Ethan Allen Interiors Inc (ETD) 2026 Q1 法說會逐字稿

Good afternoon, and welcome to the Ethan Allen fiscal 2026 first quarter analyst conference call. (Operator Instructions) Please note this conference is being recorded.

下午好，歡迎參加伊森艾倫2026財年第一季分析師電話會議。（操作員說明）請注意，本次會議正在錄音。

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

現在，我很高興向大家介紹主持人馬特·麥克納爾蒂，他是高級副總裁、財務長兼財務主管。

Thank you. You may begin.

謝謝。你可以開始了。

Thank you, operator. Good afternoon and thank you for joining us today to discuss Ethan Allen's fiscal 2026 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 up for your questions.

謝謝接線生。下午好，感謝各位今天蒞臨我們論壇，共同探討伊森艾倫2026財年第一季業績。今天陪我一起的是我們的董事長、總裁兼執行長法魯克·卡特瓦里。Kathwari 先生將作開場和結尾的發言，而我將在發言中途談談我們的財務業績。在我們發言完畢後，我們將開放提問環節。

Before I begin, I'd like to remind the audience that this call is being webcast live under the news and events tab within our investor relations website. A replay and transcript of today's call will also be made available on our investor relations website.

在開始之前，我想提醒各位聽眾，本次電話會議正在我們投資者關係網站的新聞和活動欄位下進行網路直播。今天電話會議的錄音和文字記錄也將發佈在我們的投資者關係網站上。

There you will find a copy of today's press release which contains reconciliations of the non-GAAP financial measures referred to on this call and in the press release. Our comments today may include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.

您可以在那裡找到今天新聞稿的副本，其中包含本次電話會議和新聞稿中提到的非GAAP財務指標的調整表。我們今天的評論可能包含前瞻性陳述，這些陳述存在風險和不確定性，可能導致實際結果與預期結果有重大差異。

The most significant risk factors that could affect our future results are described in our most recent 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.

可能影響我們未來業績的最重要風險因素已在我們最新的 10-Q 季度報告中進行了描述。有關這些風險的完整評估，請參閱我們向美國證券交易委員會提交的文件。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.

接下來，我很高興將電話交給卡特瓦里先生。

Thank you, Matt. We are pleased to have you all on this call. Considering the many challenges, we are very pleased that our unique vertically integrated enterprise and our focus and investments over the years are providing strong results.

謝謝你，馬特。很高興各位都能參加這次電話會議。考慮到許多挑戰，我們非常高興我們獨特的垂直整合企業模式以及多年來的專注和投資正在取得顯著成果。

Our interior design focus, investments in technology and many years of developing a strong retail network, our North American manufacturing and logistics have positioned us well. Our written sales in the first quarter increased by 5.2% despite the question of tariffs.

我們專注於室內設計，投資於技術，多年來發展強大的零售網絡，加上我們在北美的生產和物流，使我們處於有利地位。儘管存在關稅問題，但我們第一季的書面銷售額仍成長了 5.2%。

We continued our history of returning capital to shareholders by paying $16.4 million in cash dividends and ended the quarter with $193.7 million in cash and no debt. Our US government sales were impacted by delays in advance of the government shutdown. I will discuss a lot of this in more detail after Matt provides a brief financial overview of the quarter and we will also discuss our initiatives to continue to strengthen our enterprise and provide an opportunity to grow our sales and earnings and cash.

我們延續了向股東返還資本的傳統，支付了 1,640 萬美元的現金股息，本季末現金餘額為 1.937 億美元，且無任何債務。由於政府停擺，我們與美國政府的銷售受到了延誤的影響。在 Matt 簡要概述本季度財務狀況之後，我將更詳細地討論其中的許多內容。我們也將討論我們為持續加強企業實力、為增加銷售、收益和現金流提供機會所採取的各項措施。

Matt?

