Good morning, and welcome to our 2017 shareholders meeting, also a year when we are celebrating our 85th year. We are pleased to have also all of our directors are present here. We have with us Jim Schmotter, we have Mary Garrett, we have with us John Dooner, Domenick Esposito, Tara Stacom. We've also with us, a number of our officers are here today. What I would like to do is give a brief overview of our business, the progress that we are making, and then after we are done with my presentations, and also Eric Koster, our General Counsel Secretary, is going to conduct the formal part of the meeting. We'll be very happy to answer any questions or comments that you might have.
As I said, we are celebrating our 85th year the whole year, and in fact, last month, we had about 550 of our associates here from all over the country and many other countries as well, celebrating this event with us. This was our annual convention. Briefly, Ethan Allen got its start in 1932 when two young New York City entrepreneurs, Ted Baumritter and Nathan Ancell, went to Vermont and established the Ethan Allen brand by focusing on the most relevant style of the time. That is early American colonial. In the '30s and the '40s, pioneered what was called the gallery concept. That is establishing Ethan Allen galleries in large stores. Then in the 1950s, and especially in the 1960s, they pioneered again by establishing freestanding Ethan Allen galleries by having many entrepreneurs convert their stores from Ethan Allen Gallery all over the country.
By 1970s, about 250 of these galleries had been established, and around this time, Ethan Allen had also established close to 30 manufacturing plants all over the U.S., mostly in the Northeast, but had even gone to Oklahoma and to California. In the 1980s, the company went from being public to be part of a company called Interco. In the late '80s, we had an opportunity to having a management buyout of the company, and we took the company private. In the 1990s, we had to reposition the company again. We had to make changes, change almost 50% of our product lines in a year and a half's time, change the design of our galleries at that time, and convinced all our dealers to do it, and then also started speaking with one voice.
That happened because in the late '80s, we took a major step of delivering our product at one cost nationally. Hardly anybody did it at that time. Even today, it is not that much prevalent. It established an Ethan Allen as a national network. In 2000s, we were confronted with globalization and commoditization. In 2000s, around that time, before 2000, about over 75% of the furniture was made in the U.S. 15 years later, 75% went offshore, and a big issue of deflation, which has lasted in the last 15-20 years. Every year, because of this globalization and commoditization, the prices of our products, as has happened in other products as well, the prices have gone down. To stay ahead, every year, you go down 5%-7% before you are even at the base level.
That has happened in the last 15 years. We have had to confront with that. Today, we are a desired and a known brand. 75% of our products are made in our workshops. We are in an interior design business with 1,500 entrepreneurial interior designers, which we are strengthening every year. Importantly, I'll talk about it, close to 600 of them are also participating in live chat. Today, personal service and technology is important. We have 303 design centers worldwide, 200 in North America, and we have almost 70% of them have been relocated, refreshed. We also have a very strong logistics. I'll talk more about it. In the last few years, we've had to again reposition our offerings to make them stylish, livable, quality, value. Our vertical integration helps because we make over 75% of the products.
Personal service is a new luxury. Today, combined with technology, these are some of the initiatives I will discuss in greater detail. Our retail network has gone from a store, and in fact, is in the process of going from a store to what I call a design center. Marketing today is a new paradigm. Today, 70% first shop or view us online before they come to our design center. This has major implications. It has also meant, for instance, in our designers, we have 1,000 less designers today than we had 15 years back because people used them to do their window shopping in our stores. Now they do it online. It's positive, it also has challenges. We also, in the last two years, did two collaborations with Disney and with Amazon.
As I said, in the last three years, we have changed over 70% of our product line. We introduced Buckhead. We introduced Santa Monica. All of these are, of course, in our design centers. You can even get a greater perspective of it from our website. Brooklyn, somewhat of an urban projection. Sonoma, some you might say more of a European, Italian, French projection. Georgetown, part of what we had under this umbrella of Uptown, which I'll talk more about. We introduced the Ethan Allen Disney last year, and in fact, it was introduced about this time because I think November 18th is Mickey Mouse's birthday, and we introduced it that year. We have an anniversary. Although, of course, we started selling him a few months later. We have now our newest product line is being introduced to the consumer this month. It's in our design centers.
