While many middle-of-the-road home-goods retailers have found it difficult to increase sales and profitability amid a cautious consumer-spending profile and discount-heavy retail environment, furniture and interior-decorating company Ethan Allen Interiors (ETD -0.90%) is feeling much more comfortable. The company recently reported its fiscal second-quarter earnings, and though the numbers didn't blow estimates out of the water, the Street still ate them up and asked for seconds. Management used the classic phrase "cautiously optimistic" to describe forward sales and earnings potential, but it looks like this is one shop that is finding ways to get customers through the door -- and more important, spending their money.

Earnings recap
One would think that home-goods stores have the wind at their backs, given the continuously improving housing market. DIY and improvement shops like Home Depot certainly have felt the push, but the decorations and furnishings businesses feel more of a squeeze. Companies such as Pier 1 Imports and Bed Bath & Beyond recently reported weak December sales, sending both stocks plummeting.

Ethan Allen, while a much purer play on furniture than the aforementioned home-goods companies, is faring better. Sales grew 1% in the 2014 fiscal second quarter to $193.1 million. Backlogs looked more attractive with 14% growth over the prior year, as well as comparable retail written sales -- up a healthy 6.6%.

The bottom line grew 5% to $0.41 per share -- one penny ahead of estimates -- based on improved margins and sales boost.

The furniture market is extremely competitive, and it's a highly fractured industry between the independent shops and the corporate efforts. Luckily, one major threat, Internet retailers, have yet to replace the brick-and-mortar stores, as people still like to test out and see in person their future couch.

Ethan Allen is trying to separate itself from the pack with inventory-management efforts aimed at immediate delivery -- a subject that can be a huge headache (or conversely, relief) for shoppers. For a case study in the benefit of ideal delivery mechanism, look no further than Amazon.com.

Looking ahead, management didn't give a big dose of optimism, but suggested sales and profits will continue to rise in coming periods.

A buy?
At 15.3 times forward earnings, Ethan Allen isn't dirt cheap, but it's certainly not expensive. Competitor La-Z-Boy trades at more than 18 times forward earnings. Ethan Allen also has a healthy-looking balance sheet, with $113 million in cash and securities -- 14% of its current market cap. The company's total liabilities are nearly covered by current assets.

On continued strength in the housing sector and a management team working to build a competitive advantage, Ethan Allen is an interesting pick for investors.