馬特？

Thank you, Mr. Kathwari. Our financial performance in the just completed first quarter was highlighted by retail written order growth, strong growth margin, positive operating cash flow, and a robust balance sheet. Despite macroeconomic challenges, our operations produced positive financial results, which I will now discuss. Our consolidated net sales were $147 million as higher average ticket prices, and designer floor sample sales were offset by lower delivered unit volumes, reduced traffic, and fewer contract sales.

謝謝您，卡特瓦里先生。在剛結束的第一季度，我們的財務業績亮點包括零售訂單成長、強勁的成長利潤率、正的營運現金流和穩健的資產負債表。儘管面臨宏觀經濟挑戰，但我們的營運取得了積極的財務成果，接下來我將對此進行討論。我們的合併淨銷售額為 1.47 億美元，平均票價上漲和設計師展廳樣品銷售被交付單位數量減少、客流量減少和合約銷售減少所抵消。

Retail written orders grew for the second consecutive quarter as demand patterns continued to improve. Retail written order growth at 5.2% was driven by improved order conversion, increased promotional activities, the strength of our brand, the loyalty of our clients, new product introductions, and additional marketing efforts. Wholesale orders decreased by 7.1% during the quarter as the segment was impacted by lower contract business, including reductions in government spending.

隨著需求模式持續改善，零售訂單連續第二季成長。零售書面訂單成長 5.2%，這得益於訂單轉換率的提高、促銷活動的增加、我們品牌的實力、客戶的忠誠度、新產品的推出以及額外的行銷努力。本季批發訂單下降了 7.1%，原因是該業務板塊受到合約業務減少的影響，其中包括政府支出減少。

We ended the quarter with wholesale backlog of $53.5 million. A lower volume of contract orders combined with improved customer lead times helped reduce our backlog from a year ago. However, in the last three months, our wholesale backlog rose by $4.7 million due to the timing of incoming contract orders.

本季末，我們的批發積壓訂單為 5,350 萬美元。合約訂單量減少，加上客戶交貨週期縮短，幫助我們減少了去年同期的積壓訂單。然而，在過去的三個月裡，由於合約訂單到貨時間的原因，我們的批發積壓訂單增加了 470 萬美元。

Strong consolidated gross margin of 61.4% was driven by a change in sales mix, lower raw material input costs, selective price increases, lower headcount, and a higher average retail ticket price, partially offset by increased promotional activities, elevated designer floor sales, and higher inbound freight, including incremental tariffs.

強勁的綜合毛利率達到 61.4%，這主要得益於銷售組合的變化、原材料投入成本的降低、選擇性提價、員工人數的減少以及平均零售價的上漲，但部分被促銷活動的增加、設計師專櫃銷售額的提高以及包括額外關稅在內的進貨運費的增加所抵消。

Our adjusted operating margin was 7.2%. For historical context, our pre-pandemic fiscal 2020 first quarter operating margin was 20 basis points lower. Our current year operating margin was impacted by fixed cost deleveraging from lower delivered sales combined with increased promotional activity, additional marketing, higher occupancy costs from new design centers, and sales of floor inventory to make room for new products, partially offset by a disciplined approach to controlling operating expenses, including reduced headcount. Our headcount totaled 3,189 at quarter end, a decrease of 4.7% from a year ago as we continue to identify operational efficiencies and streamline workflows. Adjusted diluted EPS was $0.43. Our effective tax rate was 25.4%, which varies from the 21% federal statutory rate primarily due to state taxes.

我們調整後的營業利益率為7.2%。作為歷史參考，我們在疫情爆發前的 2020 財年第一季營業利潤率比現在低 20 個基點。本年度營業利潤率受到以下因素的影響：由於交付銷售額下降導致固定成本槓桿化，加上促銷活動增加、市場營銷投入增加、新設計中心佔用成本上升以及為新產品騰出空間而出售庫存；部分被控制運營費用的嚴格方法所抵消，包括減少員工人數。截至季末，我們的員工總數為 3,189 人，比去年同期減少了 4.7%，因為我們將繼續尋找提高營運效率和簡化工作流程的方法。經調整後的稀釋每股收益為 0.43 美元。我們的實際稅率為 25.4%，這與 21% 的聯邦法定稅率有所不同，主要是因為州稅。

Now turning to liquidity. We ended the quarter with a robust balance sheet, including total cash and investments of $193.7 million with no debt. We generated $16.8 million in operating cash flow during the quarter through lower inventory levels and higher customer deposits. Capital expenditures of $2.4 million were primarily for retail design center buildouts and investments in technology.

