Ethan Allen Interiors Inc (ETD) 2025 Q1 法說會逐字稿

Good afternoon and welcome to the Ethan Allen fiscal 2025 first quarter analyst conference call. (Operator Instructions) Please note this conference is being recorded.

下午好，歡迎參加 Ethan Allen 2025 財年第一季分析師電話會議。（操作員說明）請注意，本次會議正在錄製中。

It is now my pleasure to introduce your host, Matt McNulty, Senior Vice President, Chief Financial Officer and Treasurer. Thank you. You may begin.

現在我很高興向您介紹主持人，高級副總裁、財務長兼財務主管馬特·麥克納爾蒂。謝謝。你可以開始了。

Thank you, Shamali. Good afternoon and thank you for joining us today to discuss Ethan Allen's fiscal 2025 first quarter results. With me today is Farooq Kathwari, our Chairman, President and CEO. Mr. Kathwari will open and close our prepared remarks while I will speak to our financial performance midway through. After our prepared remarks, we will then open the call for questions.

謝謝你，沙瑪利。下午好，感謝您今天加入我們討論 Ethan Allen 的 2025 財年第一季業績。今天與我在一起的是我們的董事長、總裁兼執行長 Farooq Kathwari。Kathwari 先生將開始和結束我們準備好的發言，而我將在中途談論我們的財務業績。在我們準備好發言後，我們將開始提問。

Before we begin, I'd like to remind the audience that this call is being transcribed live under the news and events tab on the investor relations page of our website. A replay of today's call will also be made available on our investor relations website. There you will find a copy of our press release which contains reconciliations of non-GAAP financial measures referred to on this call and in the press release. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business.

在我們開始之前，我想提醒觀眾，本次電話會議是在我們網站投資者關係頁面的新聞和事件標籤下進行現場轉錄的。今天電話會議的重播也將在我們的投資者關係網站上提供。您可以在那裡找到我們的新聞稿副本，其中包含本次電話會議和新聞稿中提到的非公認會計準則財務指標的調節表。我們相信非公認會計準則的簡報更能反映了基本的營運趨勢和業務績效。

Our comments today may include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our quarterly report on form 10-Q. Please refer to our SEC filings for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call.

我們今天的評論可能包括前瞻性陳述，這些陳述受到風險和不確定性的影響，可能導致實際結果出現重大差異。我們的 10-Q 季度報告中描述了可能影響我們未來業績的最重要的風險因素。請參閱我們向 SEC 提交的文件，以了解這些風險的完整審查。本公司不承擔更新或修改本次電話會議中討論的任何前瞻性事項的義務。

With that, I am pleased to now turn the call over to Mr. Kathwari.

現在，我很高興將電話轉給 Kathwari 先生。

Thank you, Matt, as stated in our press release, we are pleased with our first quarter fiscal 2025 financial results. We had sales of $154.3 million, continued the strong gross margin of 60.8%, operating income of $17.6 million with a margin of 11.4%. We also continued strong cash generation and ended the quarter with $186.4 million in cash and investments.

謝謝馬特，正如我們在新聞稿中所述，我們對 2025 財年第一季的財務表現感到滿意。我們的銷售額為 1.543 億美元，毛利率持續維持 60.8% 的強勁勢頭，營業收入為 1,760 萬美元，利潤率為 11.4%。我們也持續保持強勁的現金產生能力，本季結束時現金和投資為 1.864 億美元。

We paid $20.2 million in cash dividends during the quarter and the board approved a regular cash dividend of $0.39 per share payable on November 27, 2024. After Matt provides a brief overview of our financial results, I will review our continued focus to strengthen the five key areas of talent, marketing, service, technology, and social responsibility. Matt?

我們在本季支付了 2,020 萬美元的現金股息，董事會批准了將於 2024 年 11 月 27 日支付的每股 0.39 美元的定期現金股息。在馬特簡要概述了我們的財務表現之後，我將回顧我們對加強人才、行銷、服務、技術和社會責任這五個關鍵領域的持續關注。馬特？

Thank you, Mr. Kathwari. Our financial results in the just completed first quarter were highlighted by strong margins and operating cash flow amid a challenging economic environment. Our consolidated net sales were $154.3 million, down 5.8% compared with last year, primarily due to lower contract sales and the decline in delivered unit volume. From a demand perspective our retail segment orders were down 6.8%, while wholesale segment orders decreased 4.8%.