It's called Passport. It is somewhat of a global, traveled look, getting inspirations from many parts of the world. Well-received. The next one that we just introduced to our network last month and will be introduced to our consumers next year in around April, May. It continues with somewhat more of a formal, but a livable formal. Our focus has always been to strengthen our vertically integrated structure. We own and operate nine manufacturing facilities, seven in the U.S., one in Mexico, and one in Honduras. As I said earlier, we manufacture and assemble about 75% of our furniture in our North American plants. Our focus on environmental and social responsibility and uniform manufacturing standards is tremendously important to us.
We have full control of product from manufacturing, I would say from a design, from engineering, from design, engineering to manufacturing. Then we deliver it through our three national distribution centers, 29 retail division service centers, and 37 independent retailer service centers. The manufacturing, we have a tremendous focus. As I said, we have a great group of people who are working in our manufacturing. They're craftspeople with long history, and much of the furniture is built one piece at a time. Most frames are hand-assembled, and stitching is guided by hand. Our wood products are made with premium lumber and veneers. We have really best-in-class construction techniques, and a lot of technology is now in our manufacturing. Our first plant, Beecher Falls, Vermont, we have also our major sawmill. We have in Maiden, North Carolina, three upholstery plants.
In Old Fort, North Carolina, near Asheville, we have a wood plant. In Passaic, New Jersey, we do all our wall decor, and also this facility also is partly used as distribution. Orleans, Vermont, we have a major wood plant. Then, as I mentioned, about 10 years back, we purchased a small plant, about 40,000 sq ft in Silao, Mexico. It's a great, central Mexico, great people, great operation. Today, it's almost 600,000 sq ft. This plant does most of our cutting and sewing because cutting and sewing in the United States is difficult. From there, they send these bundles to North Carolina. Our three plants do most of the upholstery. Honduras, we purchased a plant that was an empty plant, was made for a wood plant. We started as a chair plant.
Now today, it is a full-fledged plant producing a lot of products. We made a lot of progress all in the last five or six years. Our distribution logistics in the business in our enterprise is very important. Dublin, Virginia, is our main distribution center. We're over 600,000 sq ft, and this is where most of our furniture is received and then shipped to our service centers. From the service centers, delivered to our clients. In Atoka, Oklahoma, we have approximately a 250,000 sq ft distribution center. Most of this product is UPS product shipped from there. It's very important for us to make sure we ship the products in one day or two days, and all of that is shipped within that time period. Passaic, New Jersey, is also partly used. It's a 300,000 sq ft facility, partly used as a distribution center.
Our logistics retail network, in our enterprise, logistics is tremendously important. The network is operated by our retail, by independent retailers or by the company retail division. They receive the product, they prep the product. Then they deliver because providing great service and making sure that customers are satisfied and we don't get the returns, it's important for us to have this kind of a network to provide this service. The company, in addition to having service centers all over the country, has five major locations. One of them is right here in Newtown, Connecticut, which delivers to the client, to customers from Maine to Manhattan. We have one in Pomona, California, which takes care of all of Southern California. We have one in Margate, Florida, which takes care of most of Florida, especially the southern part of Florida.
Chester Springs in Pennsylvania takes care of from New Jersey to Maryland, to Washington, Philadelphia, and all that general Mid-Atlantic states. Detroit, Michigan takes care of from Detroit to Milwaukee, Chicago, and the Midwest. From that point of view, it's extremely important that with our independent retailers and with our Let me just see. All right, it's going backwards. Premium home delivery is critical. In this case, as I said, we deliver the product at one cost nationally to the consumer's home, and it is white glove service. That's what differentiates us. The next important thing is what we say, Quick Ship is a new reality. People today want things faster. We started this program with custom Quick Ship upholstery. Now 85% of our wood products are available as Quick Ship. All our accents, accessory products are available to be shipped, most of them by UPS.
