Good day, ladies and gentlemen and welcome to the Ethan Allen Third Quarter Earnings Release Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and with instructions following at that time. Now, I will turn the conference over to your host, Corey Whitely, Executive Vice President, Administration and Interim Chief Financial Officer.

Thank you, Jonathan and good morning everyone. Welcome to Ethan Allen’s earning conference call for our third fiscal quarter ended March 31, 2014. This call is being webcast live on ethanallen.com, where you will 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 could cause actual results to differ materially from those expected when making such forward-looking statements. Please refer to our SEC filings for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. Also joining the call today is our Vice President, Corporate Controller, John Bedford. 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.

Alright, Corey, thank you and thank you for participating in our third quarter earnings call. As we reported, we had relatively good results considering the challenges of very harsh weather. Our sales increased 2.9% to $173.1 million. Retail comp sales increased 2.1% with total retail sales flat from last year quarter. The third quarter historically represents lower delivered sales. Gross margins were at 53.8% compared to 54.6%. The change was primarily due to mix of retail and wholesale sales to total sales. This year retail represented 76.2% compared to 78.5% last year. Adjusted operating margin of 6.9% versus 7% last year was good considering disruptions caused by severe weather, including higher energy costs. Our adjusted wholesale operating margin was 11.7% versus 11.9% last year and adjusted retail operating margin was at 0.6% and flat with last year. Written business was also impacted in the quarter due to weather. Comparable written division written was flat with last year with total written down 2.4%. Our retail division backlogs increased 10.1%. As we reported, comp written sales in retail division were down 13.4% in January, 1.4% down in February, and increased 15.6% in March due mostly to improvements in weather and also due to the holidays falling in April this year. Adjusted earnings per share for the quarter, was up 6% to $0.22. We maintained strong cash and equivalents of $124.8 million, an increase of 6.5% from previous year. Our net debt as of March 31 was $6 million compared to $38 million net debt as of March 31, 2013. Inventories of $145 million increased as per plan by $3 million from 3/31/13 and $7.7 million from 6/30/2013. The increase was due to improving our service position and on demand initiative, which I will discuss after Corey gives a more detailed overview of our financial statements. And at this stage, Corey, please go ahead.

Thank you, Farooq. For the third quarter of fiscal 2014, consolidated net sales of $173.1 million increased 2.9% compared to the third quarter of fiscal 2013. Adjusted operating income was $12 million compared to $11.8 million in the prior year third quarter with the adjusted operating margin of 6.9%, down slightly compared to 7% in the third quarter of fiscal 2013. Adjusted net income of $6.5 million increased 6.7% over the prior year third quarter. Wholesale net sales of $111.1 million increased 2.8% during the third quarter of fiscal 2014 compared to the third quarter fiscal ‘13. The retail segment net sales declined two-tenths of 1% for the quarter at $131.8 million compared to $132.1 million in the prior year third quarter. The wholesale gross margin improved to 32.5% for the third quarter of fiscal ‘14 from 31.9% in the prior year third quarter. The retail gross margin of 44.7% for the third quarter in fiscal ’14 remained unchanged from the prior year third quarter. The retail segment net sales were 76.2% of consolidated net sales and that compared to 78.5% of consolidated net sales during the prior year third quarter. The higher ratio of wholesale segment sales to the total net sales brought the consolidated margin down to 5.3% – I am sorry to 53.8% for the third quarter of fiscal 2014 compared to 54.6% in the third quarter fiscal ’13. The impact from the extreme winter weather was most noticed in written orders booked by the retail segment which for the third quarter of fiscal ’14 decreased 2.4% compared to the third quarter of fiscal 2013. Comparable design center written orders booked decreased 0.5% compared to the third quarter of fiscal 2013. For the nine months year-to-date fiscal 2014 period the retail segment written orders booked are up…

