Ethan Allen 3Q profit drops 50 percent on charges, sales dip

Home furnishings company Ethan Allen Interiors Inc. said Tuesday its third-quarter profit dropped 50 percent due to restructuring costs and weak wholesale sales.

For the quarter ended March 31, net income fell to $8.8 million, or 30 cents per share, from $17.5 million, or 54 cents per share, in the prior year quarter.

Excluding restructuring and impairment charges related to the closure of several design and service centers, the company said it earned 39 cents per share.

Revenue fell 4 percent to $235.9 million from $246.5 million in the third quarter of 2007.

Analysts polled by Thomson Financial expected profit of 36 cents per share on slightly higher revenue of $237.4 million. Analyst estimates typically exclude one-time charges.

Retail sales rose 3 percent while wholesale sales dipped 9 percent. Same-store sales, or sales at stores open at least a year, at Ethan Allen design centers fell 1.1 percent.

Ethan Allen said its sales were affected by the weaker economy and the switch in the timing of the Easter holiday.

"Sales in March particularly slowed down due to broader economic concerns raised by the extraordinary intervention of the Federal Reserve to stabilize financial institutions, and to some extent due to Easter falling in March this year," said Chairman and Chief Executive Farooq Kathwari, in a statement. "With a relatively calmer economic environment in April, and Easter behind us, the decline in sales so far has been considerably reduced."

The company said most of the major relocation of its design centers is expected to be completed this fiscal year, and capital expenditures for next year are expected to drop by 30 percent to 50 percent from current annual levels of $70 million.