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DANBURY, CT-A boost in retail sales helped offset a decline in wholesale demand to drive quarterly profits to $19.5 million, or 56 cents per share, for Ethan Allen Interiors Inc., the home furniture maker announced.

The $6 million increase topped second quarter profits in 2004 when restructuring and impairment charges of $12.8 million in left the company with profits of $12.5 million or 53 cents per share.

The results for the quarter ending June 30 was 2 cents above the mean estimate of industry analysts who had expected the Danbury, CT-based company to earn 54 cents a share in the quarter.

“Overall, we are pleased with our operating results for the last 12 months in light of the challenging economic environment,” Ethan Allen Chairman and CEO Farooq Kathwari told investors and analysts in a conference call Thursday.

For the fiscal year ending June 30, net income for the company dropped to $79.3 million from $79.5 million while sales fell to $949 million from $955.1 million. Per share earnings, however, rose during the period to $2.19 from $2.08.

Kathwari blamed the decline in the numbers on rising gas prices and the threat of higher interest rates that has shaken consumer confidence in the economy. Increased competition from cheaper furniture makers also caused a dent in the company’s business, he said.

Responding to those factors, Kathwari said the company, which last year eliminated promotional sales in favor of lower everyday prices, instituted several initiatives in its product, stores and marketing, including the turnover of 70% of its product line during the last two years to meet changing demand.<p.With 45 new stores opened in the last two years and a 20-store international presence, Katwari said the company, which currently has 313 total outlets, is poised for future expansion. Five new stores are planned to open in the next six months and between 15 and 20 more will open in Fiscal Year 2006, he said.

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