Ethan Allen Interiors Inc (ETD) 2007 Q4 法說會逐字稿

All right, good morning, I'm Farooq Kathwari, Chairman and CEO of Ethan Allen Interiors Inc. Joining me today is Jeff Hoyt, our Vice President of Finance, and Peg Lupton, Director of our Investor Relations. Also special to us today is that we're joined by 200 of our retail management associates who are here in Danbury attending a special retail leadership conference. We felt it would be good for them to participate in this event and understand the perspective from the financial markets. We have had a good quarter considering the negative consumer confidence for home furnishings, retail environment and a very challenging last fiscal fourth quarter and fiscal comparisons where our sales increased 12.3%.

During the fourth quarter, written sales at the retail division were up 6.2%, comp written was down 2.6%. During June, we did see positive trends that we had our total increase in written up 10.5% and comp also increased 1%. Please keep in mind last year, June, in our retail division, written we had an 18% increase with an 8% increase in comparable original sales. While our sales declined 5%, our operating earnings were a healthy 12.5%. Our EPS was $0.65 compared to $0.60, $0.66, our EPS was helped by better gross margins, cost controls, keeping in mind we had added 19 new design centers to our retail division during the year, also helped was lower share count do you to our continued repurchase of our stock and somewhat lower tax rate.

Our financial position remains strong. On June 30, we have about $147 million of cash. Reduced $7.8 million in inventory during the year despite as I said adding 19 new design centers. During the year, we also purchased, repurchased 1.5 million shares at an average cost of $34.84 and July, that is this month, we have purchased 489,000 shares at a cost of $34.63. At this time, I would like to ask Jeff Hoyt to give you a, give the financial information and after this, I will discuss our business and then open it for questions. Jeff.

Thank you, Farooq. Good morning. Please note that in the earnings release issued earlier today and in the course of our prepared remarks, references made to certain non-GAAP information, which excludes the effects of restructuring impairment charges recorded during both fiscal 2007 and fiscal 2006. A reconciliation of the non-GAAP information to the most directly comparable GAAP measures are available on our website.

For the quarter, sales totaled 258.5 million, representing a 5% decline from the prior-year comparable quarter as Farooq mentioned, we again faced tough comparable during the period as a result of 12.3% increase in sales posted during the prior year fourth quarter. During the quarter, wholesale sales decreased 8.5%, to 162.8 million and sales for the Company's retail division increased 1.7%, to 187.5 million, while comparable retail sales decreased 5.9%. For the period retail written sales increased 6.2% and comparable written sales decreased 2.6%.

The consolidated gross margin for the quarter was 53.4% as compared to 51.4 in the prior-year period. The increase in gross margin reflects a higher proportion its share of sales of retail sales to total sales during the period and efficiencies within our product sourcing operations, mostly of which was brought about by improved pricing on phone and reduced overhead associated with previously-closed plants. Partially offsetting the gross margin gains were additional costs occurred in connection with operating our case good Plants at 32 hours during the quarter in an attempt to maintain a appropriate balance of inventories. Currently all plants are operating on a 40-hour schedule.

For the quarter, the consolidated operating margin was 12.5% and the wholesale and retail operating margins amounted to 15.8% and 3.5% respectively. Operating profitability has been reasonably well-sustained, despite the decline in volume due to the gross margin gains mentioned earlier and a continued focus on operating costs containment. Other factors positively impacting results for the period include approximately $1 million in gains associated with the sale of certain real estate assets and a slightly lower effective tax rate as a result of continued benefits being derived from the manufacturers deduction provided for Under the Jobs Creation Act of 2004 and certain tax planning initiative. Earnings per share for the quarter amounted to $0.65, a net income of 20.5 million, this compares to EPS of $0.66 and net income of 22.4 million in the procedure year comparable period.

For the full-year, sales amounted to 1 billion, representing a decrease of 5.7% from the prior year. As a reminder, sales increased 12.4% during fiscal 2006, due in part to the prior-year introduction of our Mission Possible initiative, which resulted in a one-time reduction in backlogs. For the period, wholesale sales decreased 10.9% to 656 million, while sales for the Company's retail division increased 1.1% to 698.6 million and comparable store delivered sales decreased 6.3%. On a full-year basis, retail written sales increased 2.9% and comparable written sales decreased 5.2%. The consolidated gross margin for the year was 52.4% as compared to 50.7 in the prior year. Once again, reflecting a greater mix of retail sales to total sales and ongoing operational efficiencies within all facets of the organization.

