Good day, ladies and gentlemen, and welcome to the Ethan Allen Future Earnings Release Call. [Operator Instructions] I would now like to turn the conference over to your host today, David Callen, Vice President of Finance and Treasurer. Please begin.

Thank you, Sean, and good morning, everyone. I am David Callen, Ethan Allen's Vice President of Finance and Treasurer. Welcome to Ethan Allen's earnings conference call for our second fiscal quarter ended December 31, 2012. This call is being webcast live on ethanallen.com, where you'll also find our press release which contains supporting details including reconciliations of non-GAAP information referred to in the release and on this call. Our comments today will include forward-looking statements that are subject to risks, which may cause the actual results to be materially different than expected when making those statements. Please refer to our filings with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking materials discussed during this call. After our Chairman and CEO, Farooq Kathwari provides his opening remarks, I will follow with details on the financial results. Farooq will then provide more details about our ongoing business initiatives before opening up the telephone lines for questions. With that, here is Farooq Kathwari.

Yes, thank you, Dave. And also thank you for all participating in our conference call. We are pleased with our results considering a challenging operating environment. As you have noted in our press release there are several moving items that I would like to focus on, on this part of the call. Delivered sales increased 4.4% to $191.3 million. Company retail division net sales increased 6.1% to $151.8 million, with comparable design center sales of 4.9%. Our written sales in the company retail division were impacted by several factors including, in fiscal 2013, second quarter Hurricane Sandy impacted 28 company operated design centers and 8 licensee design centers. We estimate company retail division total and comparable written sales was negatively impacted by about $4 million. In fiscal 2012, due to major new product introductions, about $4 million of clearance product was sold by the company, a retail division impacting written business during that quarter and also negatively impacting gross and operating margins in the second quarter of our fiscal 2012. Gross margin in the second quarter of fiscal 2013 is 54.4% and in fiscal 2012 second quarter, 53.6%. Improved gross margins in fiscal 2013 second quarter was positively impacted by lower clearance sales and then negatively impacted by Hurricane Sandy as we took downtime in our manufacturing operations. In fiscal second quarter 2013, operating margin, ex-special items of $20 million compares to $15.6 million, a 28% increase. A few observations on our operating margins, wholesale operating margins, x special items was 9.9% versus 14.4%. This was an abnormal decline. Major factors included fiscal 2012 second quarter sold to retail division about $10 million, that’s from a wholesale to a retail division, about $10 million higher floor sample products, with a higher mix of actions and higher margins for new products…

Thanks, Farooq. Net sales for the quarter were $191.3 million, up 4.4% over the prior year second quarter. Our retail segment reported net sales of $151.8 million, an increase of 6.1% versus the prior year quarter, including comparable design center net sales growth of 4.9%. Written orders booked during the quarter by our retail division were, as Farooq mentioned, negatively impacted by Hurricane Sandy and by lower clearance product sales which affects both our written and delivered in the period of the sale. Our retail division written orders grew 1.2% including an increase of 0.1% in comparable design center written orders. At December 31, 2012, the company's retail division operated 149 design centers, compared to 147 design centers at the same time last year. Our Wholesale segment net sales were also affected by Hurricane Sandy and the prior year sales included significant shipments of new prototype products to support the retail product overhaul. For the second fiscal quarter Wholesale net sales were $108.2 million, up 1.4% over the prior year quarter. Consolidated gross margin for the quarter was 54.4%, up 80 basis points from 53.6% the prior year quarter. Our retail division made up 79.4% of our consolidated net sales for the quarter, compared with 78.1% the second quarter of fiscal 2012. The higher mix of retail business helps the consolidated gross margin, but our retail division also benefited from 33% lower clearances event sales. As Farooq mentioned, the lower volumes and prototype product shipments negatively impacted our Wholesale efficiencies during the quarter as did the impact the Hurricane Sandy. Our operating expenses in both years include items that we have adjusted from our non-GAAP results. In the current year quarter we recorded charges of $1.6 million or $0.3 per diluted share, to write down the carrying value of 2…