現在來談談流動性問題。本季末，我們的資產負債表穩健，現金和投資總額為 1.937 億美元，且無任何債務。本季度，我們透過降低庫存水準和增加客戶存款，實現了 1,680 萬美元的營運現金流。240萬美元的資本支出主要用於零售設計中心建設和技術投資。

We continued our practice of paying cash dividends. In July, our board declared a special cash dividend of $0.25 per share, in addition to our regular quarterly cash dividend of $0.39 per share, both of which were paid in August. We have paid a special cash dividend in each of the past six fiscal years and a cash dividend every year since 1996. 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.

我們繼續沿用派發現金股利的做法。7 月，我們的董事會宣布派發每股 0.25 美元的特別現金股息，此外，我們還派發每股 0.39 美元的常規季度現金股息，這兩項股息均已於 8 月支付。在過去的六個財政年度中，我們每年都派發了特別現金股息，並且自 1996 年以來每年都派發了現金股息。此外，正如我們在獲利報告中剛剛宣布的那樣，我們的董事會宣布派發每股 0.39 美元的季度現金股息，並將於 11 月支付。

In summary, we are pleased to deliver positive first quarter results with the resilient client base, a debt-free balance sheet, and a vertically integrated business. We are navigating the current environment focused on what we control, which is talent, service, marketing, technology, and social responsibility.

總而言之，憑藉穩健的客戶基礎、零負債的資產負債表和垂直整合的業務，我們很高興能夠取得積極的第一季業績。我們正在應對當前的環境，專注於我們能夠控制的方面，即人才、服務、行銷、技術和社會責任。

Looking ahead, we remain focused on our strategic initiatives in the face of ongoing economic uncertainty. We are confident in the strength of our business model, including our North American manufacturing base and vertical integration, which allows us to provide clients with custom furniture and complimentary design services.

展望未來，面對持續的經濟不確定性，我們將繼續專注於我們的策略性舉措。我們對自身的商業模式充滿信心，包括我們在北美的生產基地和垂直整合，這使我們能夠為客戶提供定製家具和配套設計服務。

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

接下來，我將把電話轉回卡特瓦里先生。

All right, Matt, thanks very much.

好的，馬特，非常感謝。

Now, as we have mentioned, considering the many challenges, we are pleased with our results. Our written sales increased by 5.2% despite lower traffic. This is due to Number 1, we have continued to position Ethan Allen as a desirable brand.

正如我們之前提到的，考慮到許多挑戰，我們對所取得的成績感到滿意。儘管流量下降，但我們的書面銷售額仍成長了 5.2%。這是因為第一點，我們一直致力於將 Ethan Allen 定位為一個令人嚮往的品牌。

Number 2, We had more qualified customers who visit our design centers. Less customers but more qualified. We continue to focus on key areas in strengthening the following: Talent. We have strong dedicated team members in our vertically integrated structure. In marketing during the quarter we increased our national marketing with many initiatives. Our marketing costs at the national level increased 44%. Going from 2.4% of net sales last year to 3.4% in the current period. We believe that we should continue to see the benefits of this increase as we move forward. In technology, continued utilization of technology in our vertical enterprise is a game changer. This time included technology in our manufacturing. This has included technology in our manufacturing, retail, marketing, and logistics. Our focus continues. Reinvention has positively impacted many areas included. Interior Design network. We have relocated about 75% of our design centers in the last 20-years, while reducing the design center footprint, that's the size of a design center, by 25%.