Consolidated operating margin for the year, which includes a pretax restructuring impairment charge of 13.4 million, amounted to 11.1%, excluding the effects of the charge, the consolidated operating margin was 12.4%. The wholesale operating margin, which also includes the a forementioned restructuring charge amounted to 15.1%, excluding this charge, the wholesale operating margin was 17.2% and the retail operating margin totalled 2.2% for the year. Annual earnings per share including the $13 million restructuring charge mentioned previously amounted to $2.15 on net income of 69.2 million. This compares to EPS of $2.51 and net income of 85.7 million in the prior-year comparable period, which also included a pretax restructuring charge of 4.2 million. Excluding the effects of the charges in both periods, current-year earnings per share amounted to $2.41, our net income was 77.7 million as compared to $2.59 and 88.3 million respectively in the prior year. With respect to the balance sheet, financial position remains strong as of the end of the period. As Farooq mentioned, despite continued growth of the retail division which added 19 locations during the year and a softer environment within home furnishings, we have effectively controlled inventories. Year-over-year we have reduced inventory levels by nearly 8 million or 4%, while at the same time maintaining good service position.

In fiscal '07, we generated operating cash of 119.2 million, utilized 51.6 of available cash to repurchase 1.5 million shares of our common stock. Also during the year, we utilized 59 million to fund capital expenditures, 15 million for acquisitions and nearly 25 million to pay quarterly cash dividends. Subsequent to June 30, we have not repurchased an additional 700,000 shares for 23.3 million, representing an average price of slightly more than $33 per share. As you probably saw this morning, our board yesterday increased the remaining share repurchase authorization to 2.5 million shares. Excluding the foremention restructuring charges in both periods, EBITDA totaled 150.3 million or 15% of sales for fiscal 2007, as compared to 167.5 million and 15.7% respectively in the procedure year. Overall, given the challenging economic environment, we're pleased with the results. At this point, I will although turn things back to Farooq so he can provide an update on several of our strategic initiatives.

Thank you,Jeff. Also let me remind that we also increased our dividend by 10% yesterday and I am please to say that we have continued to have a strong financial position to be able to do that. Now, from the business point if view, our main initiative during the quarter and the year include the following. Continued development and introduction of branding of lifestyles. We have defined our products into seven lifestyles and are introducing them internally to our design centers and externally to our customers. We believe the lifestyles spanning gives us a competitive advantage of helping our clients and design consultants with achieving better and faster decision.

Our product programs are strengthened by introducing two important programs. Modern Glamour, Defining the Glamour Lifestyle and Horizon Studio, Defining the Metro Lifestyle. In late June, we also introduced new products, mostly focussed on smaller-space solutions. These new products for the most part represent current best sellers available in smaller scale for smaller-space solutions. We believe that in the growing opportunity in this area as people downsize and also for urban living. We plan to introduce additional products in the fall as our objective is to introduce products about four times a year in manageable quantities to benefit both our retail network and our logistics operations.

During the year, we have focussed on strengthening our professional and retail network. We have added high-caliber design consultants and also project managers. For the Company retail division during the year, we added 699 design consultants and also added 41 project managers. During the quarter in the fiscal year, we have maintained strong marketing initiatives, which include a national television program, which airs about every another week, for the whole year except the month of December. Starting this fall, we plan to increase our television spending to have greater presence on prime time.

Our direct mail program continues with our quarterly magazine mailings. This month, we also started mailing what we call a designer newsletter to our clients and in some markets, also to our prospects with objective on increasing traffic into our design centers. We are continuing to use of e-mail by sending out every other week to about 500,000 clients and prospects. We have just introduced a new consumer finance program which offers attract to many financing options for our customers. We are working on a new world-class website, which will also enable consumers to order online. All orders will be passed on to our design centers and designers in order for them to turn these customers into long-term clients. We expect to launch the now website early 2008.

We ended the year with 313 design centers, 158 company-operated and 155 by our independents. During the fourth quarter, six new design centers were opened, four overseas and two in North America. Two design centers were closed and three were acquired from retiring retailers. During the fiscal year, 24 new design centers were opened, 18 of them were new, including nine in China, six relocations in the United States, 11 design centers were closed and 12 acquired by the Company. We are please that we continue to position our network and important markets with our fresh projection and attitude. On our operations side, fiscal '07 saw the consolidation of two manufacturing plants and two national decrease facilities and the opening of two distribution facilities in Dublin,Virginia and Atoka, Oklahoma. We incurred an excess of $5 million in costs that were resolved in fiscal '07 in closing and relocating these manufacturing and distribution sites.