All right, Dave, thanks. When I look at my own notes I’ve put in $25 million of capital expenditures, which is for the 12 months but I also know we spent $13.5 million for the 6 months ended December 31. Now we continue to focus on improving our marketing and operations. Our offerings were strengthened by introducing the American Colors program in the second quarter. This program reflects our ability to make custom products in our North American facilities, offering many options, including an array of attractive colors. During the quarter, the second quarter we finalized the development of the fresh colors program expanding our reach to younger consumers of ages say between 4 and 16 and obviously their parents. This program is being delivered to our design centers at this time with soft marketing in February and a national advertising campaign starting in March. During the second quarter, we developed a very important program which we call Impressions. This consists of wood upholstery and accents. This program was developed from concept to engineering to manufacture and shipment in about 10 weeks, a record for us. We planned to have this product in our design centers in January, late January, and February and a national marketing campaign from April. As I mentioned earlier, we entered the European market and Montreal, Canada. We opened a flagship design center in Brussels and this past weekend participated for the first time in the Paris exhibition to develop licensees in Europe and other countries. During the second quarter, we also opened new design centers in Seattle, Washington and Las Vegas, Nevada. During the quarter, we also sold 2 of our retail division design centers in Houston to our long time retailer the Chesnick family who operate 6 Ethan Allen and design centers in Houston, San Antonio and Austin markets. This week, we are also opening a flagship design center. This is the 74th in Shenyang, China with our licensee, Markor. We continue to migrate our website to the cloud environment and as stated earlier, launched the Canadian website in the second quarter in English and French. Our objective is to migrate our U.S. website to this cloud environment in early fourth and by early first quarter for fiscal 2014 also launched the European website. We continue to improve many aspects of our North American manufacturing and logistics. We remain cautiously optimistic for the remaining second half of our fiscal 2013. We have entered the fiscal third quarter with lower backlogs, primarily due to impact of Hurricane Sandy and at this stage are building our backlogs to help improve our efficiencies in our retail and particularly in our manufacturing, for our business for the third and particularly for the fourth quarter. At this stage, we would like to open for questions and comments.

[Operator Instructions] Our first question comes from Brad Thomas of KeyBanc Capital.

Farooq, it was obviously an unusual quarter with the hurricane and the elections and the fiscal cliff going on, but if you step back, maybe, I was hoping you could talk a little bit more about how you’re performing and how the express line and new customers are starting to react to your new products?

Our express program is doing what we intended it to do, that is to deliver our products fast. Interesting thing is this, that as you know we developed certain room packages for express programs with the intent of letting people know that they can have a whole room with a great design, let us say at $7,000 or $8,000 with financing at 48 months. That message is getting across but what we see is that people are selecting and choosing items from our express program and then also taking products from our custom, because custom is also now being shipped in 4 to 6 weeks. So express is helping us get the message across. And now what we're also doing is we're adding to our express program more products that is already in stock. Because we have a lot of product that is in stock, in case goods and upholstery and the next quarter you're going to see us also have those products added, all in stock product will be added to our express program because if we have it in stock we ship it express. We are starting to change the consumer profile of getting younger people in, and I believe Brad that our fresh colors program, which we are going to launch this quarter is a very important program for us. In the next few weeks you will start seeing some our advertising on our website. It's also reflected in our direct mail that we just sent out in January. And the objective is not only to get the young people. I'm talking of products for the young people, but also get their parents, who are also in the 30-plus age group. So I believe that we're going to continue to expand our reach.

Okay great. And then just in terms of the -- some housekeeping items about the financial statements. On the adjustments, would those have been in gross margin or SG&A? I apologize if I missed that in the prepared remarks?

Yes, Brad, they are all in our operating expenses. None of them were in cost of sales.

And then I think this is the first quarter in a while that you haven’t broken out selling versus general and administrative. Is that how we should start modeling going forward, just one line and then maybe any comments you could give on those 2 different buckets?

Yes, I tell you why we did that and you are right, we should -- what we did was we decided that some of the items that we previously were having and selling really belonged -- technically belonged to administrative and some administrative belonged to selling, mostly in our retail division. Just to give an example, it’s all internal. For instance, all compensation paid to our designers was in selling but all the benefits were in administrative. It doesn’t make sense. At the end of the day, it’s all one bucket. So you’re going to see it all together as we move forward. We internally know the differences but externally, it will be confusing. So we thought it would be good for you to see one number.

Okay, and then just lastly with those kind of pieces in mind, so it looks like your gross margin increase was not as great as it’s been over many of the last 5 or 6 quarters but you did get a lot more operating expense leverage. I would have thought it might have been the other way given that your anniversarying a lot of discounting that you did have strength in the retail segment. Could you just talk a little bit more about why the margins played out the way they did this quarter?

Yes Brad, this quarter our gross margin of 54.4% was the second best we have ever had. The only better we have had was last quarter of 55.6% where we were not impacted by the Sandy as well as impacted by the other factors that I mentioned, the downtime and things of that nature. So, I think that 54.4% is still at the record levels.

