No room for lazy boys
This isn't your father's recliner. That's what Ethan Allen is hoping its customers think when they enter any one of the firm's 312 furniture retail stores around the world. Based on Ethan Allen's recent performance, the company appears to be convincing plenty of people. In January 1999, the company posted record earnings, the 16th quarter in which Ethan Allen experienced growth. Earlier in the winter, the company also won a passel of design awards. The heady performance reflects a decision adopted 11 years ago by the CEO to move away from a colonial image and instead focus on modern sales methods and design features.
Colonial name, non-colonial focus
Founded in 1932, Ethan Allen built its reputation upon stores filled with well-made, colonial-style furniture. The company grew throughout the 1980s, but by the middle of the decade, sales had plateaued at around $200 million a year. Moreover, few young people looking to furnish their first homes were turning to Ethan Allen. In 1989, Farooq Kathwari became CEO, and set out to discover why Ethan Allen's sales and customer base weren't growing.
Sloppy stores, slow factories
In Ethan Allen's vertical structure, Kathwari found problems in nearly every stage of its furniture-making business. The company's dependence on early American designs meant few contemporary furniture offerings for younger people. Its three manufacturing plants needed modernizing, and its stores were often unkempt and uninvitingly designed. A few branches even sold competitors' furniture.
From colonial to revolutionary
In response, Kathwari closed seven factories and modernized the company's three sawmills. Kathwari turned the retail stores, which are independently owned but contractually obligated to sell only Ethan Allen goods, into airy showrooms. Ethan Allen also opened 65 company-owned stores, which now earn a third of the company's revenue. Finally, the company introduced modern furniture designs and home accessories. 90 percent of Ethan Allen's products, which now include wallpaper, curtains, and picture frames, have been designed since Kathwari's tenure. In 1998 the company launched a $67.5 million ad campaign to transform its image from stodgy to hip. Kathwari also presided over considerable overseas growth - the company now boasts 33 stores outside of the U.S.
On the Internet, in the nursery, or in a dream
More than a decade after his arrival, Ethan Allen isn't done innovating. In 1998, the company unveiled a line of outdoor furniture. Customers can also visit the company web site and pick out furniture (they still have to travel to a store to place an order, but they can apply for online financing). By the last quarter of 1998, the company was reporting $193.7 million in sales and had won design awards from American Society of Furniture Designers, Home, and Better Homes and Gardens. In 1999 the company unveiled a line of children's furniture, E.A. Kids. And in June 2000 the company took another step away from its colonial roots when it introduced a line of minimalist furniture called the Horizons collection, complete with the decidedly un-colonial tag line, "Where dream meets reality."