As of June 30, 2007, we have nine manufacturing plants, five national distribution centers, supporting about 100 retail service centers. We are starting fiscal '08 with more efficient manufacturing and logistic operations. As Jeff pointed out, we're pleased that our fiscal manufacturing associates are back to a 40-hour workweek. At the end of the year, about 60 to 65% of our products were made in the United States. We are entering fiscal '08 with a strong financial position, competitive advantage of introducing a branding of our lifestyles, helping make decorating what we call fun and easy, a strong retail team and leadership. We have migrated our business from a store to an interior design business. Our retail design centers are in better locations. We have enhanced our internal and external of marketing. We're a strong manufacturing sourcing logistics operations and finally, as we stated in the press release this morning, we remain aware of the fact that consumer confidence is impacted by several factors beyond our control. However, at the present time, we believe we have the opportunity due to our own internal initiatives to realize earnings per share within the current range of endless estimates for the fiscal year ending June 30, 2002. And at this stage, I will open for questions.

Thank you. (OPERATOR INSTRUCTIONS) Would you like to take questions from the phone line, first?

Yes, please go ahead.

Thank you, Adrianne Shapira of Goldman Sachs, your line is open.

Good morning, Adrianne.

Good morning, Farooq. We were impressed with the gross margin performance. I was wondering if Jeff could give highlighted mixed retail sourcing and reduced overhead and give us a sense of which of the three were perhaps the most important drivers in going forward, where we should see perhaps continued benefits or perhaps slowing of those opportunities.

There are a number of factors for that gross margin improvement. First, as you said is the mix of retail to wholesale. It's increased from 69 to 73%. The second factor is a better gross margin at our regional operations. Third is despite the fact that we had to operate our manufacturing-- case goods manufacturing at 32 hours, we're still able to improve our gross margin at the manufacturing level. I would say almost one third, one third, one third, Adrianne.

That is helpful, Farooq. It was interesting. Jeff had mentioned the factories were idled to 32 hours and now back to 40 hours. Is that a function? Have you worked through the inventory and that is why you're back up? Could you tell us why back to 40.

That's right. We had decided that our domestic inventories had to be maintained at the levels that made sense and decided it was best to control them by doing 32 hours and they're back to where we want them to be.

Okay, lastly about the guidance, Farooq. You mentioned you were comfortable at the range. If you look at the range, it's from 3 to 22% in terms of earnings growth, much wider than last year when you endorsed 10 to 12%. Could you give us a narrower range or give us the sense where your comfort level is?

Well, the good thing is it's a broad range, Adrianne.

That is a good think this. You're right.

I know. -- I think it's hard to make a project but we feel comfortable with the initiative we have taken. If you look at what we did in 2007 fiscal, 2006, we had many, many hurdles. Not only a soft economy, but we also had the hurdle of having tough comparisons. I think going into 2008, we do not know what the hurdles are going to be in the economy, but certainly we're less of a tough hurdle in terms of a comparisons.

Great. Thanks, Farooq. Great job in a tough environment. Thank you.

Thank you.

Next question comes from Chad Bolin from Raymond James.

Good morning, Farooq, Jeff, Peg, can you hear me?

We hear you well.

You offered quantification of the sales trends in June. I was wondering if you could give us the same level of detail for the prior two months and the press release you had stated you saw some positive trends in recent weeks. Could you comment at all on the current quarter and what you're seeing there?

As we indicated, as I indicated for the whole quarter, our written comps were down about 2.6. But for the month of June, they were up 1%. So, as we went into the end of the quarter, the June, we saw positive results. Despite the fact as a said, -- or earlier, we also had a 8% comparable for the previous year and, however, despite the 8% comparable, we were up 1%. It's positive trend; however, it's too early to tell if that is going to continue going forward. However, with our network, our own initiatives, there is some issues outside, outside of our control. We feel reasonably comfortable.

And regards to the inventories, it was very impressive, given the decline in sales and additional stores, how should we be thinking about that inventory number for the balance of the year?

We will continue to add relocated line centers. We will continue to -- to plan for more business so the chances are that it might be somewhat higher but not too much.