Our next question comes from Budd Bugatch with Raymond James.

I would like to focus, if we could on retail profitability which was superb at least on a comparative basis this quarter, maybe get a little more color. Was it fostered by gross margin, by expense control and how much might have been due to either?

Budd, number of factors. First is we shipped almost $152 million. The shipments are very important because we do have a leverage. Second is there was somewhat of a higher gross margin because of the fact that our clearance products are much less this quarter than last quarter. Third factor was that we had lower, we did cut down expenses and we are very careful in cutting our operating expenses, including about $1 million, we reduced our advertising at the retail division. So as you know, we had an operating income of $6.4 million, sort $1 million was due to reduction in advertising at retail and that we also increased our advertising by $1.5 million on national television on the Wholesale side. We felt it was important for us to increase advertising at the Wholesale side on national television, because that also benefits our licensees.

So, was there seasonal impact to the second quarter which usually has I think more accessory sales in the mix? Is that something we should think about retail profitability going forward?

No, Budd. We had -- the main thing was that we had $6.9 million of operating income, excluding some special charges and those special charges are really the cost associated with Brussels and Montreal. It was basically a higher gross margin and higher sales and somewhat lower expenses as I mentioned. Overall we are looking very carefully at our operating expenses and also this quarter about $1 million less in advertising, but still we did $6.9 million of operating income, which are record but the top lines are very important going forward and that I think you got to keep in mind.

Okay. And I think you said, let me make sure I got this right, that the actual level of operating expenses in the retail segment were less this year on a dollar basis than last year. Is that correct or did I…

Yes. They are lower this year on a dollar basis than last year.

Got you. Okay. And I think you also called out some items on the wholesale profitability that you called that, I think David called that normally low this quarter and I’m curious as to what you think the ultimate level of wholesale profitability should be for the company going forward, now that it’s the company is little bit differently structured than it was in the last cycle.

That’s right. And again Budd, as you noted the wholesale operating margins also reflects products that we sell from the wholesale to our own retail division and then on consolidation is eliminated. So last year we sold a lot of product from the wholesale to our retail and then in consolidation eliminated it. So that’s one factor one has to keep in mind. The second one is that we were impacted in our manufacturing, as I mentioned with Sandy and we took some downtime, but I would think that anywhere in the range of 12% or so is what my objective is to have Wholesale margins.

Okay, and the number of days of downtime you took because of Sandy, what was the impact due to it?

I think that we have not given that out as yet but Dave is -- let me talk to Dave and to see how much of information we can give out.

Okay and finally for me, I think you said the retail backlogs were down but you said due to Sandy, without Sandy would retail backlogs have been up?

The retail backlogs are approximately same as what we had last year. The Wholesale backlogs are down due to a great degree, the impact of not having as much of new product being introduced.

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

Just to follow up on Budd there, just kind of interested in the x-Sandy lay of land, if you were to look at maybe bulk deliveries and orders, kind of giving your best guesstimate to what to those would look like without those affected stores in the mix.

David, what’s your perspective?

The analysis that we did excluding those 28 locations Todd, looked like the other locations were up about 3% to 4% -- 3 to 4 percentage points relative to where those 28 locations were.

And is that deliveries or both written business and sales?

No, it’s written. Deliveries were not impacted as much because we did have the backlog as you know. Anything, any order that we get in November, the chances are we would most probably deliver them towards the end of December or January and so the impact was felt in late October, when Sandy hit and some have noted it is the last week of the month where we do get a lot of orders and we were impacted in the last week of October, first week of November, and that affected to a great degree our written. It affected -- as I’ve noted our deliveries in retail would have been higher too without Sandy. But I think the impact of the Sandy was more on the manufacturing side, where we had to take downtime.

Okay, so normalized about 5% increase in written business?

That's right.

How should we think about, without even getting into the distinction of Wholesale versus retail related expense, but just on a total spend basis, marketing and advertising sequentially, looking to the third quarter, how should we look at that?

Our overall advertising in the third quarter would be close to what we spend about, anywhere between 5% and 10% higher.

5% to 10 % higher than in Q2?

That's right.

What about the -- on the international side, you've now entered Brussels and Montreal. Just kind of maybe using those 2 as examples, because they are your newest markets and maybe you can just kind of expound on it a little bit to talk about future markets as well, but in Brussels, in Montreal, let's say, what's the optimal number of stores for Ethan Allen to operate?