第二，我們有更多合格的客戶光臨我們的設計中心。客戶數量較少，但素質較高。我們將繼續專注於以下關鍵領域，以加強人才建立。我們擁有一支實力雄厚、敬業的團隊成員，公司採用垂直整合的組織架構。本季度，我們在行銷方面加大了全國行銷力度，並推出了多項措施。我們在全國範圍內的行銷成本增加了 44%。從去年淨銷售額的 2.4% 上升到本期的 3.4%。我們相信，隨著我們不斷向前發展，我們將持續受益於這一成長。在科技領域，我們垂直企業持續運用科技將帶來改變。這次我們將技術融入生產製造。這包括我們在製造、零售、行銷和物流等領域採用的技術。我們將繼續關注這一領域。革新對包括在內的許多領域都產生了積極影響。室內設計網。在過去的 20 年裡，我們搬遷了約 75% 的設計中心，同時將設計中心的佔地面積（即設計中心的規模）減少了 25%。

Have stronger interior design talent. We have 50% less designers today than 10-years back. But generating 75% more business for retail associates, again, combining good talent, technology, products, and all the other things we do has made it possible.

擁有更強的室內設計才能。如今的設計師數量比10年前減少了50%。但透過結合優秀的人才、技術、產品以及我們所做的其他一切，我們再次為零售員工創造了 75% 以上的業務成長，這才成為可能。

We invested in our manufacturing, including new technology. Opening new retail locations while closing other locations has been important. New design centers that were opened in Colorado Springs, Greater Toronto, and Greater Houston.

我們對生產製造進行了投資，包括引進新技術。在關閉部分門市的同時開設新的零售門市非常重要。在科羅拉多斯普林斯、大多倫多地區和大休士頓地區開設了新的設計中心。

We have 173 retail design centers in North America, including 143 company operated and 30 independently owned and operated. About 75% of our furniture is made in our North American manufacturing and almost all custom on receipt of custom orders. This is very different than what happened 20 years back when about 80% of our case goods were made for stock.

我們在北美擁有 173 個零售設計中心，其中 143 個為公司自營，30 個為獨立擁有和營運。我們約 75% 的家具是在北美工廠生產的，幾乎所有家具都是根據客戶客製訂單生產的。這與 20 年前的情況截然不同，當時我們大約 80% 的箱裝產品都是為了庫存而生產的。

We deliver our products at one price to our clients in North America with our white glove delivery service. This is very important, not easy to do to deliver the products whether you are in Seattle or you are in Miami or New York at one delivered price to the customer with white glove service. It is unique but very important for us.

我們以統一價格透過優質外送服務將產品送達北美客戶手中。這一點非常重要，無論您身在西雅圖、邁阿密或紐約，要以統一的送貨價格並提供優質服務將產品交付給客戶，並非易事。它很獨特，但對我們來說非常重要。

We have consolidated our national distribution into one major distribution center while reducing the number of company operated retail centers location by 35% in the last 10-years. Keep in mind we had about 10 national distribution centers. Now one major distribution center with two smaller locations is what makes it work.

在過去的 10 年裡，我們將全國分銷業務整合到一個大型分銷中心，同時將公司自營零售中心的數量減少了 35%。請記住，我們當時擁有大約 10 個國家級配送中心。現在，一個大型配送中心和兩個較小的配送點就能讓這種模式運作起來。

On social responsibility, our teams continue to focus operating a socially responsible enterprise and treating our associates and our clients with respect. In addition, we focus on operating in an environmentally responsible manner.

在社會責任方面，我們的團隊將繼續致力於經營一家對社會負責的企業，並尊重我們的員工和客戶。此外，我們專注於以對環境負責的方式進行營運。

We recently had our annual convention about two weeks back, which was attended both physically and vertically by our entire enterprise. Under the theme of always moving forward, we reviewed our many initiatives including the launch of new products that will be presented to our clients in the spring of 2026 in our design centers.