謝謝你，凱瑟瓦里先生。在充滿挑戰的經濟環境下，我們剛完成的第一季的財務表現突顯了強勁的利潤率和營運現金流。我們的綜合淨銷售額為 1.543 億美元，比去年下降 5.8%，主要是由於合約銷售額下降和交付量下降。從需求角度來看，我們的零售部門訂單下降了 6.8%，而批發部門訂單下降了 4.8%。

Lower incoming orders reflect a soft home furnishings market, a housing market that has not yet rebounded and less contract business. On a positive note, we saw an increase in average ticket price, higher designer home calls, more qualified traffic and a strong month of September for incoming contract orders.

新訂單減少反映出家居市場疲軟、房地產市場尚未反彈以及合約業務減少。從積極的方面來看，我們看到平均票價上漲、設計師上門拜訪量增加、合格流量增加以及 9 月份合約訂單強勁。

We ended the quarter with wholesale backlog of $63.9 million, down 15.2% from a year ago, but up $10.4 million since June 30, due to the timing of the incoming contract orders. Strong consolidated gross margin of 60.8% was driven by a change in the sales mix, reduced head count, selective price increases and lower raw material input costs. Adjusted operating margin was 11.5% compared with 12.1% a year ago.

本季末，我們的批發積壓金額為 6,390 萬美元，比去年同期下降 15.2%，但由於收到合約訂單的時間安排，自 6 月 30 日以來增加了 1,040 萬美元。60.8% 的強勁綜合毛利率是由銷售組合的變化、員工人數減少、選擇性提價和原材料投入成本降低所推動的。調整後營業利益率為 11.5%，而去年同期為 12.1%。

Our double-digit operating margin reflects our ability to maintain a disciplined approach to controlling operating expenses. Compared to our pre-pandemic first quarter ended September 2019, our adjusted operating margin has improved 450 basis points due to streamlining our vertically integrated enterprise. Now, I'd like to provide an update on our distribution center located in Old Fort, North Carolina which was impacted by Hurricane Helene in late September. The distribution center suffered a loss of $0.3 million related to damaged inventory and remediation costs as well as a temporary work stoppage and disruption in shipments. We are thankful to report that our associates have returned to work and the distribution center has resumed normal operations. The combined impact of Hurricane Helene and import disruptions in advance of the temporary east coast port strike lowered our first quarter net sales by approximately $2 million which we expect to catch up on during our second quarter. Adjusted diluted EPS was $0.58. For historical context adjusted diluted EPS for the three months ended September 2019 was $0.35. Our effective tax rate was 25.3% for the quarter which varies from the 21% federal statutory rate primarily due to state taxes. Now turning to liquidity, we ended the quarter with a robust balance sheet including cash and investments of $186.4 million and no outstanding debt. We generated $15.1 million of cash from operating activities and reduced inventory levels by 4.3%.

我們兩位數的營業利潤率反映了我們維持嚴格控制營業費用的能力。與截至 2019 年 9 月的疫情前第一季相比，由於精簡了垂直整合的企業，調整後的營業利潤率提高了 450 個基點。現在，我想介紹一下我們位於北卡羅來納州老堡的配送中心的最新情況，該中心在 9 月底受到了颶風海倫的影響。由於庫存損壞、修復成本以及臨時停工和運輸中斷，配送中心蒙受了 30 萬美元的損失。我們很高興地報告，我們的員工已重返工作崗位，配送中心也已恢復正常運作。颶風海倫和東海岸港口臨時罷工之前的進口中斷的綜合影響使我們第一季的淨銷售額減少了約 200 萬美元，我們預計第二季將彌補這一損失。調整後攤薄每股收益為 0.58 美元。就歷史情況而言，截至 2019 年 9 月的三個月調整後攤薄每股收益為 0.35 美元。本季我們的有效稅率為 25.3%，與 21% 的聯邦法定稅率有所不同，主要是由於州稅的原因。現在轉向流動性，我們在本季結束時擁有穩健的資產負債表，包括 1.864 億美元的現金和投資，並且沒有未償債務。我們從經營活動中獲得了 1,510 萬美元的現金，並將庫存水準降低了 4.3%。

Capital expenditures were $3.6 million and included expansion of our manufacturing operations in Mexico, additional investments in technology, retail design center relocations and improvements and remodeling costs associated with our hotel.