Okay, thanks Corey. I am pleased we are making very good progress in strengthening our competitive advantages, including expanding the variety of styles. One of our major competitive advantages is that we provide a variety of styles for home decorating, from casual to classics in both the contemporary and what we call the new traditional designs under the overall umbrella of eclecticism and migrating to home fashion. Since last six months, we have a major initiative to make enhancements to our product programs, which we plan to launch to our retail network in our June conference and for consumer launch starting in fall of this year. We have scheduled an investor conference on June 24 at our Danbury headquarters following the retail conference. Expanding our message in both traditional and digital mediums is a great focus. During the quarter, we maintained our advertising spending to similar levels to last year. The mix was changed to increasingly spending more on digital mediums. As I have discussed, we are developing a much stronger marketing campaign for this fall with the introduction of this very large new product programs and we believe a much more effective presentation in our design centers. Our On Demand programs have started to make an impact. We are gradually increasing more of the products shown in the design centers to our On Demand program. The On Demand program includes both furniture and accent programs. Most of the accent programs were already On Demand that is in-stock program. Since last year, we are now adding furniture products shown in our design centers to the in-stock program. This is helping provide options and is also helping in selling our custom products. Expanding our investments in technology is also a priority. We continue to invest in technology at all levels, especially…

(Operator Instructions) Our first question comes from the line of Budd Bugatch from Raymond James. Your question please.

Hi Budd, good morning.

Good morning guys, this is Bobby actually filling in for Budd. Thank you for taking my questions and congrats on the quarter.

Yes, thanks Bobby.

Farooq, I was wondering if you can maybe comment on your ad spending plans going forward when should we expect the ramp-up in ad spending over the next couple of quarters?

Our objective at this stage is more or less to maintain it in the third and the fourth quarter and then really ramp it up in the first quarter of I would say I am sorry in the fourth quarter and the first quarter which is July, August and in September. That quarter we will start in September with the launch of all these new products. We will start increasing our advertising and then we will ramp it up even further moving forward. So you are going to see us more or less to maintain our advertising for this fourth quarter that we are in now April, May and June and July, August and September – July and August more or less we will maintain what it is, starting September you are going to see us ramping it up.

Alright, thank you and how big of the new product rollout is that compared to some of the product rollouts that we have seen in the past?

In the past really has been just small little introductions. This is major. This is going to be I would say at least five times more than what we have done in the past.

Alright. And that all comes on the line really in the December quarter that starts taking an impact?

It starts in the – yes that’s right October, November, December that’s the quarter. Although about half of the product line or 60% to 70% we will introduce to consumers in the – starting September and the balance we will start – we will introduced it in January, because we got to space it.

Alright, perfect. And then you mentioned the accessories mix was 17% was that 17% year-to-date or for the third quarter?

That’s year-to-date?

Year-to-date and it improving the third quarter year-over-year?

Yes, for the whole year it improved from 15 to 17.

Okay, perfect, perfect. I would jump in the queue and let other people some ask questions. Thank you again and best of luck gong going forward.

Thanks Bobby.

Thank you. Our next question comes from the line of Brad Thomas from KeyBanc Capital Markets.

Thanks. Good morning Farooq and good morning Correy.

Good morning Brad.

I want to just start with a big picture question I know that the maybe reinvention is just strong term, but the transformation of Ethan Allen is ongoing thing not just one quarter thing. But you have been working on it a number of different things from a merchandising and marketing standpoint for the last several quarters. And I was just – I know the weather has been tough and there have been other one-time issues, but as you look at your customer database and the demographics of who shop in your stores and website visits, what data points can you point to, to show us some traction from some of these initiatives so far?

One of the major initiatives of course perhaps you are referring to is when we started last fall under this whole umbrella of eclecticism and this also migrating to what we say from furniture to fashion. It’s a little bit too early, Brad, to really give an overall impact in the six-month period. It is somewhat of a short period. However, we have increased our advertising in the digital mediums. So that we in addition to reaching our base consumer, which still is the baby boomer consumer, we are starting to make traction with the Gen-Xers. And I believe that a year from now I say that we are going to have much more of a greater impact in increasing our consumer base to somewhat more also from the Gen-Xers, but right now, there is still primarily baby boomers, which are very important, because the baby boomers are the ones who are spending the money and also are interested in our design services, but more and more increasingly we are seeing some traction, but I think we have got to another six months to give you some results.

Okay, great. And then a couple of just housekeeping items, with respect to the backlog about 10%, I think that’s a similar level that the deposits have been up the last quarter or two. Just as we think about some of the new product rollouts you have on the horizon, do you think you have an opportunity to work down the backlog and benefit sales or structurally might that backlog need to stay where it is or get a little bit bigger, just any color on that regard would be helpful?