大約兩週前，我們舉行了年度大會，我們整個企業都以線上和線下兩種方式參加了此次大會。在「不斷前進」的主題下，我們回顧了我們的許多舉措，包括將於 2026 年春季在我們的設計中心向客戶推出的新產品。

The new products have been important. We've launched new products in the last one year, which is, which of course resulted in our selling of floor samples, but we also have included new products which we introduced in Danbury two weeks back and will be in our design centers by spring of next year.

新產品非常重要。在過去一年裡，我們推出了新產品，這當然也導致了我們的地板樣品銷售情況，但我們也包括兩週前在丹伯里推出的新產品，這些產品將於明年春天在我們的設計中心推出。

As I stated earlier, both the domestic and international economies are going through major changes. We remain focused on providing great service to our clients to our vertically integrated structure. We remain cautiously optimistic.

正如我之前所說，國內經濟和國際經濟都在經歷重大變革。我們將繼續專注於透過我們垂直整合的結構為客戶提供優質服務。我們保持謹慎樂觀的態度。

With at this time we're open for any questions or comments.

目前我們歡迎大家提出任何問題或意見。

We'll now be conducting a question-and-answer session. (Operator Instructions)

接下來我們將進行問答環節。（操作說明）

Taylor Zick, Key Bank Capital Markets.

Taylor Zick，Key Bank Capital Markets。

Hey, good afternoon. I'm doing well. How are you, Farooq?

嘿，下午好。我一切都好。法魯克，你好嗎？

First off, congrats on, the strong comp here in this fiscal first quarter. I just wanted to ask more specifically about the cadence of retail written order trends during the quarter, maybe what you saw during the Labor Day sales period and outside of that as well.

首先，恭喜貴公司在本財年第一季取得了強勁的業績。我只是想更具體地詢問本季零售書面訂單趨勢的節奏，例如您在勞動節銷售期間以及其他時間觀察到的情況。

Yeah, that's a good question because, first quarter we were looking at all these, the challenges of government shutdowns and everything else. What we saw was much lower traffic. Interestingly, but more qualified people and the ones who came in were buying.

是的，這是一個很好的問題，因為第一季我們一直在關注所有這些問題，包括政府停擺以及其他各種挑戰。我們看到的是交通流量大幅下降。有趣的是，更有資格的人以及進店的人都在購買。

And what we saw was that mostly, most of the quarter we maintained more or less similar increases. We did not see any major highs or lows during the quarter. What we saw was people coming in, working with our designers, and buying. Now if the environment was different and we didn't have about a 30%, 30%-plus lower traffic into our design centers. Because of the fact, with the economy and what is taking place, but the people who came in were interested, qualified, they worked with our designers, thereby helping us increase our business.

我們看到的情況是，在本季的大部分時間裡，我們保持了大致相似的成長。本季我們沒有看到任何大的上漲或下跌。我們看到的是人們進來，與我們的設計師合作，然後購買商品。如果環境不同，我們的設計中心客流量沒有減少 30% 甚至更多，那情況又會如何呢？由於經濟形勢和當前的情況，但前來應徵的人都有興趣、有資質，他們與我們的設計師合作，從而幫助我們擴大了業務。

Yeah, that's great. Maybe just to follow-up here on, promotional activity. Obviously we've seen the industry become more promotional over the past few quarters. You noted it, this quarter here for Ethan Allen. Can you talk a little bit more about what you're seeing and maybe what your expectations are for, the balance of the year or, 2026 if you don't want to comment on that?

是的，那太好了。或許這裡只是想跟進一下推廣活動。顯然，在過去的幾個季度裡，我們看到這個行業的促銷活動越來越多。正如你所看到的，本季度伊森艾倫公司（Ethan Allen）的業績就是如此。您能否再詳細談談您目前觀察到的情況，以及您對今年剩餘時間或2026年的預期（如果您不想對此發表評論的話）？

Yeah, I mean we are watching what is happening in the industry. We have more or less maintained our promotional activities across the board. We have not gone into any major promotions, but we have, we do give special savings, every quarter, and we have maintained that, and we felt we do also provide financing, but also the level that we've been doing in the past, small changes, but not much, so we maintain our that's because of that, you see our margins have been maintained. If that was not the case, we would not have the gross margins that we have today.

