Player Avatar NetscribeRetail (91.76) Submitted: 11/30/2006 1:47:33 AM : Underperform Start Price: $29.17 ETH Score: +54.22

Ethan Allen Needs to knock on the Wood, Ethan Allen Interiors is a vertically integrated firm in home furnishings and accessories, with a dozen furniture factories, including saw mills. The company operates through its wholesale and retail segments. The company’s wholesale segment engages in designing, manufacturing, domestic and offshore sourcing, sale, and distribution of a range to a of home furnishings network of its stores. The company’s retail segment, on the other hand, sells home furnishings to consumers through a network of company-owned interior design centers.

The industry, in which the company operates, itself is facing a down turn. Furniture companies have pared their profit forecasts in recent weeks as the cooling U.S. housing market, higher borrowing costs, and other economic factors lead consumers to pull back from big-ticket purchases. Moreover, new home sales and existing home sales have been declining from the past four quarters. Furthermore, home equity is expected to fall by 40% in 2007. These factors will have their effects on the future home furnishing sales.

Considering the growing uneasiness in the industry, Ethan Allen Interiors has been trying to speed up the process of filling customer orders, but again the faster turnover has reduced the visibility of future sales. With consumer confidence going down, along with the company’s declining sales, Ethan has shut down two of its manufacturing facilities. Owing to these conditions and the fact that consumers are directing their discretionary dollars elsewhere, there is no scope for the company’s stock to perform well at least in fiscal 2007.

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Member Avatar moonchild13438 (< 20) Submitted: 12/20/2006 8:11:22 PM
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ethan allen has closed more than two factories. Is an un easy industry.Hopefully it does well for the sake of the remaining company

Member Avatar NetscribeRetail (91.76) Submitted: 4/16/2007 4:58:22 AM
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Ethan Allen Interiors (ETH) is in to home furnishings and accessories. The company operates through its retail and wholesale segment out which retail segment is the larger contributor of sales. Retail segment this quarter reported a decline of 1.4% and its wholesale segment showed a double-digit decline. Though its top line declined, its gross margins look strong at 52% and company portrayed increasing operating and net margins. This improvement in its margins is due to its control over its expenses and inventory management.Company faced a good second quarter only in terms of margins, but the industry is still showing the signs of soft retail conditions. Sales of new houses in February 2007 slid 3.9% and 18.3% vs. previous quarter and year. Average interest rates on 30-year and 15-year loans have also increased. Though remodeling activities are showing a slow growth but the rising fuel prices and interest rates may curb customer spending.The company had recently shut down two of its manufacturing plants and whose cost has been more or less absorbed accept for the Spruce pine cost which will largely flow through inventory in the second half of the year. This might have a negative effect on the margins. Its plans to invest heavily on the advertising, can push some inventory, but may pressurize the margins. Considering this, one can say with the slumping retail environment and no great strategy on the part of the company, future growth of the company looks a little shaken.

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