Yes. The part of the backlog really was due to the effects of two factors, one was the weather impacted our deliveries and secondly we did have some delays of products coming from offshore. As you know, still about 45% or 50% of our case goods are coming from overseas even though now we are increasing that from our own North American facilities. So, those two are created backlog for deliveries at the retail even though as we saw, we saw flat sales, but increase in backlogs. So what we will do is obviously most of that is going to be used up and we do like to have somewhat of a higher backlog, but that will depend upon our business this quarter, Brad.

Okay, great. And then just lastly if you could give us an update from what you are seeing in China, in terms of the underlying trend in growth rates that would be helpful?

Yes. The good news is that we are back on track. On China, we did have some issues as you know there are some inventory issues, with our business had maintained. So, right now, they have balanced the inventories and business has been increasing in China. And in fact, it has also been increasing in other places for us like for instance even though relatively they are somewhat smaller, but we have had a stronger presence in say in countries like we are in Amman, Jordan or in Korea or we are opening up a third one in Manila. We opened in Bucharest. We are just in the process of opening in Doha, a second one in Dubai, a second one in also in Doha, Qatar and also in Riyadh. So we are making some progress overseas as well. And I think that progress will continue to give us that incremental business, but a great, great focus really is in our design centers in North America. That’s where we have a tremendous amount of opportunity of increasing our sales.

Of course. Well, thank you so much and look forward to seeing you in June.

Okay, thanks Brad.

Thank you. Our next question comes from the line of Jeremy Hamblin from Dougherty & Company.

Yes, hi. Good morning. Jeremy Hamblin - Dougherty & Company: Hi, good morning and thanks for taking my questions. I wanted to actually just follow-up on China for a second. And it looks like or if I recall back to my notes from last year, I know there was some disruption in deliveries both in the third quarter and the fourth quarter. And I believe that you had indicated there were about $6 million in each quarter, is that part of the reason why you saw a higher skew towards your wholesale business in Q3 and should we expect a similar skew in Q4?

No I think you are absolutely right, I think it’s you are right on mark. The reason – one of the reasons that our wholesale business increased was because this will bring back and having the China and get back on track. So yes that was actually the main reason why the wholesale was higher this time relative to what happened last year. Going forward, I do not know at this stage, it depends on how much of a business we get from international that’s China included, which is – and how much of the business growth takes place in our own retail division because the retail division – the retail division sales increase at the level and today at 76% of the business coming from the retail division. That is a – that’s a big, big number. And the relatively small I mean a good increase in retail division will change that balance fast. Jeremy Hamblin - Dougherty & Company: Okay, so too early to tell on how in the June quarter that’s going to skew in terms of the retail segment?

Right, but you know while you are looking at the retail gross margins, I think you should really focus more on the operating margins. As Corey mentioned our operating margins are pretty healthy both at the region and the wholesale, those really – that’s really where it matters. So it is more an operating margin level. At the wholesale level when a wholesale business increases, it has a good impact on our operating margins even though on a consolidated basis it might show a little bit lower gross margins. Jeremy Hamblin - Dougherty & Company: And let me ask – actually ask a little follow-up question on that tying back to China, so I was surprised to see that although your wholesale business increased year-over-year by about $3 million, which again part of that as you said was due to China normalizing, but you did see your operating margins fall by about 20 basis points can you talk to us maybe some of the puts and takes on that from a wholesale operating margin?

Yes, a number of factors too. Other one is that we have been somewhat more aggressive in our promotional activities. I am sure you are noticing which we haven’t done in the past, but we are having some of our products even being given at the sale price of 20%, so that is also having an impact. And some of that impact is held at – takes place at retail, but it also impacts our wholesale margins, because we then do adjust our prices for the retail depending upon what are suggested discounting is at retail. So that is also a factor. And other factor is at the wholesale level I mentioned our energy costs. Our medical costs overall were also a factor in from – in increasing our expenses for the – at the wholesale level. And also at the retail level too. Jeremy Hamblin - Dougherty & Company: Right, thanks. And then one more follow-up from just elaborating on the prior comment about your new product introductions which are going to be major five times what we would normally see. I think in the past that has caused some changes in normalized patterns in terms of clearance sales and the timing on when you see things, so should we anticipate that you are going to have higher level of clearance sales in the early part of fiscal 2015 to make room for that those newer goods coming in. And then historically you have also seen I think a sales bump when that does happen and potentially slightly lower gross margins, any potential color on that and how we should be thinking about that flow would be very helpful?

