DANBURY, Ct. - Furniture giant Ethan Allen - number 27 on the FDMC 300 - has announced its coronavirus response plan, which involves temporarily laying off 70 percent of its global workforce. Furloughed employees will receive benefits for up to two months.
"As you know, we are going through unprecedented times," said CEO Farooq Kathwari. "Our enterprise over the past 88 years has gone through the Great Depression, a World War and several recessions, and we have come out stronger and more vibrant each time. The coronavirus crisis is unique and severe. Never in our history, in fact in world history, has mankind been asked to stay locked up in their homes and businesses asked in mass to close down their operations."
Salaries of remaining employees will be reduced.
"We are taking many steps to manage this crisis with compassion and collaboration. An important aspect is to have cash to continue to exist. Fortunately, we have been prudent and so far, have been debt free. However, we have now taken on debt to ensure we have cash availability to survive this crisis. We have to make tough decisions to conserve cash. We are taking many measures including reduced compensation of our management associates. I have personally decided to take zero salary to June 30th, and we will reduce the salaries of all our associates making a salary of $80,000 and up."
Specifically, the plan involves:
- Design centers, which were originally planned to be closed from March 19th through March 27th, will remain closed as multiple counties and states have imposed shelter in place, or stay at home orders extending through mid to late April.
- The company will continue to pay its affected associates through April 2, 2020.
- Temporary closure of most of its manufacturing facilities, effective immediately.
- The furlough of approximately 70% of its global workforce
- Farooq Kathwari, Ethan Allen’s Chairman, President and CEO will forego his salary through June 30, 2020
- A salary reduction of up to 40% for all senior management and up to 20% for other salaried employees through June 30, 2020
- Board of Directors will reduce their cash compensation by 50% through June 30, 2020
The company will also hunker down on cash flow and expenses:
- Elimination of all non-essential operating expenses so that operations are maintained at minimum levels
- The delay of capital expenditures
- Temporary halt of the share repurchase program
- As previously announced on March 23, 2020, the Company borrowed $80 million under its revolving credit facility. To further increase liquidity and strengthen its financial position, the company borrowed an additional $20 million on March 30, bringing its cash and investments on hand to approximately $110 million as of March 31, 2020.
Ethan Allen Interiors Inc. (NYSE: ETH) is a leading interior design company and manufacturer and retailer of quality home furnishings. The company offers complimentary interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates nine manufacturing facilities including six manufacturing plants and one sawmill in the United States plus one plant each in Mexico and Honduras. Approximately seventy-five percent of its products are made in its North American plants.
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