資本支出為 360 萬美元，包括擴大我們在墨西哥的製造業務、額外的技術投資、零售設計中心搬遷以及與我們酒店相關的改進和改造成本。

We also continued our practice of returning capital to shareholders in the form of cash dividends. In July, our board declared a special cash dividend of $0.40 per share in addition to a regular quarterly cash dividend of $0.39 per share both of which were paid on August 29. We have paid a special cash dividend in each of the past four years. Also as just announced in our earnings release, our board declared a regular quarterly cash dividend of $0.39 per share which will be paid in November.

我們也繼續以現金分紅的形式向股東返還資本。7 月份，我們的董事會宣布除每股 0.39 美元的常規季度現金股息外，還宣布每股 0.40 美元的特別現金股息，兩者均於 8 月 29 日支付。過去四年，我們每年都會支付特別現金股利。此外，正如我們剛剛在財報中宣布的那樣，我們的董事會宣布定期派發每股 0.39 美元的季度現金股息，將於 11 月支付。

In summary, our vertically integrated business produced a double-digit operating margin during a period marked by industry wide headwinds. We achieved these positive results and generated $15.1 million in operating cash flow while protecting our margins through disciplined investments and solid execution. We ended the quarter with a robust balance sheet and look forward to continuing our progress.

總而言之，我們的垂直整​​合業務在整個產業面臨逆風的時期實現了兩位數的營業利潤率。我們取得了這些積極的成果，產生了 1510 萬美元的營運現金流，同時透過嚴格的投資和紮實的執行保護了我們的利潤。我們以穩健的資產負債表結束了本季度，並期待繼續取得進展。

With that, I will now turn the call back over to Mr. Kathwari.

現在，我將把電話轉回給 Kathwari 先生。

Thank you, Matt. I will briefly discuss our continued focus on the five areas.

謝謝你，馬特。我將簡要討論我們對五個領域的持續關注。

The first is talent. We continue to develop strong teams in our vertically integrated enterprise which includes our retail network, manufacturing, logistics, products, marketing and technology. In marketing and merchandising we have accelerated the introduction of new products under the umbrella of classic design with a modern perspective.

首先是人才。我們繼續在垂直一體化企業中發展強大的團隊，包括零售網路、製造、物流、產品、行銷和技術。在行銷和銷售方面，我們在經典設計和現代視角的保護下加快了新產品的推出。

During the last 18 months, we have completed the redesign of our design centers under the umbrella of an interior design destination with strong interior design and strong technology. This has enabled great productivity with less headcount. The redesigned design centers reflect about 25% less floor display space making it much more efficient. Strong interior design associates coupled with technology is, as I have said, a game changer.

在過去的 18 個月裡，我們在擁有強大室內設計和強大技術的室內設計目的地的保護下完成了設計中心的重新設計。這以更少的人員數量實現了巨大的生產力。重新設計的設計中心減少了約 25% 的地面展示空間，從而提高了效率。正如我所說，強大的室內設計團隊與技術相結合，可以改變遊戲規則。

Next, we have continued to refine our North American manufacturing which makes about 75% of our furniture and custom made on receipt of orders. This is a great differentiator and has provided more design options to our interior designers and clients and also increased productivity and lowered inventory. We have also made improvements to our national and retail logistics enabling us to deliver our products at one price to our clients in North America. Our marketing also benefits from technology with our advertising costs of about 2.3% of sales as compared to about 6% of sales about seven to eight years back.

接下來，我們繼續完善我們的北美製造業，我們約 75% 的家具和訂製家具都是根據訂單生產的。這是一個巨大的差異化因素，為我們的室內設計師和客戶提供了更多的設計選擇，同時也提高了生產力並降低了庫存。我們還改進了國內和零售物流，使我們能夠以統一的價格向北美客戶交付產品。我們的行銷也受惠於技術，我們的廣告成本約佔銷售額的 2.3%，而七到八年前，這一比例約為銷售額的 6%。

We are pleased to continue to maintain strong cash while providing good cash dividends. Quarter ended September 30, we gave cash dividends of $20.2 million and ending with cash of $186.4 million compared to $163.2 million at September 30, 2023.