I think you are hitting it on the mark. We will – our plan is that in July and August we are going to have our retail conference in June where we will be developing all our plans for the introduction of these new products coming into our design centers in August, so that – and early September so we start marketing them in September onwards and more of it will be in October, November and December. So we will be start – we will be selling floor sample products starting in July and August. So you are going to see that quarter some impact on the margins. And at the wholesale level to a great degree we have been of course planning it that this is going to take place, managing our wholesale inventories keeping this, all these things in view. But yes, it is – there is a possibility that we might have an impact on margins in July and August. And I think that you should keep in view. Jeremy Hamblin - Dougherty & Company: Thanks for taking my question.

Yes, thanks very much. Jeremy Hamblin - Dougherty & Company: Good luck.

Thank you. Our next question comes from the line of Todd Schwartzman from Sidoti & Company.

Yes, hi Todd. Todd Schwartzman - Sidoti & Company: Hi, Farooq. Hi, Corey. I wanted to just talk about traffic, of course the weather impacted overall numbers, absolute terms, but just on a year-over-year basis, what was the traffic conversion rate?

First of all, traffic is down. And you know this is no secret that traffic in all retail is down, almost all retail is down. And the reason is obvious as we know the traffic in malls is down. Fortunately, we don’t have almost 99% of our design centers are not in malls, but the traffic is down because people used to go window shopping into stores. Today, the window shopping is done on the websites. The websites are critical. And that’s why we have been investing a great deal in making sure a website is enhanced. In fact, we have done a lot of work in it. And we have in fact also retained a boutique firm to improve our experience on our websites, on our mobile experiences on people coming into our design centers on touch-screens. So, to give you at this stage, we know that our traffic was down in January, February, and March. And now the good news is this that the traffic that is coming in is more qualified. That’s the good news. So, for all the window shoppers are shopping on the website and the folks who really want to buy are coming into design centers. That I think one has to keep in mind when you look at just round numbers, Todd. Todd Schwartzman - Sidoti & Company: Yes. I mean, it’s a good thing that they are more qualified, but just in terms of the prospects that walk through the doors, how many of them did you convert to customers in the quarter and what was that conversion rate a year ago?

I tell you what I just have in front of me, but let’s Corey will get back to you to see what the conversion, yes, we do – we monitored very carefully we call it the performance index that is the number of people who come in and how many we convert. I mean, I have a general understanding what it is, but you are looking for the whole network. Let me see whether we make that information public. If we do, Corey will talk to you. Todd Schwartzman - Sidoti & Company: Okay. Because you do have a pretty strong presence in the Northeast, I think those stores are probably hurt worst of all and the Midwest certainly due to weather, I would think that somebody who did walk into a design center in February in particular was probably pretty motivated to buy something. So, I would be curious to see what those numbers were?

We will do that up. Certainly, our performance – PI, performance index was very, very high, because those folks who came in, they did buy, but I will have Corey give you the numbers. Todd Schwartzman - Sidoti & Company: It sounds good. Thank you. In terms of the written business in April thus far did the written business pick up where you left off in March?

I also mentioned the impact of the holiday is falling in April versus March. So April, of course, we have the tax season and then we had the Passover and Easter, which is over. Right now, we are somewhat trending similar to more or less to what we expected so far, but the last 8 days or 9 days is going to make a difference. That’s when we expect to close the business. So, we are going to see what happens. It’s a little bit too early to tell about April, Todd. Todd Schwartzman - Sidoti & Company: Not to put words in your mouth, but it sounds as though if you normalize for the difference in holidays, timing difference of the holidays that you are about even, about flat, is that….

Well, so far I think what we are looking at is this that we get a certain amount of business everyday until the last week of the month. So more or less it is about the same, but the last one week is going to make a real important factor. So far it’s looking reasonably good. The weather seems to be holding up all over. We have lots of initiatives in place. We have even, I am sure you noticed it have a special driver. We are putting the special promotional drivers like all our bedroom products we have put on the special savings since last Friday to the end of the month. That’s having an impact. We are also giving about 20% savings on that, which does impact our margins as previous comments were made. But I think we have lot of initiatives in place to see that we do have a decent April. But then I think the main, May and June are generally good business months. Todd Schwartzman - Sidoti & Company: And if you look out to the end of fiscal ’15, so the end of next fiscal year where do you expect to be – where you expect to finish the year in terms of domestic design centers and also international stores?

