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Ethan Allen 4Q sales up 12.3%

By Janice Chamberlain -- Furniture Today, July 30, 2006

Danbury, Conn. — Despite flat traffic in its stores, retailer-manufacturer Ethan Allen racked up a 12.3% sales gain in its fourth quarter, driving a 12.4% upswing for the year ended June 30. Net profits in the latest quarter jumped 14.8%.

Chairman and CEO Farooq Kathwari attributed the sales gains to a "better sales conversion rate" by store associates, and to a stronger retail management team.

Total sales in the latest quarter increased from $242.3 million a year ago to $272 million. Net profits came to $22.4 million. Delivered sales for the company's retail division were up 21.8% to $184.4 million, as wholesale sales increased 3.6% to $178 million. Same-store delivered sales were up 12.8%.

For the year, the vertically integrated company achieved record sales of $1.1 billion, up 12.4% over the previous year's $949 million. Annual delivered sales in the retail division increased 17.9% to $691 million, and wholesale sales increased 11% to $736.1 million for the year. Comparable sales at Ethan Allen stores surged 12.3%.

Annual net earnings, including a $4.2 million pretax restructuring charge, jumped 8% to $85.7 million, measured against net profits of $79.3 million in the prior year.

Gross margins in both 2006 periods exceeded 50%, with the quarter coming in at 51.4% and the year at 50.7%. Comparable gross margins in the 2005 periods were 49.8% and 48.6%, respectively.

In a conference call with analysts, Kathwari said the company sourced 35% to 45% of its product offshore In the fourth quarter. He said imports represented about 52% to 55% of case goods, 30% to 35% of upholstery and 14% to 15% of accessories.

Ethan Allen opened four stores in the latest quarter, bringing the total to 306 worldwide, 139 company owned. It plans to open about 16 stores in the coming year.

Looking ahead, the company expects sales next year to be up 5% to 7%, with earnings per share up 10% to 12%.

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Ethan Allen 4Q sales up 12.3%; Profits jump 14.8%

Jul 27, 2006

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