Ethan allen CEO: Smaller stores are the future

Ethan Allen Interiors Inc. (NYSE: ETH) CEO Farooq Kathwari said the furniture retailer is in the midst of a transition to become an interior design company from its traditional role as a consumer goods seller. Kathwari made the comments during a midday conference call.

“We are selling solutions and service. We’ve got about 100 of our [interior design] professionals here with me and they’re nodding their heads,” Kathwari said.

The chief executive said the firm’s new retail locations will be smaller, with “design consultants” doing most of their work outside of the office making sales pitches. He said the company is looking at converting some of its existing larger stores into smaller “design studios.”

For the reset of Ethan’s fiscal year, which ends on June 30, Kathwari said the firm’s main initiatives will be increasing the amount of offerings and improving the company’s “vertically integrated structure to provide interior design solutions.”

Over the next six months, Ethan Allen plans to open eight to 10 new design centers in various metropolitan areas, including Sacramento, Denver and Philadelphia. The firm’s flagship design center will open in Manhattan this spring. As of Dec. 31, Ethan had 305 design centers, 160 of which are owned directly by the company.

“We have substantially strengthened the caliber of interior design professionals in our design centers,” the chief executive said in explaining Ethan’s program of employee recruitment and training.

Ethan Allen is making “good progress” on its revamped website and expects to be online by the summer, Kathwari said. Because website orders will be forwarded to design consultants who will assist shoppers, the CEO said online orders will be a combination of personal contact and technology.

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