Yes, good question. We are as you know I have said it in the past already focus has been to improve the efficiency effectiveness of our design centers rather than just the numbers. For instance, we just opened up in Cleveland a design center in a great location, Lyndhurst, which replaced two design centers. We just opened up a great design center in Central New Jersey which replaced two design centers. So I think these numbers are a little bit numbers are not necessarily the total story, having the design centers in the right locations is more critical than the numbers. I would say that at this stage, more or less we should be close to where we are. Might be five or seven more but not a tremendous amount, tremendously more than what we had. Having said this, we are right now looking at about 15 markets where we used to be and we are not there today. And where we used to be like for instance Toledo, Ohio, Madison, Wisconsin and many markets like that, good markets, we used to have 15,000 square foot. Today, we are now going to reenter these markets and with a much smaller footprint because we have been experimenting from 1600 square feet to 8000 square feet. And today a smaller footprint is critical because of space, because of the technology that we have, so we have 45 new markets that we are target – 50 markets that we are targeting in North America in addition to a number of overseas. So we are going to – so I do not know how many of those we are going to get by end of next year. But we are focused to increase it Todd as we move forward. Todd Schwartzman - Sidoti & Company: So would you recommend that looking at number of total design associates or number of associates, design consultants per store perhaps rather than the traditional metrics of square footage or to a change in footage or change in number of doors opened would be the best bet for modeling purposes?

Yes, we used the combination of both. For instance, we have 1500 interior designers and we – I look upon them as entrepreneurs. As you know when folks in the investment community ask me are we going to acquire any company I would say yes, we are going to acquire interior designers. And we have as I said acquired over 800 of them in the last few years. Most of them ran their own businesses. And an interior designer on an average gives us $600,000 - $700,000 of business, so putting in more interior designers, but to do that we got to also be able to increase traffic, that’s other critical factor. Now, we could have spend a lot of money in increasing traffic, but I want to make sure we are absolutely ready and in a much better position not absolute, but really in a much better position in our offerings, in our technology, in our website. And I think by September we will be in a much better shape than we are today to be – to invest lots of money to get more traffic into our design centers, which means we can then add more people. Todd Schwartzman - Sidoti & Company: Okay, I think that’s a good segue to my next question, are you aware right now of any opportunities to buyback design centers in the next 12 to 15 months?

No, not really. That is, maybe one or two here or there but not much. Right now we have stable, our independent retailers are stable. There is always – there are one or two or three that is possible. And in fact, some of them are also opening new ones. And our independent retailer just opened up a second one in Calgary. Our independent retailer in Houston is opening one, our new design center in Houston. We got some moment going on in that way too. So you are not going to see too much of change on that thought. Todd Schwartzman - Sidoti & Company: Farooq, you don’t really speak too much about product categories within case goods, specific categories within cased goods in particular, but a number, a couple of your major competitors in the kid’s furniture business have recently announced plans to exit that business and competitive pressures and manufacturing domestically I think has taken a toll on some of the players in the past year in particular. What challenges are you seeing at Ethan Allen that are unique to manufacturing youth bedroom furniture domestically and what are you doing better or differently if anything than your competitors on the juvenile furniture front?

I think it is really an issue of juvenile or adult, the issue really is whether you have the ability to manufacture competitively in the United States. With the plants that make our adult furniture are the ones that make juvenile furniture for the kids. So there is no difference from that perspective. Now, the fact is this that if you are today selling products and you are selling it as the commodity, it’s very hard at this particular stage to compete with manufacturers offshore. In our case, because of the fact that we have – we have decided to maintain manufacturing in the U.S. and we have complemented it in manufacturing in North America. Today, it gives us the competitive advantage even though we have intentionally decided that we will operate at lower margins in cased goods. That’s what you are referring to. Then we could have done five or six years back, if it goes all our plants and gone overseas, we would have had certainly higher margins, but we would not be in a advantageous position that we are today. And I believe we will be in a greater advantageous position a year from now by having manufacturing in the United States and other North American countries, great competitive advantage for us. Todd Schwartzman - Sidoti & Company: Would you say that today’s consumer, consumers of non-commoditized children’s furniture still care much about the product’s country of origin?