We, of course, have also custom. We're combining in-stock and custom. The retail network is an important part of our business. Today, we have, as I said, 1,500 interior designers with 303 design centers. We also have 6,700, what we call IDA, or Interior Design Affiliates. These are designers who do not work full-time for us. The other 2,000 do. When they come in, they work with our in-house designers and take care of clients. We have continued to reposition our design centers. Today, as you will note, 72% of our design centers have been relocated within the past 15 years. It's been a major undertaking. Just to give you a perspective that today we have more or less three design attitudes out there.
The first one, which is the classic design, this is the one that we converted from the colonial to what you see today. It's right here in Danbury, Connecticut, average is 15,000 sq ft. We have, prior to the great recession, we built larger design centers called Neoclassic Design Centers, averaging 18,000 sq ft. Now, in the last 10 years, we are relocating to what you call lifestyle centers, averaging about 8,000 sq ft. Just to give you a little perspective, in the last year, we opened up our second location in downtown Manhattan in the Flatiron area. Also what we are doing now is we are repositioning it from a store to an interior design center with designers and with technology all right in the front so people know what our business is about.
We also relocated from a 25,000 sq ft building in Virginia Beach to about a 10,000 sq ft building, again, with interior design projection. Also, we repositioned and expanded in Corte Madera, San Francisco. Just opened recently in Indianapolis. Again, from a freestanding to a lifestyle center with an interior design projection. We also recently opened a new one in downtown Atlanta in the Buckhead area. We also opened, in September, in more of the downtown area of Chicago, more of the urban areas of Chicago. Right now under construction is a new design center in the Superior area of Denver, Colorado, scheduled to open in summer of 2018. We're also in the process just right now of relocating in Calgary, in Canada, in Cedar Rapids, Iowa. These are all under development. Internationally, we've continued to focus on with our licensees. Many of them were here in our convention.
We have a strong presence in China. We have over 83 locations. China has been good. They've grown in the last year. We have three locations in Korea. They're also doing well. We have also in the Middle East, in Doha, in Jeddah, in Dubai, in Kuwait, in Jordan, also in the Philippines. We're just also in the process of opening a design center in Taiwan and also in Indonesia. The next one, which is a very important element, the environmental stewardship and sustainability is critical. We've always been very focused on this. Sustainable operations is tremendously important, and we take pride in the fact that we did this in the last 30, 40 years, not now. Because of that, I would say our leader in terms of our environmental, in terms of, for instance, using electrical usage, reducing carbon footprints, water usage, landfill, greenhouse gases, recycling.
For instance, one example in Vermont, we used to burn hundreds of thousands gallons of oil. Now we burn zero because we use wood chips, and we also produce electricity. In fact, that is a steam engine that produces electricity in Vermont. Our social responsibility is not only now in our own manufacturing, we are now conducting it all across the world. Every company that we deal with has to meet our social responsibility standards. We have invested in our talent, and we are now working with every organization that we work with all over the world. Safety is critical in our business, we have a lot of focus on safety because we are in manufacturing, we are in retailing, we are in logistics. We have made a lot of progress in that. Now, briefly on our marketing.
Marketing, as we all know today, that customer experience is critical. Good customer experience is what defines brands. In fact, even today, if you don't have a good customer experience, giving big discounts does not work. Even brands are important, but experience is important, so our focus is on that. Our marketing really focuses on creating desire, call to action, and this experience I talked about. Our internal marketing for us is external and internal. Internal marketing is acquisition of talent, learning and training, technology, live chat, grassroots marketing, social and digital marketing. Acquisition of talent is critical. Our interior designers are entrepreneurs, and every year, this last month, we had 240 of them being recognized here. We do it every year. Learning and training is critical part of our enterprise. Today, of course, with technology, a lot of that learning is done via technology.
