Farooq Kathwari, Chairman and CEO, commented, "As Ethan Allen has evolved into a business model focused on providing interior design service and solutions, including free in-home design consultations, we do not need to have as many neighborhood locations in major markets.
For example, in New York City, we will be consolidating two design centers in Manhattan and one in Queens into one major new flagship design center located on Third Avenue across from Bloomingdales, which is scheduled to open by May, 2008.
The twelve design centers that are being consolidated represent about $34 million in annual sales, about 50% of which is expected to be consolidated into the new Manhattan location. We expect most of the remaining business to be picked up by our other design centers. We expect this consolidation will improve operating profits by about $3 to $4 million annually starting in fiscal 2009."
As of December 31, 2007 Ethan Allen has an international network of 305 design centers of which 160 are company-owned and 145 are independently owned. During the first half of this fiscal year there were seven new design centers opened in key markets in the US and three new design centers opened internationally.
During the next six months, we are on track to open eight new design centers. Most of the new design centers represent relocations of existing design centers to larger and better locations. Since 1993 an extensive portion of our retail network has been relocated.
Commenting on current business, Chairman and CEO Farooq Kathwari stated, "While business conditions have remained difficult during our second quarter ended December 31, 2007, we are pleased with our projected results. Our sales for the quarter ended December 31, 2007 were approximately $260 million, up about 1% from the prior year quarter. We expect operating margins to be between 12% and 13% and diluted earnings per share to be between $0.68 and $0.70 compared to $0.70 in the prior year quarter."
Continuing, Mr. Kathwari stated, "While recognizing that the overall uncertain economic environment is expected to remain weak for the foreseeable future, we have the opportunity to continue to do well due to the many initiatives that we already have in place to position Ethan Allen as a provider of Style, Quality, Value, and Solutions. We look forward to discussing in greater detail after our earnings release on January 23, 2008."
Ethan Allen Interiors Inc
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