Slide 1: Re-Design Ethan Allen: Discussion Materials: Poor Revenue Performance
Re-Design ETHAN ALLEN Discussion Materials: Poor Revenue Performance AN October2015 was SPANO EL_L wirw.RedesignEthandllen.com WAWAW castienioe INVESTMENTS Was?
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION WITH RESPECT TO ETHAN ALLEN INTERIORS INC. (ETHAN ALLEN’ or*ETH" or THE *COMPANY") IS FOR GENERAL INFORMATIONAL, PURPOSES ONLY. IT DOES NOT HAVE REGARD TO THE SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY OR PARTICULAR NEED OF ANY SPECIFIC PERSON WHO MA
Slide 3: Discussion Materials
Discussion Materials DE —————————— = There are many issues plaguing Ethan Allen that we believe can be traced to one root cause, namely poor corporate governance that has enabled a stale and outmoded approach to business. One of the most cited concerns voiced to us relates to the Company's inability
Slide 4: Lackluster revenue generation over the last 5 years versus peers
Discussion Materials @ The following illustrates the Company's lackluster performance in revenue generation over the last 5 years versus its peers Sinmitions) ae FY2010/ FY2011/ FY2012/ FY2013/ FyY2014/ Ey2014 Fy2012 FY2013 Ey2014 FYy2016 CAGR [Ethan Allen $679.0 $729.4 $728.1 $746.7 $754.6 2.7% % G
Slide 5: Ethan Allen has fallen behind peers in year-to-year revenue growth
Discussion Materials = Ethan Allen has faltered after the “Great Recession’ and has fallen dramatically behind the average of its peers over the last several years in terms of the key retailing operational metric of year-to-year revenue growth Yr-to-Yr Revenue Growth 140% 120% 10.0% 8.0% = eTH m Ave
Slide 6: Compound annual revenue growth far below peers over five years
Discussion Materials = Ethan Allen has witnessed compound annual revenue growth far below its peers over the last five years 5-Yr Revenue CAGR aes =a on = The following chart graphically illustrates how so many years of poor revenue performance results in effective stagnation, as Ethan Allen's reven
Slide 7: Failure to generate e-commerce revenue; insignificant online presence
Discussion Materials = Ethan Allen has failed miserably in its ability to generate e-commerce revenue and has an insignificant online presence % of Online and Direct Revenue 60% 50% 40% 30% 20% 10% 0% LF Ethan Allen Restoration Hardware Williams-Sonoma = More and more consumers are purchasing produc
Slide 8: Importance of online revenue and the shift to online retail
Discussion Materials = The importance of online revenue is articulated in the following passage, which projects that 50% of all retail sales will take place online in the notoo-distant future “The store is far from dead, but for most retailers, it's gasping. While the majority of retail sales still
Slide 9: A Tale of Two Retailers: Restoration Hardware's growth
Discussion Materials = Restoration Hardware’s revenue five years ago was not materially different from Ethan Allen and ithas subsequently grown revenue dramatically A Tale of Two Retailers $2,000.0 '$1,800.0 $1,600.0 $1,400.0 $1,200.0 '$1,000.0 $800.0 Se $600.0 mRH $400.0 $200.0 30.0 Fyto/i1 FYTII2
Slide 10: 2015 commentary on Restoration Hardware's reinvention
Discussion Materials = Note the following 2015 commentary regarding Restoration Hardware, which provides context for the dramatic revenue growth enjoyed by the company following its 2010 reinvention discussed on the previous page “it’s hard to believe that Restoration Hardware once was a typical mal
Slide 11: Analyst commentary on stale approach to merchandising
Discussion Materials = The conclusion amongst the analytical community supports our belief that the Company's stale and complacent approach to merchandising is responsible for Ethan Allen's poor sales performance (emphasis added in the following commentary) ‘Ethan Allen has been slow to change, in o
Slide 12: "We run it like a private company"
Discussion Materials “We run it like a private company” -- Faroog Kathwari October 5, 2015 conference call with Farooq Kathwari, Corey Whitely, Tom Sandell, and Richard Mansouri vas ) SANDEL oe
Slide 13: Ethan Allen needs a new and improved Board
Discussion Materials = We believe Ethan Allen desperately needs a new and improved Board who can bring fresh perspective and new ideasto the Company = The following candidates nominated by Sandell together possess very relevant skills in many key functional areas, who we believe will be able to impl
Slide 14: Participants and proxy solicitation notice
Discussion Materials Sandell Asset Management Corp., Castlerigg Master Investments Ltd., Castlerigg International Limited, Castlerigg International Holdings Limited, Castlerigg Offshore Holdings, Ltd., Castlerigg Active Investment Fund, Ltd., Castlerigg Active Investment Intermediate Fund, L-P., Cas