Well, in Montreal, it's going to be, at this stage, only one. Montreal is part of our Canadian retail division. As you know, we are already in Canada in a number of cities. However going to Montreal was a major undertaking because it is, we had to convert everything into French, develop a new website and our information systems as well as all the information that we have had to be in French. So that was done for Montreal, but for Brussels our objective is to have 2 design centers in Belgium. We just opened one in Brussels which was a major undertaking. The second one will be less of an undertaking because obviously we have all the logistics in place now in Antwerp. We have all the general management into place. So our Antwerp design center should open in the fourth quarter of this year, and at this stage that is our objective for company-operated design centers. The rest is to get licensees, and that's why we also showed for the first time in the Paris Home Furnishings Exhibition this last weekend. I had also gone there for a couple of days. Our objective is to open up licensees in Europe and other countries as well, and we made some good progress, good contacts and we have a team of people now in Europe and their objective is to get new licensees in Europe.

And on the websites for the Canadian market, having to create both English and French versions, is there anything that you have learned, anything that is problematic that cropped up, that might affect entry or how you handle creating websites for other countries going forward?

No, this was of course a great learning experience because we also converted all our information into Dutch for Brussels. For Belgium we have it in French and in Dutch. This is also our first test site of converting our website to a cloud environment. As you may know our website right now is operated by our servers in our headquarters in Danbury. The cloud environment gives us a much greater flexibility in developing more of an e-commerce business. So in Canada, for the first time we started to do e-commerce, it’s just a beginning. We are also working in Canada to get more people to our website. And as we get the U.S. website in -- by April of this year, that’s another 2 or 3 months, on this cloud environment, you are going to see a faster reaction time and much more flexibility in terms of people, ability to not only navigate the website but even on e-commerce. And then, after we have done that by July-August we will be also establishing a website in Europe and obviously, the Canadian one is in Canadian prices and Europe is going to be in euros. And it will give us an opportunity of not only having a website with information but our objective is also to develop more e-commerce business.

Got it. On the backlog how does that look by product category?

Backlogs of product categories, why don’t we go on, David is going to get that information. We are actually in New York, not in our offices, not in Danbury. So he will get the information for me. Overall as I said our Wholesale backlogs are substantially down from last year, with 2 factors. One is that we don’t have as many – we have new orders for new products and the second is our backlogs are down because we deliver now faster. So it’s good and bad news. Good is, we are delivering faster, we are more efficient. The challenge is that we need to continue to keep business going, otherwise we got to take downtime, because we don’t build inventories. In the olden days we used to be build inventories and would take less downtime, but today we can’t do that because basically other than a very small little product program with Express, that is domestically made, everything is custom. So going into this third quarter, we’re going in with less backlogs on the Wholesale side and about the same backlogs on the retail side. So, I think it would be somewhat of challenge in the third quarter in terms of shipments but I think, I hope that by the fourth quarter it will equal out.

Regarding the mix of products Todd, it’s slightly less as Farooq mentioned earlier, less in accents, more in upholstery and less in [indiscernible].

Because upholstery basically all isn’t our custom order is case goods and accents that we would have a backlog in and we have much less of those this time and that’s why our case goods plants were affected more. Our objective now, we’re starting to build backlog now in January businesses, we’re starting to build business. We will not know exactly everything until the end of the month but we do see positive signs in January in building backlogs.

And in terms of second quarter delivers, did case goods continue to lag at about the same rate vis-a-vis upholstery that we’ve seen in recent quarters or did it close the gap a little?

No, it’s about the same, as you know, for number reasons. And in recessions, people do buy upholstery and we have also focused a lot of advertising on upholstery. So upholstery as a percentage of total businesses continues to increase.

Okay. And last question, I realized there is one weekend to go in the month, but just kind of looking at January-to-date demand trends, just traffic, orders, average ticket written, what can you tell us about these first 20 some odd days?

They are positive but keep in mind last January was a very, very strong month for us and we’ve been building it and we’ve seen positive, we’ve had increase in traffic and but still in the next 8 or 9 days is going make a -- will determine how much of the business we’re going to get. We know we’re obviously cautiously optimistic, we got very strong programs in January, February, March. The question is going to be how much we can deliver this quarter and how much we’re going to go into the fourth quarter. So just keep that in mind.

Would you say traffic is flat year-over-year in January?

Yes. I would say traffic has, overall, increased this January versus last year.