Well, people prefer to be made in America, but then when it comes to the pricing if it’s extremely expensive, they are not going to buy. So, we have got to make sure that we have great quality and competitive pricing. And even on some categories we operate at lower margins. That’s what we do. Todd Schwartzman - Sidoti & Company: So all-in from where we you sit right now, I think things could change of course, but it is this lucrative market segment to play in for the long-term?

Absolutely. In fact, we are going to increase our presence. Our operations have become, we, as you know, we operate on what I call an averaging of gross margins between what we do in the U.S. and with other North American facilities. And the products we are now making, which I mentioned earlier, most of those products are designed, two, three years back, we didn’t design products that are competitively to be made in the United States. They could be made anywhere. If that is the case, you don’t have a competitive advantage. These products are being made with the resources that we have, we operate sawmill. We operate cased goods plants, we operate rough mills, we operate everything in the world. Now, we vertically integrated it and been a challenge in the last few years maintaining them, but today, I think it’s going to be a competitive advantage, because sourcing overseas is also becoming an issue. Todd Schwartzman - Sidoti & Company: If you think children’s bedroom is a source of potential market share expansion for Ethan Allen, is that something that we could expect to see, receive more of your advertising dollars going forward?

Well, we will look at that, Todd. I think at this stage, we have lot of great funds coming in. And I think that most probably the children might come a little bit later for us. Right now, we are looking at adults and the teenagers up, but children we already have it. But I think you make a good point. And of course I don’t know what’s happening in the industry, the people who have had a tough time and I am sorry to hear that that they have had to close their plants to go overseas, but in our vertically integrated model and the fact that we have custom and on demand give us the competitive advantage. If we didn’t have custom and it’s all being sold in the commodity hard to compete. Todd Schwartzman - Sidoti & Company: Got it. Thank you very much.

Alright, Todd.

Thank you. Our next question comes from the line of Dillard Watt from Stifel. Your question please.

Yes, hi good morning.

Thanks. Good morning, Farooq. I was wondering if we could talk just a little bit about the weather and you obviously were providing some great color with written orders in each month of the quarter, but John Baugh and I were wondering if you could maybe help us figure out, what impact in March was just from your Northeast stores that were no longer getting hit hard by weather and maybe one impact was sort of an improvement in the business cadence, so I don’t know maybe if you can help us with maybe what your good weather stores like in Florida did maybe in January and February versus March or kind of any color on that would be helpful.

Yes, without giving exact numbers which I don’t have in front of me, but certainly California and Florida did well in January and February. When it comes to March and what was very, very tough was Midwest, Chicago was – Minneapolis, Chicago, Northeast, even Washington was a big, big challenge in January and February. And while in March all of them improved while they improved obviously just to give overall and they improved better than of course California and Florida in March because of the pent up demand that we had in January and February.

But it is – but you are saying that the California and Florida stores did see some improvement in March?

Yes, they did.

Great, okay. I think all of my other questions at this point have been answered. Thanks a lot.

Alright.

Thank you. Our next question comes from the line of Cristina Fernandez from Telsey Advisory Group.

Hello there Christina.

Hi good morning. If you look – if I recall correctly normally in an average year you update 10% of your product assortment and this year you are saying five times and probably 60%, what is different from the new product introductions you are going to be making in the fall versus what you have done in recent years?

Well, I don’t want to give a lot of our secrets out there Christina. But basically really it is an attitude. It is an attitude of products reflecting the way people live today. It is also reflects and you will see that attitude and it’s no secret I would say this that today people are living more relaxed whether it’s a casual or the so-called formal product it has to be more relaxed. It has got to be livable. The second thing is we looked at it and said what kind of products can be made where our competitive advantages can be utilized that’s our resources here and in other parts of North America that is Mexico and also in Honduras. Now Honduras as you know, we just got it going two years back. In Mexico we got it back six years back, so Mexico is more mature in getting us going. Honduras was not, but we are pushing it. But one of the reasons, we also delayed what we are doing now which impacts Honduras was that we were not ready, but on a very accelerated basis we have made – we are getting it going into a major case goods operation. A year from now it will be a major case goods operation is already getting there. So that was affected too. So our first an attitude from a design and second utilizing the raw materials that are available to us in South America and available in North America and also this whole attitude as I said was relevant design for today’s lifestyles.

