kathwari

Well, as you know, the last week of the month is where we get about almost 40% -- 30% to 50% of our business. So we have very strong programs. People are confident. But the next 5, 6, 7 days will determine what happens in October. But overall, we've got very, very strong programs out there.

Analyst
Budd Bugatch

Okay. And you said you've increased advertising by 12.8%. If I'm -- that number, is it about $8.3 million? Is that the number you average? Or do we have a wrong beginning number?

Executive
Farooq Kathwari

No, that's exactly right. It's $8.3 million. And just, Budd, as I'm sure this question will come in advertising, I'll also just mention it upfront, as we move forward, last year we spent $8.6 million, which was about 4.3% of advertising in our second quarter. But then we expand -- we spent a lot of money in the third and the fourth quarter, as you know, in the third quarter, we spent $13.8 million. And in the fourth quarter, we spent $13.5 million. And it was on a very strong national television campaign. It did get our message across. But as we know, it didn't have as much of an impact in bringing sales. So we all know that. So this year, the good news is we'll spend money -- strong money but we are not going to spend $13.8 million in the third and the fourth quarter. It will still be strong but we will spend less money.

Analyst
Budd Bugatch

Okay. And can you quantify for us the amount of GSA orders or GSA revenues that are in the wholesale segment?

Executive
Farooq Kathwari

Corey? As I said, Budd, the orders have been negatively impacted because of the competitor who was bidding at such, such low prices. The government benefited. It