Okay. Well, thank you very much. Very helpful.

Okay.

Our next question comes from Todd Schwartzman of Sidoti and Company.

Good morning.

Good morning, Farooq. Can you repeat the number of shares we purchased in the quarter and what the average price was?

This quarter?

The June quarter.

Oh, the June quarter. Okay, the June quarter is, let me just tell you in a minute. We purchase, we purchased 489,200 shares at $34.63. For about $17 million, $16.9 million, Todd.

And in the month of July, I thought I may have heard conflict numbers, can you run that by us again one more time, please?

The month of July, Todd is about 700,000 shares at 23.3 million. Slightly over $33 a share.

Okay. Great and what was CapEx for the quarter?

CapEx in the quarter was 11.6 million. 59.1 for the total year.

That is not include about acquisitions of about 15-point what?

15.3 for the year in acquisitions of 4 million in the quarter.

And the fiscal '08 expectation as of now is?

It will be approximately the same, Todd.

Okay. Lastly, without compromising your design center expansion plans, is there anything can you do or are doing to address SG&A containment somewhat?

Todd, we have been doing that. It's actually because of that we have been able to maintain the relatively good earnings because of controlling our SG&A but in a sensible way. As our retail network, has increased, both the Company as well as our independence, we are now able to better utilize our advertising dollars in a more efficient manner. For instance, three years back, we spent a great deal of resources on print advertising and that print advertising is not that productive anymore. So we have taken those resources and put them into international television. We are better targeting our mailings and direct mail, so we have been able to actually reduce our total advertising and make it more effective. Similarly, we're taking a looking at our operations, our logistics and delivery of our products and seeing to it, which is a major expense. So we have already reduced our overall costs, relative to our volume and you will see us continue to do that and on an operation and manufacturing and logistics side this year, we do not have the costs that are associated with the closing of the plants. And the consolidation of a distribution center as I said it cost about $5 million. That will be a benefit going forward. On the other hand, health costs increase,even thought this last quarter our utility costs were somewhat flat and we had to watch those too, Todd.

And the incremental TV ads spend in prime time coming in the fall, is that once again going to be somewhat at the expense of direct mail or other media?

It's possible. Possible we will put more incremental money into that. That.

Thanks.

All right, Todd, thanks.

Next question comes from Dana [Getski] of Morgan Keegan.

Good morning it is actually Boris Bernstein who just joined the call and was wondering, Jeff, when I hopped on the call, I thought I heard you mention a gain on sale of assets and it might have been in this quarter, is that true and could you quantify that for us?

There was a gain associated with the sale of some real estate about a million dollars down in the interest and other income line.

Got it and then, I'm trying to assess, talking about the segments the health of the franchise chain relative to the Company-owned stores and I can see that Company-owned stores grew a couple of percent in terms of sales on a double-digit increase in locations, I think, and wholesale sales down 9%. Can you comment on that? Are the comp trends or trends in general better at your own stores or at the franchise level?

I think when you take a look at wholesale sales, they are today impacted by number of factors. They are impacted by the reduction of our backlogs as it is in the previous share. They are impacted by introduction of our new products, the timing of new products is important because the wholesale may ship the products but they don't reflect into sales because today's 60% of that or more, going into our own retail stores, which are not counted as sales. The timing of the products on the wholesale is today impacting the results of the wholesale sales. And having said this, I would say that the results of our independence and most of our independence are somewhat similar to our retail and when I say most, probably 30%, perhaps during the low but less than what comes in each division is doing.

But in general, looking at the wholesale number and a good way to gauge the health of the entire company given the store changes, store count changes within your own stores?

No, I think that better is to gauge the strength of the Company by looking at the retail because the wholesale doesn't completely reflect accurately the sale that is taking place because of the fact as I said, all the sales that take from the wholesale that goes into our retail are eliminated until they are delivered to the ultimate consumer. The wholesale sales don't completely reflect what used to take place, what --- the way we did several years back when the majority of our business is done with independent retailers.

Got it. Thank you.

Okay.

Our next question comes from DeForest Hinman of Paradigm Capital.

Hi, Farooq. I got on the call too late. Did you talk about the raw material costs in the quarter?

They were somewhat, they were flat.

On the foam side?

On the foam side wholesale because as I know, the biggest increases took place last year. So while we have some increases and foam is slightly increased but lumber has gone down. So, on that, what we will not see for the whole company any major increases.

