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Ethan Allen Announces Second Quarter Results

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Ethan Allen Interiors Inc. reported sales and earnings for the three and six months ended December 31, 2005. Three and Six Month Results Net delivered sales for the quarter ended December 31, 2005 increased 12.5% to $276.0 million from $245.3 million in the prior year quarter. Net delivered sales for the Company's Retail division increased 15.5% to $180.0 million, while Wholesale sales increased 16.2% to $187.5 million during that same period. Comparable Ethan Allen store delivered sales increased 12.5% over the prior year quarter. During that same period, Retail division written sales increased 10.2% while comparable store written sales increased 6.3%. For the six months ended December 31, 2005, net delivered sales increased 10.9% to $527.3 million from $475.6 million in the prior year comparable period. Net delivered sales for the Company's Retail division increased 13.7% to $338.4 million, while Wholesale sales increased 13.4% to $366.0 million during that same period. Comparable Ethan Allen store delivered sales increased 10.8% over the prior year comparable period. During that same period, Retail division written sales increased 14.2% while comparable store written sales increased 10.9%. For the quarter ended December 31, 2005, earnings per share increased 22.2% to $0.77 on net income of $26.2 million. This compares to earnings per share and net income of $0.63 and $23.1 million, respectively, in the prior year comparable period. For the six months ended December 31, 2005, earnings per share, which includes a pre-tax restructuring and impairment charge of $4.2 million related to the Company's planned conversion of one of its existing manufacturing facilities into a regional distribution center, amounted to $1.26 on net income of $43.3 million. This compares to earnings per share and net income of $1.14 and $41.9 million, respectively, in the prior year comparable period. Excluding the impact of the restructuring and impairment charge, earnings per share for the current period amounted to $1.34 on net income of $45.9 million. Farooq Kathwari, Chairman and CEO, commented: "We are very pleased with our results for the quarter. We believe that the structural changes undertaken within our business during the past three years, including initiatives to enhance our product offerings, our manufacturing, sourcing and logistics activities, our retail network, and our marketing efforts, played an important role in our ability to increase sales more than 12%, increase operating income 21%, and increase earnings per share 22%. In addition, during the quarter, we generated $20 million of operating cash, returning that same amount to our shareholders through the repurchase of stock and the payment of quarterly dividends." Mr. Kathwari continued: "In addition to the factors mentioned above, delivered sales and earnings for the quarter were favorably impacted by the continued implementation of one of our strategic plans, referred to as "Mission Possible", the objective of which is to reduce the lead time associated with the delivery of our products to the consumer. As a result of this initiative, we were able to substantially reduce our delivery time and backlog during the quarter, including orders that, if not for this initiative, would have likely resulted in delivered sales during the March fiscal quarter." Commenting on the outlook for the remainder of the fiscal year, Mr. Kathwari stated: "As mentioned previously, the quarter ended December 31, 2005 was a transitional quarter during which we made considerable progress with respect to a number of key initiatives, enabling us to reduce delivery times and increase shipments. While it has not been our practice to provide specific comments regarding quarterly earnings estimates, we have made an exception for next quarter in light of the effect that our initiatives had on second quarter results. For the fiscal third quarter ended March 31, 2006, we currently estimate that earnings per share will increase 8-12% over the prior year comparable period. Further, at this time, we believe that the current range of analyst estimates for the fiscal fourth quarter ended June 30, 2006 is within reach." Ethan Allen Interiors Inc. is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through an exclusive network of 313 retail stores in the United States and abroad, of which 132 are Company-owned. Ethan Allen has 11 manufacturing facilities, which include 2 sawmills, located throughout the United States.

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