Ethan Allen Reports Lower Sales For Fourth Quarter

Furniture World Magazine

Ethan Allen Interiors Inc. reported sales and earnings for the three and six months ended December 31, 2006. Three and Six Month Results: Net delivered sales for the quarter ended December 31, 2006 amounted to $257.4 million as compared to $276.0 million in the prior year quarter. Net delivered sales for the Company’s Retail division decreased 1.4% to $177.4 million, while Wholesale sales decreased 11.7% to $165.7 million during that same period. Comparable Ethan Allen design center delivered sales decreased 8.5% as compared to the prior year quarter. For the six months ended December 31, 2006, net delivered sales totaled $500.2 million as compared to $527.3 million in the prior year comparable period. Net delivered sales for the Company’s Retail division increased 1.5% to $343.4 million, while Wholesale sales decreased 12.2% to $321.3 million during that same period. Comparable Ethan Allen design center delivered sales decreased 5.3% as compared to the prior year comparable period. For the quarter ended December 31, 2006, earnings per share amounted to $0.70 on net income of $22.8 million. This compares to earnings per share and net income of $0.77 and $26.2 million, respectively, in the prior year comparable period. For the six months ended December 31, 2006, earnings per share, which includes a previously announced September 2006 restructuring and impairment charge, amounted to $0.96 on net income of $31.2 million. This compares to earnings per share and net income of $1.26 and $43.3 million, respectively, in the prior year comparable period which included a September 2005 restructuring and impairment charge. Excluding the impact of these charges in both periods, earnings per share amounted to $1.22 on net income of $39.8 million in the current year period as compared to earnings per share and net income of $1.34 and $45.9 million, respectively, in the prior year comparable period. Farooq Kathwari, Chairman and CEO, commented: "We are pleased to report quarterly operating earnings of 14.2% of sales despite a soft home furnishings retail environment and challenging prior year comparisons which, together, resulted in a 6.7% decline in sales. Delivered sales and earnings for the December 2005 quarter were favorably impacted by stronger economic conditions and our initiative to reduce the lead time associated with the delivery of our products to the consumer. As a result, we experienced a substantial reduction in our backlog and increased profitability during the prior year quarter.” Mr. Kathwari further stated: “Our focus remains the positioning of Ethan Allen as a provider of interior design solutions. In order to achieve this objective, we continue to strengthen the professionalism of our associates, develop stylish products which better facilitate a one-stop design experience, and open new design centers in key markets. These efforts, we believe, along with our comprehensive and coordinated marketing programs, provide us a distinct competitive advantage and an opportunity to grow our business.” Commenting on business trends, Mr. Kathwari continued: “We saw positive trends in comparable written sales during the month of December. We also recognize that the home furnishings retail environment, as a whole, remains uncertain. At this stage, due to the strong positioning of Ethan Allen at retail, we believe the current average of analyst estimates for the fiscal third quarter ended March 31, 2007 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 307 design centers in the United States and abroad, of which 149 are Company-owned. Ethan Allen has 9 manufacturing facilities, which include 2 sawmills, located throughout the United States.