All right. And you know, we kind of have, I think, a year or more of TV advertising underneath our belts. We're going into '08 and then a little bit into '09. You had the presidential, elections in there. The spot rates go up. Does that change the TV advertising strategy or is there going to be any changes in the TV advertising strategy in your fiscal '08 relative to fiscal '07.

For fiscal '08, we have made (Inaudible) buys and we were able to get descent buys.

All right.

How it goes into fiscal '09, that might change and that will end up with the up-front buy in fiscal '09.

Have can we given any color in terms of dollar amounts or percentage of revenue on the selling side for '08?

I'm sorry, say that again?

On the advertising side, did we get any color on the dollar amount or as a percentage of revenue or thinking about that line in '08?

No, we do not give that details.

All right. That was it. Thanks, Farooq.

Thanks.

Our next question comes from Maggie Gillon of Gillon and Company.

Hey, Maggie, where have you been?

I have been around. I am tied up and hardly listen to calls, I was here today. Farooq, was wondering two things. First of all, can you elaborate a little bit on how you expect to handle the website with your dealers and, second of all, can you talk a little about your initiatives with the new credit program. Many other people are pulling back on credit and I think it's exciting that you're going forward with new arrangements.

Yes, Maggie. On the website the way we are planning it is that first we made the decision that we can not afford not to have consumers interact with us, through the website. We had to make the website available for our clients to be able to place orders, to interact with our design consultants and the way we're going do it is this and we have done experiment actually in the last few months by putting on the website our home and garden product line so that we can get all of this worked out. Every order that is going to come in is going to based on the zip code analysis unless that customer is already a designer that they're working with and that will go to the designer. On that zip code analysis, it will go to the design center and the design center will assign a design consultant to that order and they will get a credit for that order even though it has been entered on the website because we look upon that order as a lead and that customer as a lead and for our design consultants to follow through. And our objective is to do that with the Company retail division as with our independents. As for the credit, does that answer the question, Maggie?

Well, no, you said you were coming out with a new product. I thought you were saying that it was a new product. I was wondering what it was.

You mean the new website?

No, credit. Credit.

Oh, I'm talking -- on the website. The website. Yes, yes. On the credit. Yes.

That's clever the way you're doing it. Yes. And you have tested it you said with new products.

Right and by the way, I have $200 people listening to me right here who will all implement it. They sitting with me right here.

I see. Okay.

Maggie on the financing what, we have done is we're actually it is public, because we just sent out a, what we call a designer news letter in which we have, which we're showing the financing and I am sure Peg Lupton if she's hasn't done it, she's going to send you a copy, and what it is is a menu of options. It gives a opportunity for customers to select a convenient repayment period. It's, one of them is one option is a fixed equal monthly payments. And it gives them an opportunity to select a payment term like for 12 months, for instance, they will have to pay an annual percentage rate of 3.99%. 24 months, 5.99%. 36 months, 7.99%. 48 months, 9.99% and five year or 60 months at 99.9%. The objective is to help people select a term that makes sense this is not this no, no, no financing that I think is around in the industry, I think it's a sensable way for people to budget and plan and also not end up by going into those crazy financing plans, and at the end of the 12 months they miss it they go back to 20, 24% interest rates from day one. This helps them plan in budget. All right. Maggie any, other questions?

That was it for now. Thank you.

Thank you. Other questions. Next question, please.

Yes, sir, the next question comes from John Baugh of Stifel Nicolaus.

Hi, John, good morning.

Hey, Farooq. I got on late to as well but I wanted you to address what your foreign source to mix was and more importantly over the last 12 months or so, and/or respectively, what you seeing in terms of cost differential producing here versus Asia and if you comment on that upholstery and case good separately.. Thank you.

John, I mentioned that our domestic is still running between 60 and 65%. It's about 50% in case goods and about 85, 90% in upholstery. And our intention is to continue to do that, now that we have nine manufacturing plants, we have four case good plants and our objective is to strengthen them and I'm pleased they're working 40 hours. Now, in terms of the differentiation and the costs as you know that is pretty confidential information. However, I would say this across the board, I'm talking about case goods and the upholstery combined, depending on the product line and how our manufacturing is operating. If they are operating 40 hours obviously, the differential is less. Last year we absorbed a lot of cost domestically but you still talking of running in the range of 10/12% difference in gross margins.

