Ethan Allen Reports Steep Sales Decline for Quarter

Furniture World Magazine

Ethan Allen Interiors Inc. reported operating results for the three and twelve months ended June 30, 2009. Three Months Ended June 30, 2009 Net delivered sales for the quarter ended June 30, 2009 amounted to $138.7 million as compared to $235.9 million in the prior year quarter. Net delivered sales for the Company’s Retail division were $102.3 million compared with $176.5 million the prior year quarter. Wholesale sales were $85.2 million versus $147.7 million the prior year quarter. Comparable Ethan Allen design center delivered sales were down 43.5% as compared to the prior year quarter. For the quarter ended June 30, 2009, diluted loss per share amounted to $0.58 on a loss of $16.9 million, which includes a $12.9 million restructuring and impairment charge for previously announced actions. Also included in the current quarter results was $1.5 million ($0.05 per diluted share) of tax expense for the recording of reserves on certain deferred tax assets. This compares to diluted earnings per share and net income of $0.39 and $11.1 million, respectively, for the prior year, which included a restructuring and impairment charge of $2.8 million. Excluding the impact of the restructuring and impairment charges in both periods and the tax entries in the current quarter, diluted loss per share amounted to $0.23 in the current period compared to diluted earnings per share of $0.45 in the prior year comparable period. Year Ended June 30, 2009 For the twelve months ended June 30, 2009, net delivered sales totaled $674.3 million as compared to $980.0 million in the prior year comparable period. Net delivered sales for the Company’s Retail division were $508.6 million compared with $724.6 million the prior year. Wholesale sales were $403.4 million versus $616.2 million the prior year. Comparable Ethan Allen design center delivered sales were down 32.5% as compared to the prior year comparable period. For the twelve months ended June 30, 2009, which includes a $48.4 million goodwill impairment charge and $18.6 million of restructuring and impairment costs, diluted loss per share amounted to $1.83 on a net loss of $52.7 million. As noted above, the results for the fiscal year include $1.5 million tax expense booked in the fourth quarter ($0.05 per diluted share). This compares to diluted earnings per share and net income of $1.97 and $58.1 million respectively, for the prior year, which included a $6.8 million restructuring and impairment charge. Excluding the impact of the goodwill impairment and the tax expense noted above from the current year and the restructuring and impairment charges in both fiscal years, diluted loss per share amounted to $0.31 on a net loss of $8.9 million in the current year period as compared to diluted earnings per share of $2.12 on net income of $62.4 million in the prior year comparable period. Farooq Kathwari, Chairman and CEO, commented, “Fiscal 2009, while extremely challenging, provided us the opportunity to accelerate our process of reinvention. We focused on two major initiatives. First: to bring our expense and cost structure down. On an annualized basis we reduced about $120 million in operating expenses and about $30 million in manufacturing costs. We will see most of the reductions benefiting our fiscal 2010. Second: to implement many initiatives that will create a strong competitive difference and help grow our sales and profitability. Our move toward custom production in our case goods manufacturing and the launch of the new Interior Design Affiliate program are just the latest examples of these initiatives.” Mr. Kathwari further stated, “Our focus was also to maintain a strong cash position. As of June 30, 2009 we had $53 million in cash which has grown to $63 million. While business conditions remain very difficult, the rates of decline that we experienced in the last six months were substantially reduced in July.” About Ethan Allen: Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company"; NYSE:ETH) is a leading interior design company and manufacturer and retailer of quality home furnishings. The Company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates six manufacturing facilities in the United States, which includes one sawmill, and one manufacturing facility in Mexico, and manufactures approximately sixty-five percent of its products in its United States plants. For more information on Ethan Allen’s products and services, visit ethanallen.com.