我們很高興繼續保持強勁的現金，同時提供良好的現金股息。截至 9 月 30 日的季度，我們派發了 2,020 萬美元的現金股息，最終現金為 1.864 億美元，而 2023 年 9 月 30 日為 1.632 億美元。

As we move forward, we are in a good position and remain cautiously optimistic. We are at this stage going through some uncertain political times, both domestically and internationally. And I think that after these elections are over, the chances are we would get some more stability.

在我們前進的過程中，我們處於有利地位，並保持謹慎樂觀。現階段，我們正經歷一些國內和國際上不確定的政治時期。我認為這些選舉結束後，我們很可能會獲得更多的穩定性。

With that, I'm pleased to open for any questions or comments.

至此，我很高興提出任何問題或意見。

(Operator Instructions)

（操作員說明）

Taylor Zick, KeyBanc Capital Market.

Taylor Zick，KeyBanc 資本市場。

Hi there. How are you?

你好呀。你好嗎？

Hey, Farooq. I'm doing well. It's Taylor on for Brad Thomas. I just wanted to start maybe if we can talk about the cadence of written orders during the quarter, trends were a bit softer than fiscal 4Q. So maybe can you talk a little bit more about what you saw? You know what Labor Day trends were like? And then I guess if you have any thoughts on how October is trending so far.

嘿，法魯克。我做得很好。泰勒替補布拉德·托馬斯。我只是想開始，也許我們可以談談本季書面訂單的節奏，趨勢比第四財季要軟一些。那麼也許你能多談談你所看到的嗎？你知道勞動節的趨勢是什麼樣的嗎？然後我想您是否對 10 月迄今為止的趨勢有任何想法。

Yeah, I think that as relatively speaking, our written orders held up and there was not a major change from month to month. I think that when we take a look at our retail sales more or less, I would say they were in terms of the somewhat lower throughout the quarter. It sort of remained without much changes.

是的，我認為相對而言，我們的書面訂單是有效的，每個月都沒有重大變化。我認為，當我們或多或少地審視我們的零售額時，我會說它們是整個季度略低的。它保持不變，沒有太大變化。

Great. And then maybe just to talk about the upcoming election. Farooq you kind of mentioned, I think we all kind of want that behind us, but as we look at a potential outcome here and the potential that there may be tariffs, given 75% of your product is manufactured in North America. I would assume you'd be relatively insulated from any potential tariffs and that could also be a tail end for you if your competitors are impacted. So I guess as you think about that, what are some of the puts and takes as you think about any tariffs?

偉大的。然後也許只是談論即將到來的選舉。你提到的 Farooq，我認為我們都希望這種情況過去，但當我們考慮這裡的潛在結果以及可能存在關稅的可能性時，考慮到你們 75% 的產品是在北美製造的。我認為你相對不會受到任何潛在關稅的影響，如果你的競爭對手受到影響，這也可能成為你的結局。所以我想當你考慮這個問題時，當你考慮任何關稅時，有哪些看跌期權和看跌期權？

Yeah, I mean, there's a lot of talk, we just have to see what happens at this stage. We are, of course, 75% of our products are made in North America, which includes the United States, which includes Mexico and Honduras. That's where we the North American treaty. So we are watching everything. It's a good question. We are watching with all the politics going on. They are of course, talking mostly about tariffs coming internationally from overseas.

是的，我的意思是，有很多討論，我們只需要看看現階段會發生什麼。當然，我們75%的產品是在北美製造的，其中包括美國，其中包括墨西哥和宏都拉斯。這就是我們簽訂北美條約的地方。所以我們正在觀察一切。這是一個好問題。我們正在關注所有政治事件的發生。當然，他們主要談論的是來自海外的國際關稅。

So we don't hear much about changing the North American treaty, but we're watching it carefully. And we also somewhat even though we do pay higher freight for the 25% of the product that we don't make here. But if you were making 75% or 90% of our products overseas, tremendous uncertainty. When you take a look at what's happening with the freight rates coming from overseas, with the war going on with the impact of the Suez Canal, we fortunately are impacted but not only by 25% and 75% we have the benefit here. So we're watching it very carefully. But at this stage, as you mentioned, we do have an advantage.