We have and will continue to make sure that we have updated and mobile-friendly technology, especially including our website. If you go to our website today, you'll see the dynamic nature of our website. Combining technology with personal service is critical. As I mentioned, live chat just started a year back, and today close to 600 of our designers are participating in this live chat. Grassroots, we're having 1,500 designers and over 250 management and independent retailers. All of them, as I said, are ambassadors that are deeply involved with the grassroots marketing. Social media is important, we are also in the process of even accelerating all of these. External marketing is, the main elements have been direct mail, digital email, print, television, and again, technology and personal service.
We just introduced, as I mentioned, our Passport, we introduced it by sending out 3 million copies of our direct mail, which has just actually been received by clients this last week or so, being well-received. That's me going on a mountain because we're traveling. With this Passport, when you get a Passport, you travel. This is a part of our direct mail, and I think those of you who are here, you can also get that direct mail here. Digital marketing, you're going to see a lot more focus on it as we move forward. This is our Black Friday initiative going on right now. In here, again, as you can see, our initiative is expanding our Ethan Allen Quick Ship.
Especially when you custom in Quick Ship our products that are in stock, and delivering it in good shape is a great competitive advantage. This is right now banner ads. Our emails are also reflecting the Quick Ship and all our other initiatives. Print. TV, video is very, very important. A lot of the videos are being used on social media. As I mentioned, we continue to invest in technology. We are in the process of converting everything to 3D, and we're going to see more of that being used by our designers and even by our clients. We are also in the process of expanding our marketing from, in addition to our Ethan Allen network, we just recently, in last quarter actually, received our orders from the U.S. Department of State, in which we are now furnishing Ethan.
All the diplomats, all over the world have access to Ethan Allen programs, it was well-received. Created a little bottleneck because all of a sudden, in September, we received a fair amount of orders, which had the unintended consequences of putting some challenges in our manufacturing, we are more or less out of it. We have just completed that, and we are looking forward to really developing a strong program with a 5-year contract. We're also looking at other opportunities. We have now entered into an association with Margaritaville. This brand is involved with developing housing, hotels. We're right now in the process of furnishing 1,100 homes and a hotel in Orlando, and in the process of furnishing another hotel in California and a few others. We are in the process. It's a good program.
It combines the two brands quite well, where we are doing all the furnishings, this co-branding is working well, we expect these kinds of initiatives. The next one is Amazon. Just this summer, after 6 or 8 months of work, we introduced the Ethan Allen Design Studio on Amazon. It was somewhat unique for them and also certainly for us, whereby instead of just selling products, they're selling our services and having live chat with our designers. The process has just started, and it gives an opportunity for a fairly large customer base to look at Ethan Allen and then be aware of what we are doing. We have just launched it. In fact, this holiday season, they've taken a few of our items and put it into their, what they call their holiday event. We look forward to continuing development with Amazon.
Finally, I've always said this, insanity is doing the same thing over and over again, but expecting different results. We continuously look at how we're going to continue to reinvent, because for 85 years, the only reason we have stayed and been profitable for 85 years is because of continuous reinvention. With that, I'd like to introduce Eric Koster. Before that, let me go a little financial information. Of course, you're all very familiar with it, but I will give a little sum of an overview. This is a historical perspective. That is, since we took the company public, we have been able to generate a lot of free cash, and we have invested in the company about almost $780 million in capital acquisitions. We have also continued to pay dividends regular, and from time to time, special dividends, $385 million. We have also been purchasing.
A lot of this was purchased before the Great Recession. Shares, we purchased almost 40% of our company back. It cost $579 million. We have, as you can see, after the Great Recession, our sales, we had a 40% decline in two years. We really were. It was being hit with a tsunami. We have been getting back up, and in 2017, our sales was a little bit lower than 2016. It also reflects what you call our written orders. Our written orders are important. This is what we receive from the retail network and then translates into delivered sales. It reflects a three-year, 0.6% decline actually in past year. Our gross margins are healthy and remain healthy, and despite last year being somewhat lower, we have maintained strong gross margins of over 55%, which reflects our vertical integration from manufacturing and retailing.