Okay, so based on that it looks like we are going to see a change in the aesthetic but of some but part of as opposed to it just being a continuation of the…?

It will be a change in June you are going to see it.

Okay. Thanks. And then on the marketing side, did you make a change during the quarter as far as how much you plan to spend on marketing because it ended up being flat and I have been under impression that marketing was going to be up year-over-year?

No it was approximately more or less flat and as I have said we decided that six months back that this was not the time for us to increase advertising. We will continue. We still have a healthy advertising budget we spend about 5% of our sales on advertising. But we will take it up as we come in from September onwards.

And just last one I mean you have been more promotional in recent months, I mean are you seeing a direct correlation between the promotions and the traffic that you are seeing in the store or I guess in another way how effective you think are these promotions in driving...?

I will tell this and even the business we did in January, February even in March the kind of conditions we were faced with and weather we would not have had flat sales or slight increase in comparable if we had not had those promotional activities.

Okay. So then we, I mean, we continue to expect this cadence to continue over the course of the year?

You do, but we are of course very selective. We don’t do it across the board. We use special events, but I think that unfortunately whether we liked or not, our challenge is that we start with an everyday best price as that is a very good price. We didn’t develop these prices so that we could have regular prices so that we can then discount them. That’s what most retail does. We don’t do that. And that does put a challenge on us. So our 20% offering or 15% is really a big deal. For other folks who raised their prices, so they can give a 40% discount, it does not mean much, but for us it does mean much. So we are monitoring it and managing it as efficiently as we can.

Thank you. That’s all I have.

Alright, thanks Cristina.

Thank you. (Operator Instructions) Our next question is a follow-up from the line of Jeremy Hamblin from Dougherty & Company.

Yes, hi Jeremy. Jeremy Hamblin - Dougherty & Company: Hi, guys. Sorry, I had one additional follow-up and it actually goes back to the promotions that were done in January. I know on the last call we talked quite a bit about having kind of a more traffic driving promotional messaging, which kind of translated into much shorter term promotions. I know in terms of visiting some stores and it seems as though you have abandoned that strategy fairly quickly, I wanted to just see how much of the worst results in January is really attributable to the weather? And I know the weather was horrible, but can you give me a sense of how much of it was really the weather versus how much of it was promotional strategies that just didn’t work that you kind of quickly moved back to more traditional strategies that seem to be resonating better both with your customers as well as with your design associates?

Well, Jeremy, let me correct you. That’s not the case, we did not abandon it, in fact we increased it. Now what we did was in December, we decided to try a number of different initiatives. We decided that we would have in addition to our offerings for, let us say, for a whole month, we would offer something that would also be for a limited period of time. So we tried a number of things. We said one of them what we call drivers that would be for about a two-week period. Then we said okay, let’s see if we can take one-on-one item. In fact, that’s what you are most probably referring to and said let’s do it something like a flat sale for the weekend. We found that our people need more time on that, but the two-week drivers, which was mostly the more important part of it, we maintained it and we have increased it. In fact, if you go and take a look at it right now, last Friday, we started a two-week initiative on operating our bedroom products on a sale. Similarly, we did the same thing in February. We did in the January we offered different products, but we did it a two-week rather than a weekend. Jeremy Hamblin - Dougherty & Company: Okay, I see. So just adjusting the timeframe on that urgency?

Yes. Because in our case people just don’t come and buy, they need to work with a designer and they need we found that two weeks is something they need to be effective. And we just did – the other one we just did for a few items, just to try it. Jeremy Hamblin - Dougherty & Company: Great. And so it sounds like then both the design associates, as well as the customers are responding better to the two-week timeframe as opposed to the five-day timeframe?

Exactly, yes. Jeremy Hamblin - Dougherty & Company: Okay. Thanks so much for taking my call.

Alright, Jeremy.

Thank you. And I am not showing any further questions or comments in the queue. At this time, I would like to hand the program back for any further remarks.

Thanks very much. We got a lot and lot of things happening here. And I look forward to seeing you in June. Please as you know we have sent the date to hold the date. We also are going to send more information about it shortly. And if any questions or comments, please give a call to me or certainly to Corey. Corey is handling them. And Corey will be able to answer any further questions from you. So thanks very much.

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Nice day.

Thanks.