是的，我的意思是，我們正在關注行業內正在發生的事情。我們基本上維持了各項推廣活動的正常進行。我們沒有進行任何大型促銷活動，但我們每季都會提供特別優惠，並且一直保持這項優惠。我們也提供融資服務，但與我們過去的做法相比，我們只做了一些小的調整，並沒有做太多改變，所以我們保持了利潤率。正因為如此，你可以看到我們的利潤率一直保持穩定。如果不是這樣，我們就不會擁有像今天這樣的毛利率。

And then I guess just one last question for me before I turn it over, tariffs continue to impact the industry pretty broadly, what are you seeing in terms of, pricing across the industry and then maybe if you've taken any pricing yourself?

那麼，在我把問題交給你之前，我想問最後一個問題：關稅繼續對整個行業產生相當廣泛的影響，您觀察到整個行業的定價情況如何？您自己是否也進行過任何定價調查？

Yeah, that's an important issue, and of course it's changing constantly so we do not know where we're going to end. We do make about close to 80% of our products or 75% to 80% of our furniture in North America.

是的，這是一個重要的問題，而且它當然不斷變化，所以我們不知道最終會走向何方。我們大約 80% 的產品或 75% 到 80% 的家具都是在北美生產的。

In Vermont, North Carolina, then we have in Central Mexico and in Honduras. Now there has first there was no hardly any tariffs in Mexico, then there were tariffs and now they are thinking of not having the level of tariffs that they had last two weeks. It's ever changing.

在佛蒙特州、北卡羅來納州，然後是墨西哥中部和宏都拉斯。一開始墨西哥幾乎沒有關稅，後來開始徵收關稅，現在他們正在考慮取消過去兩週的關稅水準。它瞬息萬變。

So fortunately for us, while on the furniture side, we are less impacted by tariffs, we are able to manage it because of the fact of our North American presence. Our other products, which is our non-furniture products, a lot of that does come from overseas and that has been impacted by my tariffs.

因此，幸運的是，雖然家具業務受關稅的影響較小，但由於我們在北美的業務，我們能夠應對這種情況。我們的其他產品，也就是非家具產品，很多都來自海外，這些產品都受到了我所徵收的關稅的影響。

Now we have taken, and again, that changes, so everyone has to be careful that you don't act too fast. But we have made some changes and we have taken some price increases anywhere from depending on the country, the region, anywhere from 5% to 10%.

現在我們已經採取了行動，但情況又會發生變化，所以每個人都必須小心，不要行動太快。但我們做了一些改變，價格也相應上漲，漲幅因國家、地區而異，從 5% 到 10% 不等。

Some of our partners overseas have worked with us to manage the cost, so overall, I think that we have been much less impacted the margins by this question of tariffs. But most of it has been on non-furniture products. We do have one major plant that we have in Southeast Asia, which has been impacted, but again, we have to watch that every month the tariff.

我們的一些海外合作夥伴與我們一起控製成本，因此總的來說，我認為關稅問題對我們的利潤率影響較小。但其中大部分都用於非家具產品。我們在東南亞確實有一家大型工廠，該工廠受到了影響，但是，我們必須每個月都關注關稅情況。

Tariffs change. So overall, I think we're managing it well because of our strong presence in North America and our own manufacturing.

關稅有所變動。總的來說，我認為我們之所以能夠很好地應對這種情況，是因為我們在北美擁有強大的市場地位和我們自己的生產能力。

Christina Fernandez, Telsey Advisory Group.

Christina Fernandez，Telsey顧問集團。

Hi, good afternoon.

您好，下午好。

Hello, Christina. How are you?

