Ethan Allen Reports First Quarter Results for 2026

October 29, 2025  by Karen Parrish in Business Strategy, Industry   

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “Despite many macroeconomic challenges, we were pleased to deliver retail segment written order growth and a strong gross margin during the just completed first quarter. Our wholesale segment written orders were down 7.1% due to lower U.S. government business.

For the quarter ended September 30, 2025, we reported consolidated net sales of $147.0 million, gross margin of 61.4%, adjusted operating income of $10.6 million, adjusted operating margin of 7.2% and adjusted diluted EPS of $0.43. Our adjusted operating margin was impacted by lower consolidated net sales, increased promotional activity, additional marketing campaigns and sales of inventory in our retail division to make room for new products. We generated strong operating cash flow of $16.8 million and ended the quarter with total cash and investments of $193.7 million, up $7.3 million from a year ago. We continued our history of returning capital to shareholders by paying $16.4 million in cash dividends, including $6.4 million in special cash dividends. We are also pleased to announce that yesterday our Board approved a regular quarterly cash dividend of $0.39 per share, payable on November 26, 2025.”

“Retail segment written order growth of 5.2% during the quarter reflects the strength of our brand, the loyalty of our clients, and the strong execution by our associates across our enterprise. As we continue to operate our business, including opening new design centers in Colorado Springs, CO, Greater Toronto and the Greater Houston area, we remain focused on five key areas: talent, service, marketing, technology and social responsibility. As the interior design destination, we are building on our reputation for handcrafted quality, our unique blend of personal service combined with technology, and our vision of classic design from a modern perspective.”

“Our vertical integration is a competitive advantage for us. Our North American manufacturing and logistics operations are an integral part of an overall strategy to maximize production efficiencies and maintain this competitive advantage. We’re proud of our ability to manufacture about 75% of our furniture in our own North American facilities. Alongside our U.S. manufacturing facilities in Vermont and North Carolina, we have manufacturing in Mexico and Honduras. It is about partnership, quality, collaboration and purpose. We also have a strong logistics network enabling us to deliver our products with white glove service at one price to our clients throughout North America. We are one team working with one vision.”

“As I’ve said before, crisis creates opportunity. We are working through an operating environment faced with lower consumer confidence, increased tariffs and a challenging housing market. We remain confident in the investments that we are making for the future and the strength of our business model. Our vertical integration, strong talent and robust balance sheet provide a solid foundation and position us well. We are very proud to have recently been named as America's #1 Premium Furniture Retailer for the third consecutive year. We look forward to continuing our progress and remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2026 FIRST QUARTER HIGHLIGHTS*

Consolidated net sales of $147.0 million; prior year $154.3 million

Retail net sales of $128.6 million; prior year $132.8 million

Wholesale net sales of $87.0 million; prior year $86.1 million

Written orders

Retail segment written orders increased 5.2%

Wholesale segment written orders lower by 7.1%

Consolidated gross margin of 61.4%; prior year 60.8%

Selling, general and administrative expenses increased 4.8% over last year

Increased marketing spend to $5.1 million, up from $3.5 million last year to further the Company’s brand and reach

Operating margin of 6.8%; adjusted operating margin of 7.2%; adjusted prior year 11.5%

Diluted EPS of $0.41; adjusted diluted EPS of $0.43; adjusted prior year $0.58

Generated $16.8 million in cash from operating activities; prior year $15.1 million

Paid total cash dividends of $16.4 million in August 2025, including a $0.25 per share special cash dividend and a regular quarterly cash dividend of $0.39 per share

Capital expenditures were $2.4 million; $3.6 million a year ago

Ended the quarter with $193.7 million in total cash and investments; no outstanding debt

Reduced inventory carrying levels to $139.9 million at September 30, 2025, down 2.3% from a year ago

Ended the quarter with 3,189 associates; 4.7% fewer than a year ago and 31.3% less than September 2019

For the third year in a row Ethan Allen was named America’s #1 Premium Furniture Retailer

New design centers in Colorado Springs, CO, Concord, Ontario (suburb of Toronto) and Webster, TX (suburb of Houston) were opened during the quarter; ended the first quarter with 173 retail design centers in North America, including 143 Company-operated and 30 independently owned and operated; there are also Ethan Allen design centers outside of North America

Recently held the Company’s annual convention at its headquarters and livestreamed across the world; under the theme of Always Moving Forward, the program honored Ethan Allen’s history, reviewed initiatives in manufacturing, logistics, technology, marketing and retail, and celebrated interior designers both for achievement in written sales and design excellence

CONFERENCE CALL
The following information is provided for those who would like to participate in the live conference call:

For those unable to listen live, an archived recording of the call will be available on the Company’s website for up to six months. A telephone replay will also be available for one month following the call.