Moody's may downgrade Ethan Allen ratings

Moody's Investors Service said Wednesday that it has placed its ratings for Ethan Allen Interiors Inc. on review for possible downgrade following the home furnishings retailer's weak fiscal third-quarter results in late April.

About $200 million in debt instruments are affected by Moody's action.

The ratings under review include Ethan Allen's investment-grade "Baa3" senior unsecured rating. Moody's said the results, which included a 40 percent revenue drop, heightened its concerns about the company's ability to rebound.

Moody's noted that the Danbury, Conn.-based company has terminated its revolving credit facility and is likely to establish an asset-based revolving credit facility. The ratings agency said it believes the company's current liquidity position is "adequate," despite the lack of a facility.

Ethan Allen shares lost $1.31, or 10.8 percent, to $10.81 on Wednesday. The stock has traded between $6.98 and $34.02 during the past 52 weeks.