Ethan Allen shares slump after results prereleased
CHICAGO — Shares of home furnishings retailer Ethan Allen Interiors Inc. sank Wednesday, a day after the company released preliminary third-quarter results and halved its dividend, prompting at least one analyst to downgrade the stock.
Shares of the company were down 83 cents, or 6.5 percent, at $12.04 in late-morning trading after dipping as low as $10.66 earlier in the session.
Raymond James analyst Budd Bugatch cut his rating on the Danbury, Conn.-based company to “Market Perform” on Wednesday, down from “Outperform” and placed estimates under review after the “disappointing” results issued late Tuesday.
“Despite its excellent management, cohesive business model and highly recognizable brand, Ethan Allen’s sales remain under severe (and increasing) pressure due to the difficult economy and the highly discretionary nature of its product,” Bugatch wrote in a research note.
On Tuesday, Ethan Allen said it will likely lose between $17 million and $18 million for the third quarter, because of a massive sales drop attributed to the recession.
That amounts to a per-share loss between 59 cents and 63 cents. Excluding restructuring and impairment charges, Ethan Allen said it lost $12.5 million to $13.5 million, or between 43 cents and 47 cents a share, in the three-month period that ended in March.
Sales slumped nearly 41 percent, but the company did not specify what it expected quarterly revenue to be when it formally releases results on April 30.
Analysts had expected the company to earn 4 cents a share in the period on revenue of $170.1 million. They typically exclude one-time items from their estimates.
During the same period last year, the company earned $8.8 million, or 30 cents a share, on revenue of $235.9 million.
KeyBanc analyst Bradley Thomas, who expected the company’s sales to slip 30 percent, said the results were far worse than expected and showed a dramatic deterioration from the second quarter, when sales fell 27 percent compared with a year earlier.
“In fact, this is the largest quarterly decline we have seen within our entire coverage universe, and we believe the sales weakness is exacerbated by the company’s stance of everyday low price in an environment in which the competition remains very promotional,” he wrote to investors.
Also Tuesday, Ethan Allen said its board halved the company’s quarterly cash dividend to 5 cents per share to preserve cash. The new dividend is payable July 24 to shareholders of record as of July 10.
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