Author: Pia Singh

ETH – Ethan Allen CEO says he expects furniture production backlogs to be resolved in four to six months

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Ethan Allen CEO Farooq Kathwari told CNBC on Tuesday the company expects its production backlogs to catch up by early next year after a series of pandemic-induced supply issues. 

One of the advantages we have is that first of all, you know, we have the right kind of product lines. And then secondly, we have the opportunity of combining the personal service of about 1,500 interior designers with technology … Having said this, we are also impacted by service issues,” Kathwari said on “Power Lunch.”

“We are making improvements,” he said. “We are very high backlogged, but I think in the next four to six months we’ll catch up.”

The interior design manufacturer and retailer hopes to go back to its “normal” rate of being able to make custom products in less than eight weeks, Kathwari said, rather than its current rate of 12 to 16 weeks or longer. 

Ethan Allen produces custom-made products, while the majority of the furniture industry relies on its stock products, he said, adding that 75% of Ethan Allen items are made in North America. The company sells furniture and decorative home products online and through about 300 design centers in the U.S. and abroad.

Kathwari said the company is seeing “record sales” as consumers’ interest in homes increased toward the end of the summer season. He said Ethan Allen closed more than 250 of its locations and furloughed more than 4,000 employees when the pandemic hit the U.S. early last year.

Kathwari said the current service issues include delays in fabrics and raw materials such as foam and lumber. He said the company was affected by a myriad of issues including severe storms in its Texas plants, which delayed production of foam used in upholstery and couches, and an initial lack of workers in its original Vermont plant. 

“Custom is tremendously important. It was a challenge but became an opportunity with the involvement of our interior designers, with involvement of technology, and the fact that … we stayed here, and today that’s a great advantage,” Kathwari said about maintaining its business in the U.S. 

Effective Monday, Ethan Allen is also changing its ticker symbol from “ETH” to “ETD” to avoid confusion with Ethereum news in search results, according to an Aug. 4 press release. Kathwari said the change to the letter “D” reflects the company’s focus on design.

SAM – Boston Beer CEO acknowledges Q2 hard seltzer sales miss – ‘we don't look very smart'

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Boston Beer CEO David Burwick said Friday the company was surprised by the disappointing second-quarter sales of its Truly hard seltzer, telling CNBC in an interview that management does not “look very smart” after its prior forecast.

“The trade-off from grocery and liquor store purchase and consuming at home to bars during that time period particularly as the summer hit is really what hit us,” Burwick said on “Closing Bell.” “And honestly, it hit us hard and fast. … We don’t look very smart by missing on that guidance.”

Shares of Boston Beer plummeted Friday, closing down 26% at $701 apiece, as Wall Street reacted negatively to the company’s worse-than-expected quarterly results released Thursday evening. Boston Beer reported earnings of $4.75 per share on $603 million in revenue, while analysts surveyed by Refinitiv were looking for $6.69 in earnings per share and $658 million in revenue. Lower-than-anticipated demand for Truly was a key culprit for the earnings miss.

Goldman Sachs said in a note to its clients Thursday that the second-quarter drop raised questions about the company’s long-term growth plans and ability to properly forecast its results, even though the hard seltzer category was expected to slow down in some capacity after its red-hot growth in recent years. Analyst Bonnie Herzog downgraded the stock to neutral from buy.

Boston Beer owns brands such as Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard Hard Cider and other local craft beer brands.

Burwick said the company felt “very confident” in the hard seltzer category going into mid-May and Memorial Day, with the unexpected plunge only becoming clear later on and into June as more Covid-related restrictions were eased.

“One of the things that’s going on here, that’s different than the March-April time period, was that the country is opening up in May and people were going out to bars and restaurants. Hard seltzer isn’t that well developed in those channels yet,” Burwick said, adding: “It will be and it’s getting there.”

However, the company did not make a pre-announcement to alert investors and analysts of worrisome sales developments, which the executive said may be a point of “learning for us going forward.”

Despite poor second-quarter numbers, Burwick believes hard seltzer is a category that will continue to grow — even though the category has certainly slowed down from its old triple-digit growth rate.

He believes that hard seltzer’s fall is actually a “positive signal for reopening” as people gravitate away from grocery stores and into bars, choosing draft beer over seltzers.

“We will gain share. The question is where the category goes. And you know, if anybody out there can give a better sense of that we’re all ears, but we can’t control it,” said Burwick, who has been the company’s president and CEO since 2018 and has served on its board since 2005.

Boston Beer’s Truly hard seltzer and Twisted Tea brands are still the two fastest growing brands in the hard seltzer category, Burwick said. He also said the company expects the category to consolidate in the future after many new brands jumped in, which would help Truly.

Overall, the company’s revenue rose 33% in the second quarter on a year-over-year basis.

“I don’t think there’s another publicly traded beverage company, [alcoholic] or not alc, that comes close to that kind of top-line growth,” Burwick said. “We manage the business for the long term and obviously not a great day for investors, but we’re going to be back,” he added. “In fact, we haven’t gone anywhere with the same company we were two days ago. We feel just as confident about our future.”

TMHC – U.S. housing shortage will be around for 'years to come,' says Taylor Morrison CEO

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The housing shortage that began before the pandemic will stick around for a long time as market demand soars, the chief executive of homebuilder Taylor Morrison told CNBC on Wednesday.