My question, Farooq, was whether you had seen the costs in Asia relative to the costs here get better or worse. I understand they are obviously, lower there today. I am wondering about trends in costs there versus here over the last 12 months or what you see in the next 12 months.

John, depends on the level, I believe, of market you're in. As we know in the last four or five years, the trend factors of having great housing, a tremendous amount of housing and what you would call the bid in price points gave rise to a lot of major mass marketing retailing and furniture, which also helped mass producers in China and other countries. But these twin factors are creating mass retailing here and mass manufacturing over there was a major event in the last five years. but I renewed this and the last year I'll show they both are suffering at that level because of the issues in the housing that are taking place. I think at that level, there is probably a much greater supply even now. But at the better quality level, I'm talking overseas where people are making at our level of quality of products, the supply is not that great. There are not that many people who can make our level of quality. So the pressures over there, I would say at this stage most probably the mass level, because of the fact, excess production, excess capacity, they are still perhaps not-- giving good deals, but at our level, why we're not seeing any major price increases but we have not seen any decreases as well.

Thank you.

Okay.

Once again, if you have a question, press the 1 key. The next question comes from Dave Weiner of Deutsche Bank..

Hi, good morning. Thanks for taking my call. Just a quick followup question on the gross margin. I know you answered an earlier question, talking about the contribution third, a third a third from mix retail and manufacturing. I was wondering if you could dive a little bit deeper into the retail side and talk about what drove improvement there for the quarter. That was it. Thanks.

That is a good question because that really is due to our overall strategy. Of creating a retail network whereby we have focussed on driving a strong team of people, both as project managers and our designers. Secondly, which means that they able to do a full design job rather than selling a product or a commodity. The second factor at retail has been also this other implementation of our everyday best price. Everyday best price has helped us manage our inventories across the board. We used to have to focus six or nine months before and you know, that doesn't matter how smart you are, you're going to be at least 40 or 50% wrong. We have taken that ever out of our inventory management at the wholesale level, the retail level, our management at retail level is becoming more, is becoming better, becoming better focussed. They are managing their business better. All the factors, both of the wholesale and at the retail level have helped us improve our margins because we have less merchandise left to sell, because as we all know in retailing, it's the leftovers that get your margins down.

Great, that's very helpful color. Thank you.

Thank you. Thank you.

Our final question comes from Anthony Chakumba of FTN Midwest Securities.

Good morning, Farooq.

Anthony, you have a big name of your company there.

Yes. Quick question on some of the newer products. You said convention, modern glamour and Horizon. I guess was looking for color in terms of how some of the newer products are selling as compared to some of the older products or some of the lines that you had for some time now.

Yes, Anthony. Modern Glamour was introduced to the consumer on March-April period and Horizons Studio was introduced in the June-July period. It's a little bit, it takes about six to nine months to get these products and programs into the consumers hand. Our initial reaction has been strong. It adds diversity of her products, it brings us new customers, especially more on the modern, with the modern perspective, modern trends. We believe we have done well. Now, but I believe that most of the growth is going to come, I think in this fiscal '08.

Okay, and you mentioned the new customers that have come in. I am assuming that would be sort of like a younger demographing or maybe not quite as higher average household income?

No, I don't. I thinking interestingly, like for instance, the metro lifestyle and Horizons studio is they're just made exactly for people like you, were younger people with lots of money.

I don't make that much money, "farooq.

I know. What I'm getting at is an attitude. I think what it does is it expands our reach to more of the urban areas. And I'm talking the Horizon Studio, the modern glamour takes us into, you might say, more of a classic lifestyle with a modern perspective and that is become an important design perspective across the country. I think we are, we are increasing our consumer base and it's not necessarily meant for people in less income. It's meant for people actually with all different income ranges and people making high incomes because of the style and design and the great quality. You all agree?

Yes. (multiple speakers)

You got 200 of our retail folks agreeing with me there, Anthony.

Okay. Well, thanks for the color. That's helpful.

Okay, thanks.

I'm not showing any further questions from the phone lines.

All right, well, thank you very much. We, as I said earlier, that has been, we're not -- somewhat of a tough environment but at Ethan Allen, we have initiatives that are going to continue to position us as a provider of great solutions and service, and what I'm most pleased about is that we got great people who are associated with Ethan Allen who are going to continue to keep us in a leadership position. Any questions, please go of a call to Peg Lupton. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.