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Ethan Allen Posts First Quarter Sales & Earnings Increase

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Ethan Allen Interiors Inc. reported operating results for the three months ended September 30, 2007. Net delivered sales for the quarter ended September 30, 2007 increased 2.4% to $248.7 million as compared to $242.8 million in the prior year quarter. Net delivered sales for the Company’s Retail division increased 10.1% to $182.8 million. Wholesale sales increased 0.4% to $156.3 million during that same period. Comparable Ethan Allen design center delivered sales increased 0.2% as compared to the prior year quarter. For the quarter ended September 30, 2007, earnings per share amounted to $0.57 on net income of $17.5 million. This compares to earnings per share and net income of $0.26 and $8.5 million, respectively, in the prior year comparable period which included a September 2006 restructuring and impairment charge. Excluding the impact of this charge, prior period earnings per share amounted to $0.53 on net income of $17.2 million. Farooq Kathwari, Chairman and CEO, commented: "We are pleased with our results for the first quarter ended September 30, 2007. Despite continued uncertainty with respect to the economy, concerns with respect to the consumer credit situation, and a softer overall environment for home furnishings retail, sales and net income for the quarter improved. Our quarterly earnings per share increased 7.5% to $0.57 from $0.53, ex-restructuring, in the prior year period, reflecting a higher gross margin, continued cost containment efforts and the benefit of share repurchases. The consolidated operating margin reflects the addition of 17 Company-owned design centers since September 2006 and continued implementation of our project management initiative, including related investments in recruiting and training programs. For the quarter ended September 30, 2007, the Company generated $41.5 million in operating cash, utilizing $12.5 million to fund capital expenditures associated, primarily, with the opening of new design centers and $38.3 million to repurchase 1.1 million shares of our common stock in the open market at an average cost per share of approximately $33.50. As previously announced, the Company’s Board of Directors increased the then remaining share repurchase authorization to 2.5 million shares in July. As of September 30, 2007, the Company had remaining authorization available to repurchase an additional 2.1 million shares.” Mr. Kathwari continued: “We continue to make progress in our efforts to position Ethan Allen as a leading interior design company focused on providing solutions and service. As I have stated previously, our plan to achieve this objective involves: the strengthening of our recruiting and training programs in order to increase the professionalism of our retail management team; the development of stylish, high-quality products at good value; the continued repositioning of our retail network to more prominent locations; further enhancements to our advertising and marketing programs; and process improvements to enable faster delivery of our products to our customers. We believe it is these initiatives that provide us a distinct competitive advantage and an opportunity to grow our business.” Commenting on current business trends, Mr. Kathwari stated: "While our first quarter results were promising, we are aware of the difficult economic environment that still exists. However, we remain cautiously optimistic with regard to our ability to continue to do relatively well as we move forward.” Ethan Allen Interiors Inc. is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through a network of 310 design centers in the United States and abroad, of which 158 are Company-owned. Ethan Allen has 9 manufacturing facilities, which include 2 sawmills, located throughout the United States.

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