你好，克里斯蒂娜。你好嗎？

I'm doing good, thank you. Hi Farooq. Hi Matt. I had a couple of questions. Want us to start with the retail segment. It's been two quarters where the written demand has been positive, but sales for this quarter for that segment were still down 3%. So at what point will we see that demand translated into growth for that segment?

我很好，謝謝。你好，法魯克。嗨，馬特。我有幾個問題。希望我們先從零售領域著手。雖然連續兩季書面需求為正，但本季該細分市場的銷售額仍下降了 3%。那麼，我們什麼時候才能看到這種需求轉化為該細分市場的成長呢？

Well, if you take a look at our retail. We had on the, interestingly, our delivered retail was about 3.3% or 3.2% lower than last year. Or we were able to maintain our relative cost structure. I think that at this stage, our objective is to work towards, and we are seeing that there are challenges that objective is to can come close to what we did last year. That's what our objective is.

嗯，如果你看看我們的零售業務。有趣的是，我們的零售到貨量比去年下降了約 3.3% 或 3.2%。或者說，我們得以維持相對較低的成本結構。我認為現階段我們的目標是努力實現，但我們看到，要達到去年的成就，我們面臨許多挑戰。這就是我們的目標。

We'll see what happens in November and December. October is just ending, but, people, as I said, have been challenged. Our traffic has been down considerably, fortunately, because of the fact of qualified people coming in and especially our talented interior designers. If we didn't have that, the chances are we would be severely impacted with lower sales. So I think that at this stage, Cristina, our objective is to still watch but to come close to what we did last year.

我們來看看11月和12月會發生什麼事。十月即將結束，但是，正如我所說，人們面臨挑戰。幸運的是，由於合格人員的到來，特別是我們才華橫溢的室內設計師的加入，我們的客流量已經大幅下降。如果沒有那項措施，我們的銷售額很可能會大幅下降，受到嚴重影響。所以我覺得，克里斯蒂娜，現階段我們的目標仍然是繼續關注，但要盡可能接近我們去年的成績。

Okay. And then on the contract side, can you talk more about what's happening with the State Department? It seems like this was a pretty challenging quarter for that particular contract. So do you think it can normalize here in the near term over the next quarter or two or should we expect this lower trend to be a new steady state?

好的。那麼，關於合約方面，您能否詳細談談國務院那邊的情況？看來對於那份合約來說，這季相當具有挑戰性。那麼你認為這種情況會在未來一、兩個季度趨於正常化嗎？還是我們應該預期這種下跌趨勢會成為一種新的穩定狀態？

Well, it's a good question. It depends upon the opening of the government, where what we have seen is this and what we hear is that we would get orders if the government was open because the fact that government is not open, new orders are not coming in.

嗯，這是個好問題。這取決於政府是否開放，我們看到和聽到的情況是，如果政府開放，我們就會收到訂單，因為政府沒有開放，所以沒有新的訂單進來。

So it all depends upon where, what happens with the government and it also had to some extent impact on our sales, not completely, we were able to ship some products, but it's mostly on the new orders coming in. The government is closed, so we hope that the government opens up and what we hear is that there is some higher pending orders that they will forward to us when they open. And if that happens again, let's assume that it happens in the next, this quarter, then the impact of that would be toward the middle or end of the of the following quarter, you got to make that product.

所以這一切都取決於政府的政策走向，以及它在一定程度上對我們的銷售產生了影響，雖然不是完全沒有影響，我們還是能夠發貨一些產品，但主要取決於新訂單的到來。政府部門目前關閉，所以我們希望政府部門能夠重新開放。我們聽說，他們有一些優先順序更高的待處理訂單，會在重新開放後轉交給我們處理。如果這種情況再次發生，假設它發生在下一個季度，那麼其影響將在下一個季度的中期或末期顯現，你必須生產該產品。

And then my last question was on the increased marketing spend year-over-year. Can you share where the spending is going? Is it reaching more customers? Is it a different type of I guess advertising that you're doing compared to last year and where are you seeing the benefit of that advertisement in traffic or conversion or where do you think you're seeing the return?