因此，我們沒有聽到太多關於改變北美條約的消息，但我們正在仔細觀察。儘管我們確實為 25% 的產品不是在這裡生產的，但我們確實支付了更高的運費，但我們也有所保留。但如果我們 75% 或 90% 的產品在海外生產，那就存在巨大的不確定性。當你看看來自海外的運費發生了什麼，隨著戰爭的進行以及蘇伊士運河的影響，我們幸運的是受到了影響，但我們在這裡受益的不僅僅是25%和75%。所以我們正在非常仔細地觀察它。但在現階段，正如你所提到的，我們確實有優勢。

Understood and then maybe if I can squeeze one last one in. Your view, maybe on a potential recovery for the industry in Ethan Allen more broadly, the fed is obviously begin to cut during September. And in general, it looks like those, there's going to be more rates down the road. And I'm curious what your thoughts are on the lag effect between rate cut and then and the impact on your business.

明白了，也許我可以把最後一顆塞進去。您認為，也許從伊森艾倫 (Ethan Allen) 更廣泛的行業潛在復甦來看，聯準會顯然會在 9 月開始降息。總的來說，看起來未來將會有更多的利率。我很好奇您對降息與降息之間的滯後效應以及對您業務的影響有何看法。

Yeah, also keep in mind that we are now over the backlogs that were created during the COVID period that benefited us and everybody else. But now this quarter to a great degree that the past quarter reflected more normal times. So there is a very small decline in our sales, which is pretty good considering the fact that we had already used up the backlogs. So we did pretty good.

是的，也要記住，我們現在已經完成了新冠疫情期間積壓的訂單，這對我們和其他所有人都有好處。但現在這個季度在很大程度上比過去的季度反映了更正常的時期。因此，我們的銷售額下降幅度非常小，考慮到我們已經用完積壓訂單，這已經相當不錯了。所以我們做得很好。

And I think going forward, I think that we are cautiously optimistic. I think we are positioned very, very well in terms of our marketing, we have a very strong network, we have reduced our head count everywhere because as I mentioned in my comments, combining technology and good personal service is key to our vertically integrated enterprise. It's helping our manufacturing and most importantly, it's helping our retail with our interior designers.

我認為展望未來，我們持謹慎樂觀的態度。我認為我們在行銷方面的定位非常非常好，我們擁有非常強大的網絡，我們減少了各地的員工數量，因為正如我在評論中提到的，將技術和良好的個人服務相結合是我們垂直整合企業的關鍵。它幫助我們的製造業，最重要的是，它幫助我們的零售業和室內設計師。

Keep in mind we have 30% less interior designers than we just had a few years back. Doing more business, combining good interior design and technology is critical. So I think we are cautiously optimistic that with this election and all that crazy stuff going out, we should have an opportunity of consumers focusing more on their homes again.

請記住，我們的室內設計師數量比幾年前減少了 30%。開展更多業務，將良好的室內設計與技術相結合至關重要。因此，我認為我們持謹慎樂觀的態度，隨著這次選舉和所有這些瘋狂的事情的發生，我們應該有機會讓消費者再次更加關注他們的房屋。

Got it. Thank you very much. I'll leave it there.

知道了。非常感謝。我會把它留在那裡。

All right, thanks. Yeah.

好的，謝謝。是的。

Cristina Fernández, Telsey Advisory Group.

Cristina Fernández，特爾西諮詢小組。

Hello, Cristina. How are you?

你好，克里斯蒂娜。你好嗎？

Good. Thank you. Hi, Farooq and hi, Matt. I have a couple of questions. I wanted to follow up on the demand trends that you're seeing or that you saw during the quarter. Can you talk about any regional trends and, I guess specific to the states that were impacted by the storms? How, I guess how are those recovering? Are you seeing a lagging effect here as you start as in October, from the storms?

好的。謝謝。嗨，法魯克，嗨，馬特。我有幾個問題。我想跟進您所看到的或本季看到的需求趨勢。您能談談任何區域趨勢嗎？怎麼樣，我猜那些人恢復得怎麼樣了？從十月開始，您是否看到風暴帶來的滯後效應？

Yeah, that's a good question because we were impacted. First of all -- first, we had tremendous floods in Texas, so especially Houston and all that area was impacted. Now, good news is they're getting more or less back to normal. Then we got impacted with the storms in Florida and that also impacted our retail to a great degree. But good news is we've watched very carefully.

是的，這是一個很好的問題，因為我們受到了影響。首先，德克薩斯州發生了巨大的洪水，尤其是休斯頓和所有該地區都受到了影響。現在，好消息是他們或多或少恢復正常。然後我們受到了佛羅裡達州風暴的影響，這也很大程度上影響了我們的零售業。但好消息是我們已經非常仔細地觀察了。

They're all more or less back to operating at a normal level. We did have impact and that also to some degree impacted our written business in the end of September. We did, we are getting it to some degree somewhat. It also impacted October, but now we are starting to catch up. Then we got impacted from this major storm in Asheville.

