Ethan Allen Reports Net Delivered Sales Decline

Furniture World Magazine

Ethan Allen Interiors Inc. reported operating results for the three and twelve months ended June 30, 2008. Three Months Ended June 30, 2008 Net delivered sales for the quarter ended June 30, 2008 amounted to $235.9 million as compared to $258.5 million in the prior year quarter. Net delivered sales for the Company’s Retail division were $176.5 million, down 5.9% from the prior year quarter. Wholesale sales were $147.7 million, down 9.3% from the prior year quarter. Comparable Ethan Allen design center delivered sales were down 11.1% as compared to the prior year quarter. For the quarter ended June 30, 2008, diluted earnings per share amounted to $0.39 on net income of $11.1 million, which includes a $2.8 million Retail division restructuring charge relating to the plan announced on January 10, 2008. Excluding the restructuring charge, diluted earnings per share amounted to $0.45. This compares to diluted earnings per share and net income of $0.65 and $20.5 million, respectively, in the prior year comparable period. Year Ended June 30, 2008 For the twelve months ended June 30, 2008, net delivered sales totaled $980 million as compared to $1.0 billion in the prior year comparable period. Net delivered sales for the Company’s Retail division were $724.6 million, up 3.7% from the prior year. Wholesale sales were $616.2 million, down 6.1% from the prior year. Comparable Ethan Allen design center delivered sales were down 3.2% as compared to the prior year comparable period. For the twelve months ended June 30, 2008, which includes a $6.8 million restructuring and impairment charge, diluted earnings per share amounted to $1.97 on net income of $58.1 million. This compares to diluted earnings per share and net income of $2.15 and $69.2 million respectively, for the prior year, which included a $13.4 million restructuring and impairment charge. Excluding the impact of the impairment and restructuring charges in both periods, diluted earnings per share amounted to $2.12 in the current year period as compared to $2.41 in the prior year comparable period. Farooq Kathwari, Chairman and CEO, commented, “We are pleased with the progress we have made during the fiscal year. We are gratified with our superior financial performance in a very challenging economic environment. More importantly, we have undertaken numerous initiatives to position us for growth as an interior design based enterprise. In our Retail Division, initiatives include the implementation of the design team concept, the conversion of twelve design centers to design studios, the restructuring of the retail design service center network, closing of twelve Retail Division design centers in underperforming markets, and opening of a record number of eighteen new design centers, including relocations. In other areas of our vertically integrated structure, we have improved our product offerings; launched a major national and regional advertising campaign relating to our interior design services; made major improvements to our information systems including development of a new website, and strengthened our manufacturing and logistics base.” Commenting on the outlook for fiscal 2009, Mr. Kathwari stated, “In these challenging times it makes sense to be prepared for further softening of the economy and also be ready for the next upturn. The initiatives we have taken position us well. As far as our financial performance is concerned, we expect to continue to do relatively well”. Ethan Allen Interiors Inc. is an interior design business providing complimentary design service and one-stop shopping convenience through a dedicated international network of 295 retail locations, which are referred to as design centers and design studios. Ethan Allen owns nine manufacturing facilities, including two saw mills, in the United States and one in Mexico.