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From Home Furnishing Business

Ethan Allen Sees Lower Profits Due to Disney Launch, Higher Ad Spending

Ethan Allen (ETH) said it expects to report lower earnings for the quarter ended Sept. 30 due largely to higher advertising costs and expenses related to the upcoming launch of its Ethan Allen/Disney line.

The manufacturer and retailer said it expects earnings per share of 42 cents to 43 cents for the quarter, which would be down from 46 cents per share in the same quarter last year.

Based on preliminary financial information, the company said comparable-store sales at its retail stores rose 5.7%, while it expects to report a net sales gain of approximately 1.5%.

An advertising increase of 22.3% to $8.1 million, expenses associated with the Ethan Allen/ Disney launch of $0.9 million and incremental new Design Center start-up losses of $0.9 million trimmed earnings per share by 7 cents, the company said.

"We look forward to discussing our progress and initiatives at the forthcoming Investor Meeting," said Farooq Kathwari, Chairman and CEO of Ethan Allen. "Topics will include the repositioning of our offerings, our expanded marketing, investments in new Design Centers around the country, investments in technology, and the launch of the Ethan Allen/Disney magical home program in November 2016."

He added, "All of these initiatives coupled with a substantial expansion of our advertising have resulted in increased operating expenses compared to the prior year first (fiscal) quarter. Our retail comparable written sales increased 8% during the first quarter. We remain cautiously optimistic."

The company said complete financial results for the quarter will be released Oct.25.

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