“As the economy continues to improve, we’re going to see mortgage rates move up, and I think that should be expected. They’re not going to stay under 3% forever,” CEO Sheryl Palmer said on “Closing Bell.” However, she added, “the lack of supply and the overwhelming demand is something that will be with us for years to come.”  

Earlier Wednesday, the Mortgage Bankers Association’s seasonally adjusted index showed that mortgage demand decreased for the second week in a row this week, dropping by 1.8% to their lowest level since the beginning of 2020. Home purchase applications and mortgage applications to refinance a home both dropped for the week, even though mortgage rates dipped. 

Despite those developments, Palmer expressed confidence in the “robust housing market” and sustained demand across all areas and consumer types. 

“Certainly we are seeing some numbers around mortgage applications, but I think we really have to separate the supply and the demand that we’re seeing out there,” said Palmer, who has led Arizona-based Taylor Morrison since 2007.

“We are at multiyear lows as far as new and resale inventory, and, honestly, it’s going to be very difficult for us to make up the shortage, the deficit that we’ve been building up for more than a decade now,” she said.

Home prices in the U.S. have risen sharply during the coronavirus pandemic, as booming interest for houses coincided with low inventory for sale. That’s sparked affordability concerns from some observers who worry especially about first-time buyers being priced out.

Growth in housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis, creating an “underbuilding gap” of 5.5 million to 6.8 million housing units across the country since 2001, according a recent report from the National Association of Realtors.

“Additional inventory is the solution to all that ails us at this moment,” Coldwell Banker CEO Ryan Gorman told CNBC last week.

One possible bright spot in the near term is that, in June, new listings had increased 5.5% year over year and 10.9% compared with May, according to Historically, low listings have been seen between May and June.

The low mortgage rates seen during the pandemic are a factor to consider when assessing the market, Palmer said.

“From an affordability standpoint, a consumer buying a [$300,000], $400,000 house today versus a year ago, their payment is going to be less,” she said. “Consumers change their behavior, and they’re not extending themselves the same way you might have always seen years and years ago. We actually see the consumer has a lot of room in what they can afford to buy and what they’re buying.”

FEYE – Increase in ransomware attacks 'absolutely aligns' with rise of crypto, FireEye CEO says

The increase in ransomware attacks is closely connected to the advent of cryptocurrency, FireEye CEO Kevin Mandia told CNBC on Monday.  

“There’s a direct correlation,” the cybersecurity firm executive said on “Closing Bell.” “When you look at the rise of ransomware, it absolutely aligns with the rise of anonymous digital currencies.”

“It’s no question it’s an enabler that you can break in anonymously and be paid anonymously, and now you can commit crime from 10,000 miles away in a safe harbor,” Mandia added.

Mandia said that while awareness of cybersecurity issues is at an all-time high, following a series of headline-grabbing incidents including the Colonial Pipeline hack, challenges remain in preventing every single attack.

“We’re better protected today than ever before. But what we’re seeing is, we’re just playing goalie. There’s an unlimited amount of opportunities to hack us, and no risks or repercussions to those doing the intrusions,” Mandia said. “So over time, you’re going to see successful intrusions. You know, we can’t play successful defense every day.”

Outlawing ransomware payments by itself is not an adequate solution, Mandia said, while alluding to the incident involving Colonial Pipeline last month. The company paid a $5 million ransom after its IT network was hacked, although U.S. law enforcement was able to recover a chunk of the bitcoin used in that payment.

Government has a crucial role, too, Mandia said.

“We have to consider all the tools of diplomacy to back the desired outcome we want, which is quite frankly to make sure that there’s risks imposed to those who take advantage of cyberspace and the anonymity it offers,” he said.

Not everyone agrees with Mandia’s view of a link between cyberattacks and cryptocurrency. Katie Haun, a partner at venture capital firm Andreessen Horowitz who invests in crypto start-ups, told CNBC last week she thinks it’s a “myth that bitcoin is good for criminal activity.”

“The fact of the matter is, you see investigators and prosecutors solving cases where crypto was used as the technology of choice by criminals,” said Haun, who is also a former federal prosecutor who has investigated cyber crimes that involved cryptocurrency.

“Crypto is a step-level function improvement above the existing financial system in terms of traceability,” said Haun, who now serves on the board of crypto exchange Coinbase. “People often say, ‘How can that possibly be? Isn’t crypto anonymous?’ The fact is, when crypto is used for illicit activity it leaves … digital bread crumbs, and I can tell you that, firsthand, I used blockchain technology to actually solve crimes.”

David Kennedy, a former NSA hacker turned founder and CEO of security firm TrustedSec, told CNBC earlier Monday he believes making it illegal for companies to pay ransomware payments in cryptocurrency would, over time, lead to a decline in such attacks.

However, there would be a high cost in the immediate term, he contended, as companies that fall victim to security breaches struggle to return their systems to operation.

“What would happen is you’d have an influx of ransomware groups trying to get as many attacks off” as possible before the payment ban went into effect, Kennedy said.

“During that period of time, you’d see a heightened attack surface around a lot of companies being compromised and then you’d see a major dip off because they’re essentially cutting off the currency of these organizations,” he said.