他們或多或少都恢復到正常水平。我們確實產生了影響，這也在一定程度上影響了我們九月底的書面業務。我們做到了，我們正在某種程度上做到這一點。它也影響了十月，但現在我們開始迎頭趕上。然後我們受到了阿什維爾這場大風暴的影響。

We have a couple of very major operations, distribution centers which Matt just referred to, which was closed for some time, tremendous impact to our people. But good news is they're back. The next impact was the dock strikes. It fortunately didn't last too long, but for a few days it did, it stopped a lot of business both in terms of products coming in. Then exports, especially our state department business was impacted, but good news is more or less they're getting back to normal.

我們有幾個非常重要的業務，馬特剛才提到的配送中心已經關閉了一段時間，這對我們的員工產生了巨大的影響。但好消息是他們回來了。下一個影響是碼頭罷工。幸運的是，這種情況並沒有持續太久，但在幾天之內，它就停止了許多業務，無論是在產品進口方面。然後出口，特別是我們國務院的業務受到了影響，但好消息是它們或多或少正在恢復正常。

Thank you for the color. And then my second question was on the reduction in head count that you've done over the last year, the 8%-9% you call out on the press release, what areas have been most impacted? But where is that head count coming out from?

謝謝你的顏色。然後我的第二個問題是關於你們去年所做的裁員，也就是你們在新聞稿中提到的 8%-9%，哪些領域受到的影響最大？但這人數是從哪裡來的呢？

It is coming in two major areas. One is our retail and the other is our manufacturing and both of those have been impacted to a great degree with a combination of, I mean, again, we have very little turnover but it did have an impact of reducing our staff both at retail and at our manufacturing. And that really has been a tremendous benefit of utilizing technology.

它主要體現在兩個主要領域。一個是我們的零售業，另一個是我們的製造業，這兩者都受到了很大程度的影響，我的意思是，我們的營業額很少，但它確實減少了我們零售和零售部門的員工數量。這確實是利用科技的巨大好處。

And also the other benefit has been with these uncertainties in the workplace and everything else. We have also been able to acquire strong talent that's very important. We have been able to acquire stronger talent in our retail also in our manufacturing, but especially at retail.

另一個好處是工作場所和其他一切的不確定性。我們也能夠獲得非常重要的強大人才。我們已經能夠在零售業和製造業，尤其是零售業中獲得更強大的人才。

So this whole trend of what is taking place has given us an opportunity even though while we have lowered our head count. But we've also added people overall, we have less headcount but I have -- but we have stronger people because we've been able to attract stronger people who are attracted to us because of our programs, because of stability and some issues, challenges with competition. So those are two areas. Christina.

因此，儘管我們減少了員工人數，但正在發生的整個趨勢給了我們機會。但我們總體上也增加了人員，我們的人數較少，但我有——但我們有更強大的人員，因為我們能夠吸引更強大的人，他們因為我們的計劃、因為穩定性和一些問題而被我們吸引，競爭帶來的挑戰。所以這是兩個領域。克里斯蒂娜.

Thanks. And then another question I had was on the new product introductions that you've been talking about for fiscal year '25. Are those products already in your design centers? How are they being received as a percent of the total? How much is it new? Any color you can give, there would be helpful.

謝謝。我的另一個問題是關於您一直在談論的 25 財年的新產品推出。這些產品已經在你們的設計中心了嗎？它們佔總數的百分比如何？新的多少錢？你可以提供任何顏色，都會有幫助。

On one hand, we have reduced the size of our design centers. Two , three years back, we went from an average of 15,000 to 18,000 square feet to under 10,000 feet. So we've got a major reduction in space. They're more productive, which means we have less floor space. But having said this, our products that we have introduced have been more in terms of options, some products that go into the floor of our design centers, but most of them are options that our designers can use with their work with their clients.