Okay. And just to refresh, last January what made it so good was preparation for product launches or are there are other factors there?

I think last -- even though last January we did have very strong product introductions, especially the elegance product was introduced, other new products were introduced, that did help us and on top of it we were also selling a lot of clearance which I mentioned earlier, this even in January. This year we are not selling as much clearance. So last year while we had more sales, it did impact margins. This year we have better margins. So I think that this year it is much more clean. Still some clearance is still going on because we continue to introduce new products, take out products that are not performing at a level we want them to perform but overall I think last year most probably I think I don’t remember now but we didn’t have the same problem, the economic environment , the cliff and now the next thing that is coming up, even though I think consumers are somewhat not paying as much attention to it as they did in December, but still that is still an overhang on consumer confidence.

Our next question comes from John Baugh of Stifel, Nicolaus.

Nice margins, and on that I wanted ask you about the retail margin. I’m going off of memory here which is dangerous because it’s been a few years, but that 4.5% roughly was right at the high end of the range of what I remember in glory days you achieving. Is that the new normal or how do we think about retail margins over the next few years, assuming you get more leverage in the sales picture. Do we expect the operating cost to creep back up or no, we’re going to keep a tight rein on that we’re going to see mid-to high-single digit EBIT margins and retail.

Well, to answer your second question first, our operating expenses are going to be controlled very well. So that’s not an issue. I think where the challenge is, again is making sure that we’re driving more business and at $151 million of delivered sales we were able to get 4.6% of operating margin, which is more less you’re right, is pretty close to record numbers. I’m very, very happy and pleased that we’re able to do this which means John, to answer your first question is, that the more sales we get, we have an opportunity of increasing that operating margin.

And you made a comment that you need to “build back your backlog” and of course one way to do that is to advertise more and maybe promote discount, get a little more aggressive here in the near term. Is that something you're doing when you mentioned you got some strong programs and then I wanted to clarify on that advertising comment. Was that 5% to 10 % increase a year-over-year increase that you planned for the March quarter or was that compared to the December quarter and is that a valid comparison if it's the latter?

I think that, that is the question. I think I wanted to clarify that because Todd has asked that question. It is compared to the second quarter…

This year.

Second quarter this year and third quarter, I was comparing with the second and third quarter, yes.

Okay so the March quarter, your plan is to advertise 5% to 10 % more than the prior year March quarter?

No, more than the second quarter of this fiscal year.

Then sequentially, okay. And so again my question, are you going to maybe just short term, in order to get to manufacturing backlog back off, maybe be a little bit more aggressive with not just advertising, which is going up obviously but in some sort of event promo, discount sale event?

Yes, John we are doing that. In fact in January if you go to our website, you’re going to see, having a special promotion you might say on upholstery products where we are giving anywhere between 10% and 20%, which normally we give 10% off on most of our products. We're going to continue these special events in January, February and March.

Okay, and how do we, how do we put that into the numbers, You got to guess the offset of if it works you get more throughput through the plan and it sounds like a lot of downtime in the last quarter, so maybe that gets better but then you're giving away some margin. How do we balance that in terms of thinking about how to model wholesale margins and/or retail for that matter?

Well, John, that's what you got to do. But as I've said all along, you folks miss it, I don't miss anything, but John, I would say that I’m just giving anywhere between 10% to 12% of Wholesale margin. While my objective is 12% I would be happy between 10% and 12% Wholesale margin and then the retail margin really will depend upon, that's much more variable as we go forward, it'll depend upon the volume that we are shipping. 10%, 12% is good for Wholesale if you are not taking downtime, retail really is dependent upon the amount of business that we have put -- that we are shipping that month, so – or that quarter. So I think that you got to keep those perspectives in mind. We are operating at 10%, after the special charges operating margins, so which is pretty good. Our objective would be I think in this third quarter, as I said earlier, we just got to keep in mind that we do have these issues of backlogs and then in the fourth quarter it’s possible that we will be able to make it up. So I will just keep those factors in mind. I would just do the third and the fourth quarter together because you folks, you are short-term thinkers. I have got to think at least 6 months, if not 5 years.

And then just lastly, just a point of clarification on the Sandy impact, you said $0.02 to $0.03 a share in release and that equates to I think about a little over $1 million of EBIT which, on your contribution margin is more like $2.5 million, I guess of shipments. So your $4.5 million comment would be to written orders correct and the $2.5 million would be closer to the impact in the quarter from the lack of shipments.

Go ahead, David.

