Ethan Allen furloughs 70% of workforce

Ethan Allen Interiors is temporarily furloughing 70 percent of its workforce without pay, with the furniture company providing an early glimpse into one Connecticut corporation’s response to the coronavirus pandemic.

The company has multiple design centers in Connecticut that have been shuttered for the duration of social distancing orders in Connecticut and elsewhere, and also operates the Ethan Allen Hotel in Danbury adjacent to its corporate headquarters. As of last June, Ethan Allen employed 4,700 people.

CEO Farooq Kathwari is forgoing his salary through the end of June, with salaried executives and managers seeing their compensation reduced between 20 percent and 40 percent. Employees placed on furlough will continue to receive benefits for up to two months.

In a statement, Kathwari referenced “tough decisions” he has approved, including the company borrowing $110 million in a departure from its past policy of remaining debt-free. The company has suspended most manufacturing, with its U.S. plants located in Vermont and North Carolina.

“The coronavirus crisis is unique and severe,” Kathwari said in a statement Wednesday. “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.”

Over the final six months of 2019, Ethan Allen profits totaled $21 million on $348 million in revenue, with sales down 10 percent from the same stretch a year earlier.

The company listed administrative and operational expenses at $175 million and “cost of sales” expenses of $157 million, entering this year with $28 million in cash and another $13 million in accounts receivable.

Ethan Allen also has suspended a share repurchase program the board had authorized, with no immediate decision on whether to pay its regular quarterly dividend to investors.

“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,” Kathwari said. “We are taking many steps to manage this crisis with compassion and collaboration. An important aspect is to have cash to continue to exist.”