一方面，我們縮小了設計中心的規模。兩、三年前，我們的平均面積從 15,000 至 18,000 平方英尺降至不到 10,000 英尺。所以我們大大減少了空間。他們的生產力更高，這意味著我們的佔地面積更少。但話雖如此，我們推出的產品更多的是在選項方面，有些產品進入了我們設計中心的地板，但大多數都是我們的設計師可以在與客戶合作時使用的選項。

And keep in mind our designers today, almost all of them, maybe 80%, 90% when they work with a client, they're using technology, combining personal service or interior designers and technology has been a great help. And that has also helped us in our inventory management in these new products. In the olden days, we had to have that new product in our design center. But today with the technology, our designers can use that product even though it is not in the design centers.

請記住，今天我們的設計師，幾乎所有人，也許80%、90%，當他們與客戶合作時，他們都在使用技術，將個人服務或室內設計師與技術相結合是一個很大的幫助。這也有助於我們管理這些新產品的庫存。在過去，我們必須在我們的設計中心擁有新產品。但今天有了技術，我們的設計師可以使用該產品，即使它不在設計中心。

And the last question I had was on the trends you're seeing on the cost side of the business. You mentioned supply chain. But what are the trends in raw materials product costs? Are those stable? Are they going up, going down?

我的最後一個問題是關於您在業務成本方面看到的趨勢。您提到了供應鏈。但原物料產品成本的趨勢如何？那些穩定嗎？它們是上升還是下降？

Yeah, they are more or less stable, haven't gone up or down a little bit on the lower side because there is a lower demand of raw materials, especially from our competitors. So with that in mind, keep in mind that our products are many, our case good products are made in Vermont. They're made in Honduras, but we supply them with all the raw materials and all the wood is supplied from our sawmills from the United States to Honduras today.

是的，它們或多或少是穩定的，沒有上下一點上漲或下跌，因為原材料的需求較低，特別是來自我們的競爭對手。因此，考慮到這一點，請記住我們的產品很多，我們的優質產品是在佛蒙特州製造的。它們是在洪都拉斯製造的，但我們為它們提供所有原料，所有木材都是從我們的鋸木廠從美國供應到洪都拉斯的。

The client cannot tell the difference whether that item is made in Honduras or in Vermont. Same thing in our upholstery. They are made in North Carolina or Mexico. Combining this talent that we have in. Obviously, the cost of operating in Honduras and Mexico is lower than in the United States. But we believe combining the two is a great advantage for us. Gives us an opportunity of stability and service.

客戶無法區分該商品是在洪都拉斯製造還是在佛蒙特州製造。我們的室內裝潢也是如此。它們是在北卡羅來納州或墨西哥製造的。結合我們所擁有的人才。顯然，宏都拉斯和墨西哥的營運成本低於美國。但我們相信將兩者結合起來對我們來說是一個巨大的優勢。給我們一個穩定和服務的機會。

Thank you and best of luck this quarter.

謝謝您，祝本季好運。

Take care. Thanks.

小心。謝謝。

Thank you. And there are no further questions at this time. I would like to turn the floor back to Farooq Kathwari for closing remarks.

謝謝。目前沒有其他問題。我想請法魯克·凱斯瓦里 (Farooq Kathwari) 致閉幕詞。

All right, thank you. And you know, I'm looking forward to more stability in terms of the political environment and the international environment and all kinds of problems. Good news is we are positioned well, we also made lots of progress in terms of all areas.

好的，謝謝。你知道，我期待政治環境和國際環境以及各種議題方面更加穩定。好消息是我們的定位很好，我們在各個領域也取得了很大的進步。

As I said, first talent, we have a really strong talent.

正如我所說，首先是人才，我們擁有非常強大的人才。

Secondly, we have increased our marketing. Marketing has given us an opportunity to reach much more people.

其次，我們加大了行銷力道。行銷為我們提供了接觸更多人的機會。

Third, our technology in all areas is critical and whether it’s in retail.

第三，我們在所有領域的技術都至關重要，無論是在零售領域。

And fourth ability to provide great service, which we do.

第四，提供優質服務的能力，我們就是這麼做的。

And fifth is social responsibility, we strongly believe in those things. So we believe we're going to continue to do that and we look forward to continuing our focus on these five important areas and continue to grow our business and have strong financial results.

第五個是社會責任，我們堅信這些事。因此，我們相信我們將繼續這樣做，我們期待繼續專注於這五個重要領域，並繼續發展我們的業務並取得強勁的財務表現。

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

謝謝。今天的電話會議到此結束。我們感謝您的參與。此時您可以斷開線路。

Thanks very much.

非常感謝。