Ethan Allen Interiors, Inc. Reports Results for Second Quarter 2026

January 29, 2026  by Karen Parrish in Business Strategy, Industry   

Farooq Kathwari, Ethan Allen’s chairman, president and CEO commented, “We are pleased to report our second quarter financial and operating results, which include strong margins and a robust balance sheet despite a challenging environment, including the U.S. government shutdown. We continue to strengthen many areas of our vertically integrated enterprise, including our talent, product offerings, marketing, technology, retail network, manufacturing, logistics and social responsibility. As the interior design destination with a strong North American manufacturing presence, 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.”

“For the second quarter ended December 31, 2025, we reported consolidated net sales of $149.9 million, gross margin of 60.9%, adjusted operating income of $13.5 million, adjusted operating margin of 9.0% and adjusted diluted EPS of $0.44. Written order growth was impacted by a difficult prior year comparison and macroeconomic challenges, including the government shutdown. Our adjusted operating margin of 9.0% reflects a strong gross margin of 60.9% combined with our focus on cost control and operational efficiencies while making incremental strategic marketing investments. Total cash and investments of $179.3 million at December 31, 2025, included the payment of $10.0 million in regular quarterly cash dividends and $2.9 million of capital expenditures as we return capital to shareholders and reinvest in our business. We are also pleased to announce that yesterday our Board approved a regular quarterly cash dividend of $0.39 per share, payable on February 25, 2026.”

“As we enter the 2026 calendar year, our 94th year of operation, we are well-positioned and thankful for the continued hard work of our 3,149 talented and dedicated associates that support our iconic Ethan Allen brand. Recent product introductions are beginning to resonate with our clients as we operate our repositioned and refreshed 172 retail design centers throughout North America and more internationally. Our ability to offer relevant high-quality products, provide complimentary interior design service and manufacture 75% of the custom furniture in our own North American facilities is a major advantage for us and positions the Company well as we navigate the current operating environment. We look forward to continuing our progress and remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2026 SECOND QUARTER HIGHLIGHTS*

— Consolidated net sales of $149.9 million; prior year $157.3 million

- Retail net sales of $134.3 million; same as prior year

- Wholesale net sales of $79.1 million; prior year $86.8 million

— Written orders

- Retail segment written orders 17.9% lower

- Wholesale segment written orders decreased 19.3%

— Consolidated gross margin of 60.9%; prior year 60.3%

— Selling, general and administrative expenses increased 1.5% over last year

— Increased marketing spend by 25.2% to $4.9 million; equals 3.2% of consolidated net sales

— Operating margin of 9.5%; adjusted operating margin of 9.0%; adjusted prior year 11.5%

— Diluted EPS of $0.46; adjusted diluted EPS of $0.44; adjusted prior year $0.59

— Paid total cash dividends of $10.0 million or $0.39 per share in November 2025

— Capital expenditures were $2.9 million; $3.8 million a year ago

— Ended the quarter with $179.3 million in total cash and investments; no outstanding debt

— Inventories, net totaled $141.9 million at December 31, 2025, down 0.1% from a year ago

— Ended the quarter with total headcount of 3,149; 5.1% fewer than a year ago and 30.7% less than December 2019

— Operated 172 Ethan Allen retail design centers in North America, including 142 Company-operated and 30 independently owned and operated; recently relocated the Company’s San Diego, California design center to a new, inviting and inspirational space

— In October 2025, the Company held its 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

— The Sustainable Furnishings Council and the National Wildlife Federation awarded Ethan Allen a “High Score” on their 2025 Wood Furniture Scorecard for its commitment to the use of sustainable wood in furniture manufacturing

— Ethan Allen’s upholstery operation in Silao, Mexico was recently awarded the Great Place to Work® certification for the eighth consecutive year; in addition to this designation, the Silao operation was recognized as “Empresa Socialmente Responsible” (Environmentally and Socially Responsible) for the seventh consecutive year

— Ethan Allen completed its climate-related financial risk report in December 2025, which summarizes the outcome of the climate risk assessment conducted across the Company’s operations in California

BALANCE SHEET and CASH FLOW
Cash and investments totaled $179.3 million at December 31, 2025, compared with $196.2 million at June 30, 2025. The decrease during the first six months of fiscal 2026 was due to $26.3 million in cash dividends paid and capital expenditures of $5.3 million, partially offset by $15.0 million in cash generated from operating activities.

Cash from operating activities totaled $15.0 million during fiscal 2026, a decrease from $26.7 million in the prior year period due to lower net income and changes in working capital, including lower customer deposits and a decrease in accrued compensation and benefits based on timing of payroll.

Cash dividends paid during the first six months of fiscal 2026 totaled $26.3 million, which included a special cash dividend of $6.4 million, or $0.25 per share, and regular quarterly cash dividends totaling $19.9 million.

Inventories, net totaled $141.9 million at December 31, 2025, an increase of 0.7% since June 30, 2025 as new product introductions were partially offset by higher designer floor sample sales.

Customer deposits from undelivered written orders totaled $63.6 million at December 31, 2025, down from $75.1 million at June 30, 2025 as delivered sales outpaced incoming retail written orders. Wholesale backlog was $49.8 million at December 31, 2025, an increase of 2.0% during the first half of fiscal 2026 due to timing of incoming contract orders.

No debt outstanding at December 31, 2025.

DIVIDENDS
On October 28, 2025, the Company’s Board of Directors declared a $0.39 per share regular quarterly cash dividend, which was paid on November 26, 2025. More recently, on January 27, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.39 per share, payable on February 25, 2026, to shareholders of record as of February 11, 2026.

CONFERENCE CALL
Ethan Allen will host a conference call on Jan 28, 2026, at 5:00 p.m. Eastern Time to discuss these results. The conference call will be webcast live from the Company’s Investor Relations website at https://ir.ethanallen.com.

An archived recording of the conference call will be available on the Company’s Investor Relations website referenced above for six months. A telephone replay will also be available for one month following the call.