That's what makes it possible. This is in their industry high margins, but they are result of our vertical integration. Our EPS last year was $1.45, lower than 2016. Dividends, as I said, we have continued to generate cash. We make sure that we watch our inventories, our expenses. Our yield has been about 2.5%. Right after the Great Recession, we even continued with some dividends, even with the Great Recession. Our TSR performance, if you take a look at five years, 12.5%, lower than S&P 500 or Russell, higher than SPI, but three year, we are somewhat higher than the other two, S&P 500 and Russell 3000. 11.6% versus 9.6%, S&P 500, and Russell 3000, 9.1%.
We have discussed our opportunity scenarios with the investment community, with our shareholder community, that our peak, before the Great Recession, we had gone to about a $1.1 billion in sales, producing $147 million of operating income. Then two years in 2010, we were affected by the Great Recession. We went down 40%. We went from $147 million of operating income to $1 million in just a two-year time. We had to take major steps. Now we are back. We are close to about this $800 million level. We are producing about close to $86 million of operating income with over 10% operating margin. Our objective is the opportunity is to continue and to go back to the previous peak. With that, I'll also like to talk briefly about some of our corporate governance initiatives. We have a continuous focus on best practices in governance.
We have implemented the annual non-binding vote on executive compensation in 2011. We eliminated shareholder rights plan, that is a poison pill, in 2012. At the 2013 annual stockholder meeting, implemented a number of significant changes, including appointing a lead director, eliminated classified board terms, approved the recoupment clawback of executive compensation in certain circumstances, imposed requirements for board and management stock ownership, and implemented no hedging/pledging policy. We eliminated requirement that business combination be approved by a majority of the continuing directors. That's what we had previously. We did that in 2015. The 2016 annual stockholders meeting implemented a number of significant changes, including proxy access, majority voting in uncontested elections, provision for stockholder removal of directors with or without cause. Overall updates to our governance documents to implement the 2016 proposals, remove obsolete provision and conform them to customary standards.
We have done this more or less on our own. When we receive suggestions, as they make sense, we do implement them. We have an independent engaged board. They're all here, good. As our board have done for as many years as I remember, they always have 100% attendance in our board meetings. Average tenure is four years. Gender diversity is 33%. Average age is pretty young at 65 years. With that, I think Eric Koster, our General Counsel and Secretary, how about coming up?
Good morning, everyone. At this time, we're going to proceed with the order of business. We welcome you to our 2017 annual meeting of stockholders. Please refer to the rules of conduct that you received when you arrived. Your cooperation in observing these rules is greatly appreciated. Observance of the rules will provide equal opportunity for all stockholders to participate. To highlight a few of the rules of conduct, all questions and comments should be directed to the chairman. No stockholder may address the meeting until he or she is recognized by the chairman. If you wish to ask a question or make a comment, please raise your hand and a microphone will be brought to you. When recognized, please stand, state your name, and the fact that you are a shareholder. If you are acting as a proxy, please so state and name the stockholder you're representing.
Only stockholders of record as of the close of business on September 18, 2017, or their duly appointed proxies are entitled to address the meeting and to vote. Of course, be as brief as possible with your questions and comments. Although it's probably not necessary today, we ask that every question or comment be limited to two minutes. Excuse me. Now, with the order of business today, if there is anyone who is here who has not yet submitted his or her proxy and wishes to do so, would you please give it to the Inspectors of Election who are seated at the inspector's table to my left. Okay. We will proceed with the initial formal business of this meeting, after which, as Mr. Kathwari has explained, there will be an opportunity for you to ask questions of him.
Now, as secretary of the meeting, I can report that notice of this meeting was duly given on or about October 2, 2017. The list of stockholders entitled to vote at this meeting has been available for examination by any stockholder in the company's offices in Danbury for the past 10 days and will remain open for inspection during this meeting. Pending confirmation upon tabulation of the ballots and the proxies, we are operating under the assumption that a quorum is present. The Inspectors of Election for this meeting are Peter Descovich of IOE Services, Inc., and Christopher Hayden of Georgeson LLC, both of whom have already signed the judge's oath, and that will be filed with the records of this meeting. Once the final votes are tallied, the Inspectors of Election will certify the final votes of the meeting.
