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Ethan Allen Warns Q2 Results Will Be Very Weak

ETH – Sees Q2 EPS $0.38-0.39 vs $0.59.

Ethan Allen Interiors Inc. (NYSE:ETH) early Wednesday offered second quarter guidance that was well below Wall Street’s view, citing lower sales and margins.

The Danbury, CT-based furniture retailer forecast Q2 EPS to range from $0.38 to $0.39, which would badly miss the $0.59 that analysts were expecting. ETH also sees Q2 revenues of $194.7 million, also far less than Wall Street’s $213.67 million estimate.

Ethan Allen Commented via press release:

“Despite a challenging retail environment during our second quarter ending December 31, 2016 we had a reduction of 3.6 percent in our written retail orders compared to a record written increase of 15.3 percent in the previous year quarter. Due to a delivered sales decline of 6.2 percent, our adjusted operating income is projected to be approximately 8.8 percent of sales compared to 12.2 percent of sales in the previous year quarter. Our adjusted earnings per share is projected to be $0.38- $0.39 compared to $0.55 in the previous year second quarter.”

Somehow, the company remains upbeat about the rest of the year:

“We are positioned well to benefit from many initiatives including freshening of our offerings, launch of the Ethan Allen/Disney collaboration, improvements to our manufacturing and logistics resulting in faster deliveries, relocations and renovations of our design centers, and investments in technology. We are seeing increases in sales from on-line interactions and we expect to see continued increases due to the combination of technology and personal services of our interior designers. Our plans are to start substantially increasing our marketing in both digital and traditional mediums starting from our current third quarter with continued increases as we move forward.”

Ethan Allen Interiors Inc. shares was unchanged in premarket trading Wednesday, but we’ll probably see that change to the downside very soon. Year-to-date, ETH has declined -4.65%, versus a 1.31% rise in the benchmark S&P 500 index during the same period.

ETH currently has an POWR Rating of B (Buy), and is ranked #29 of 61 stocks in the Home Improvement & Goods category.

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