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To: Smiling Bob who wrote (144087)	10/23/2008 11:23:56 AM
From: Smiling Bob	Respond to of 306849

Ethan Allen profits drop 57.2% in latest quarter Sales decline 17.2% from a year earlier Furniture Today Staff -- Furniture Today, October 23, 2008 DANBURY, Conn. — Ethan Allen's profit fell 57.2% in its fiscal first quarter ended Sept. 30 as sales declined 17.2% from the same period a year earlier, the manufacturer and retailer reported today. Sales of $205.8 million represented a decline of 14.7% in retail sales to $155.9 million and a 22.4% drop at wholesale, to $121.3 million. Comparable store sales at Ethan Allen design centers were down 19% in the quarter. Earnings were $7.4 million or 26 cents per share, compared with $17.5 million or 57 cents per share a year ago. "We have been able to maintain decent profitability during these challenging times," said Farooq Kathwari, chairman and CEO. "While our sales have decreased, our gross margins increased due to many factors, including maintaining our everyday best price policy. "In addition, our many initiatives during the last several years are also a major factor in reducing costs and improving our performance," he added. "These initiatives have included developing knowledgeable and motivated associates, the repositioning of our brand to a modern attitude with a classic perspective, maintaining a consistent strong national advertising program, and continued structural change in our retail, manufacturing and logistics network." The company had 292 stores as of Sept. 30, 160 of which were company-owned. A year earlier, it had 311 stores, with 159 company-owned. During the quarter, the company implemented what it called the "team concept" in its retail division, with associates paid a base salary with the opportunity for the team to earn a bonus. An overlap of selling expenses as prepaid commissions added a $4.6 million expense in the quarter. In addition, a tax issue was resolved, resulting in a one-time benefit of about $800,000. The company also posted a restructuring benefit of $1 million in the quarter from a gain on the sale of a property it closed last year. Kathwari said a focus of the company has been to maintain liquidity. He said Ethan Allen increased its cash position by $5.5 million in the quarter, to $80 million. "As we have indicated previously, we have completed most of the repositioning of the retail network and expect a major reduction in capital expenditures this fiscal year, which should further help strengthen our cash position," he said. "While the overall economic environment remains uncertain, we believe that we are well positioned during this period and also are ready to grow our business as conditions improve."