Now, before we begin consideration of the four proposals to be submitted to a vote at the meeting, I would like to note that ballots will not be distributed to anybody who has not yet voted until after the presentation of all proposals and the stockholders have had an opportunity to comment on each proposal before the polls are closed. During the formal business of the meeting, we ask that you limit your questions and comments to the business at hand. After the formal business, there will be an opportunity for you to ask questions of a more general nature. There are four proposals to be voted on this year, and they are as follows. The first are the election of directors. There have been seven nominees for directors, Mr. Kathwari, James Carlson, John Dooner, Domenick Esposito, Mary Garrett, James Schmotter, and Tara Stacom.
There have been no other additional timely nominations. Because of that, the foregoing seven nominees are the only individuals who are to be considered for election at this meeting. Now, with regard to that, are there any questions with regard to the seven nominees? No. Any comments with regard to the seven nominees? Okay. The second proposal is to approve, by a non-binding advisory vote, the executive compensation of the company's named executive officers. Are there any comments or questions with regard to the second proposal? Okay. The third proposal is to approve, by a non-binding advisory vote, the frequency of future advisory votes to approve the named executive officer compensation. The method of voting on this proposal is to select among four options: one year, two year, three year, or abstain. With regard to the third proposal, are there any questions or comments? Okay.
The fourth proposal is to ratify the appointment of KPMG LLP as our independent public accounting firm for the 2018 fiscal year. Are there any questions or comments with regard to this proposal? Thank you. Okay. Now, I am not aware of any other business to be conducted at this meeting. Before we proceed to the vote on the above proposals, I would like to ask if any stockholder is aware of any formal business to come before the meeting. Okay. Now that all the proposals have been submitted for consideration, I would like to ask if any stockholder has any question that they would like to ask or comment that they would like to make with regard to the four proposals. If so, please raise your hand to be recognized. Okay. There are none? Okay. It is now 10:37 A.M. by my watch.
As the designee of the chairman of the company, I declare that the polls are now open and we will proceed to vote. Persons who have sent in their proxy do not need to vote by ballot unless you wish to change your vote at this time. If anyone would like to vote by ballot, please raise your hand and we will furnish you with the necessary ballot. After voting, please return your ballot to the judges sitting to my left. Does anyone wish a ballot at this time? Okay. Gentlemen, have you tabulated the vote at this point? Excuse me. The Inspectors of Election have just handed me the vote. Based upon their report, I declare that M. Farooq Kathwari, James B. Carlson, John J. Dooner Jr., Domenick J. Esposito, Mary Garrett, James W.
Schmotter, and Tara I. Stacom have been elected as directors of the company for a term of one year. I further declare that the proposal to approve by a non-binding advisory vote the executive compensation of the company's named executive officers has been approved. The proposal to approve by a non-binding advisory vote the frequency of future advisory votes to approve named executive officer compensation has been determined for a frequency of one year. Lastly, on the fourth proposal, to ratify the appointment of KPMG, that has passed as well. They will act as the firm's independent registered public accountants for the 2018 fiscal year. The report of the Inspectors of Election will be filed with the minutes of this meeting. That concludes the formal business to come before the meeting today. I would now like to turn the meeting back to Mr. Kathwari.
Well, thank you, Eric, congratulations to all our board members for being elected. Also thanks to all our shareholders. I had an opportunity this morning of looking at the results that had come this morning of having extremely overwhelming support by our shareholders. I want to thank them for that. I would also at this stage, if any other comments or questions anybody has about the presentations? If not, do I have a motion to adjourn the meeting from one of the stockholders? Seconded. Seconded. Again, thanks very much, and thank you for participating in our 2017 shareholder meeting.