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Ethan Allen has been pushed to make difficult decisions in response to the global coronavirus pandemic, furloughing 70 percent of its workforce, and CEO Farooq Kathwari, the company's chairman and president, will forego his salary through June 30, 2020.
"We are taking many steps to manage this crisis with compassion and collaboration. An important aspect is to have cash to continue to exist," Kathwari said in a statement Wednesday.
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He added that Ethan Allen will eliminate all nonessential operating expenses, delay capital expenditures and temporarily halt share repurchases.
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"Fortunately, we have been prudent and so far, have been debt-free," Kathwari said. "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."
The furniture company has also made some decisions regarding its supply chain by temporarily closing manufacturing facilities and design centers. Customers will still be able to schedule appointments with design consultants and interact virtually via Zoom, a 3-D room- planning tool, Skype and FaceTime.
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Additional salary cuts will be given to employees making $80,000 per year, and the company’s board of directors will reduce their pay by 50 percent through June 30, 2020.
Ethan Allen has signaled it is struggling with cash on hand. On March 23 it borrowed $80 million under a revolving credit facility. The company also borrowed an additional $20 million on March 30, bringing its cash and investments on hand to approximately $110 million as of March 31.