John, just to clarify you asked about $4.5 million, I don’t recall.

I think Farooq made a comment, if I’m not mistaken during the call that the estimated the impacts on written from Sandy was $4.5 million. Did I not hear that?

$4 million, approximately $4 million.

Okay, $4 million.

In written, but not all of that impacted our net sales during the quarter.

Okay, so the delivered [ph] to get to $0.02 to $0.03 a share if I calculated around $2.5 million.

Around $3 million maybe, yes.

Our next question comes from Cristina Fernandez with Telsey Advisory Group.

I wanted to clarify the sales cadence for the quarter. It seems to be based on your commentary that October started pretty strong and then you saw the impact from Sandy in late October, early November and then December was a little bit better. Is that the right way to think about the quarter?

Yes, absolutely. I think that we were down substantially in November, we were down a little bit less in December and we were strongly up in December, in written sales.

In written sales, but then as far as the deliveries, was that consistent?

The deliveries, as you know, it was somewhat more consistent because of the fact we already had backlogs with the written business in November, December. It affected some deliveries in December but most of that would have been shipped in January. So I don’t think that our deliveries were to any great degree impacted by Sandy.

You mentioned earlier that you were seeing consumers shift more to upholstery from case goods and accents. Are you seeing any changes in consumer behavior as to the price point that they’re buying?

Well, certainly the consumer is much more focused on looking at products that are promotional. In the last 2, 3 years, people are looking at and they’re looking at savings. So I think that it doesn’t matter what level of consumer it is, so some savings is an important factor. Now, in terms of our business, I would say that our customer base to a great degree is still buying products at price points that have been, that we’ve been doing for the last 2, 3 years. I don’t see a change. Accepting that I would say in the last 6 months or year, as consumer confidence is improving, there has started to be a shift of people are interested in larger projects and I would say not in a major way but we do start seeing people interested, even spending more money in terms of the products they’re buying.

Okay. And then lastly on the international side, it seems like the startup costs are mostly behind. Should we expect some of these one-time costs in the second half of the year? And then just looking further out, can you comment on what you see the opportunity for your international centers, like how many could you have over the next 3 to 5 years?

Yes, on your first question, we will have still some costs but they’re going to be, at this stage I would estimate that for the -- our third quarter maybe 25% of what we did in our second quarter and again, about 25% or so in that range for our fourth quarter. So, it’s substantially coming down because we still have some startup costs associated with entering into Europe. Then as we establish our design centers in Belgium, our objective is to open up licensees in Europe and neighboring countries, because we have also now for the first time established our own logistics center in Antwerp. As you know, we have 74 locations in China with a very strong [indiscernible]. We have also strong individual licensees in Dubai and Kuwait, in Oman and in fact also a new licensee is in the process by April or May of opening a design center in Saudi Arabia and our licensee in Dubai is going to open up another one in the UAE in the next 1 year. Now our European operation is important because we are supporting it throughout our logistics and also have established a design center which people can come to and see they are coming and seeing And I think that as we go forward you will see us get licensees. At this stage our intension is not to open any more company operated design centers in Europe.

Our next question comes from Soraya Benitez with Cougar Trading.

Just back to the international, I understand that you still have a little bit of startup costs but are there any other working capital requirements we should think about as you sort of think about the international side?

The work in capital requirements and opening up 2 design centers in Belgium are somewhat more than we open up design centers in United States, not tremendously more but I would say that most of that or half of it we are behind and when we open the next one in Antwerp, we have additional money to spend on inventory and also some leasehold improvements and also entering into lease for the next location. So overall it’s not a major capital investment. It’s basically opening 2 design centers.

Great, and then lastly, I understand these are just design centers but sort of how do we think about, at least in Europe, in terms of the competitive environment, who are you going up against there and who do you sort of admire potentially, maybe competitively?

It’s a good question because we did some studies and of course for many years in Europe that on one hand there is lot of, lot of home furnishings and large scale home furnishings, commodity-type businesses. On the other hand there are also, you might say boutiques with high prices and we are in the middle. We're providing great product and what we've brought into Europe is, which is an interesting proposition is interior design service. Service is something that is our competitive advantage in Europe and people are appreciating it, that we are providing the Ethan Allen programs with good quality and good values from European price point relative to our quality and also service, and I think that is our competitive advantage and that is what we're marketing in Europe.

I'm not showing any other questions in the queue at this time.

All right, well thanks very much. Any questions, comments please let us know. We're going to be back in the office later this afternoon. So take care.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.