我的最後一個問題是關於行銷支出逐年增加的情況。能否透露一下這筆開支都花在哪些方面了？它是否觸達了更多客戶？我猜想，你今年做的廣告類型和去年有什麼不同？你覺得這種廣告方式在流量、轉換率等方面帶來了哪些好處？還是你認為它帶來的回報體現在哪些方面？

Yeah, it's a good question and where we did was where we increased is on a national level, we increased it in additional direct mail and paid search and paid social campaigns.

是的，這是一個很好的問題。我們之所以能夠取得成長，是因為我們在全國增加了直效郵件、付費搜尋和付費社群媒體廣告的投放。

We didn't have much in paid search and paid social campaigns in the past, so we accelerated. That's where most of the increase at the national level took place, close to 50% increase. Now we don't see the benefit of it right away. I would say that we should see some benefit as we go forward in this current quarter and as we move forward, because this is a longer-term investment, but we believed it made sense.

過去我們在付費搜尋和付費社群廣告方面投入不多，所以我們加快了投入步伐。全國範圍內的增長主要發生在那裡，增幅接近 50%。現在我們還看不到它的好處。我認為，隨著本季及未來一段時間的發展，我們應該會看到一些收益，因為這是一項長期投資，但我們認為這是有意義的。

We also made sense that we had also, this past quarter, an additional direct mail that we didn't have in the previous year. So going forward we'll continue with our direct mail as we have in the past, but to answer your question, most of the money, new money, new advertising was on paid search and paid social campaigns.

我們也認為，上個季度我們增加了一筆去年沒有的直接電子郵件行銷活動是合理的。所以接下來我們會像以前一樣繼續進行直郵行銷，但要回答你的問題，大部分資金，包括新增資金和新增廣告投入，都用於付費搜尋和付費社群媒體推廣活動。

Thank you.

謝謝。

All right.

好的。

Any other questions?

還有其他問題嗎？

There are no further questions at this time. I'd like to hand the floor back over to Farooq Kathwari for any closing comments.

目前沒有其他問題了。我謹將發言權交還給法魯克·卡特瓦里，請他作總結發言。

Well thank you very much. We are fortunate that we have a very strong team, as I always talk about five things. So we have very strong talent, even though we have been able to reduce. The number of associates but the team members that we have are very motivated, knowledgeable. And it is also due to the tremendous increase in technology that is helping us in our work.

非常感謝。我們很幸運擁有一支非常強大的團隊，就像我常說的五件事。所以，即使我們已經減少了人員，我們仍然擁有非常優秀的人才。雖然員工人數不多，但我們的團隊成員都非常積極、知識淵博。這也要歸功於科技的快速發展，它對我們的工作大有裨益。

We reduce the size of our design centers. We have refreshed our design centers. We are opening new design centers and we continue to do that. Many of them are relocations. We also have, we believe very strongly that the new products are going to continue to position as well. So with strong talent, strong product programs, vertical integration.

我們縮減了設計中心的規模。我們已對設計中心進行了升級改造。我們正在開設新的設計中心，而且我們會繼續這樣做。其中許多是搬遷過來的。我們也堅信，新產品也將持續維持良好的市場地位。因此，我們需要強大的人才隊伍、強大的產品方案和垂直整合。

Our focus on technology, we believe we are well positioned and in somewhat challenging conditions because we do not know the overall international and the domestic situation, but despite all of that, we've done well in this first quarter and we believe that we'll do relatively well going forward.

我們專注於技術，相信我們處於有利地位，儘管我們面臨一些挑戰，因為我們不了解國際和國內的整體形勢，但儘管如此，我們在第一季度表現良好，我們相信未來也會表現得相對好。

Thank you very much for participating and I'm sure if you have any other questions, please let us know.

非常感謝您的參與，如果您還有其他問題，請隨時告訴我們。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。您可以在此時斷開線路。感謝您的參與。

Okay, thank you.

好的，謝謝。