Ethan Allen (ETH) Guides Q1 EPS Below Consensus

Ethan Allen Interiors Inc. (NYSE: ETH) commented today, in advance of its International Conference, on its business and preliminary financial results for its fiscal 2018 first quarter, which ended on September 30, 2017.

"We are looking forward to celebrating our 85^th anniversary next week during our international conference, which will be attended by more than 550 associates from our North American and international retail locations, and from our manufacturing and logistics operations. During the conference, we will be recognizing more than 230 of our top interior designers and discussing our business and current initiatives," said Farooq Kathwari, Chairman and CEO of Ethan Allen. "Although both our written and delivered sales were impacted by the hurricanes, we experienced good order growth during the first quarter of fiscal 2018."

The Company's preliminary results reflect that total written orders for the retail segment increased 1.7% for the quarter, which follows an 8.1% increase in the prior year first quarter. The Company estimates total written orders would have increased 2.5% without the disruption from the hurricanes. Wholesale segment orders were very strong this quarter due to the increased retail written orders, plus an additional $12.4 million of wholesale orders from the U.S State Department Packaged Home program.

The hurricanes disrupted several key markets in which the Company operates: 15 Design Centers in Florida, including 11 company-operated locations, plus five company-operated Design Centers in the coastal Carolinas were affected by Hurricane Irma; and 11 Design Centers in Texas, with five independently operated locations in the Houston market, were impacted by Hurricane Harvey. Design Centers and delivery centers were closed anywhere from a couple of days to more than a week, with an effect on both written orders and net delivered sales. Hurricane Harvey also disrupted the Company's wholesale logistics, as the temporary shutdown of railway shipping through Houston impacted shipments from the Company's upholstery plant in Mexico, and ocean freight arrivals were delayed into the Port of Houston.

Mr. Kathwari further commented, "Additionally, our written, delivered and profitability were affected by first run production of floor samples for Passport, a new product assortment launching in November. First run production and strong orders from the U.S. State Department also resulted in production and shipping delays." Mr. Kathwari added, "Going into the second quarter, our retail division backlog is up 11.6% and the wholesale backlog is up 61.6% from June 30, 2017. We are well positioned to clear up these high backlogs during the second quarter."

The Company expects to report consolidated net sales of $181.3 million for the first quarter, wholesale net sales of $111.6 million, and retail net sales of $141.6 million. The Company expects a gross margin of 55.3% for the first quarter, an adjusted operating margin of approximately 6.8%, and an adjusted EPS in the range of $0.27 to $0.28. The Company estimates that the hurricanes and first run production of new products disrupted consolidated net sales by approximately 7% to 8%, brought down gross margin from 56.0% to 55.3%, and reduced adjusted EPS by $0.14 to $0.15.

(Street sees Q1 EPS of $0.45 on revenue of $198.4 million)

The Company will release its first quarter fiscal 2018 financial results after the market closes on Wednesday, October 25, 2017, and will host an analyst conference call to discuss the Company's business and financial highlights that afternoon at 5:00 PM ET. This call will be webcast from the "Events and Presentations" page at http://www.ethanallen.com/investors. To access the conference call, dial 844-822-0103 (or 614-999-9166 for international callers), and enter conference ID 50728592. For those unable to listen live, the call will be archived on the company's website for at least 60 days.

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