Ethan Allen Interiors Reports Financial Results for Third Quarter

April 30, 2026  by Karen Parrish in Business Strategy, Industry   

Farooq Kathwari, Ethan Allen’s chairman, president and CEO commented, “We were pleased to further strengthen many areas of our vertically integrated enterprise, including our talent, product offerings, marketing, technology, retail network, manufacturing, logistics and social responsibility during the just completed third quarter of fiscal 2026. Our ability to manufacture approximately 75% of furniture in our own North American facilities is a major advantage and we are well-positioned as a vertically integrated enterprise with 172 retail design centers in North America and more internationally. We plan to continue to open new design centers in North America.”

“Our third quarter results were impacted by a reduction in business with the U.S. State Department, lower international sales and sluggish demand from a challenging environment for home furnishings, which included weather disruptions and macroeconomic uncertainty. We performed well despite these challenges. For the quarter ended March 31, 2026, we reported consolidated net sales of $135.8 million, gross margin of 59.4%, adjusted operating income of $6.8 million, adjusted operating margin of 5.0% and adjusted diluted EPS of $0.24. Retail segment written orders were flat compared to last year while our wholesale segment written orders declined 7.6% from reduced government activity, a slowdown in our international business and macroeconomic challenges. Our adjusted operating margin of 5.0% reflects the impact of tariffs partially offset by our focus on cost control and operational efficiencies.”

“We remain debt-free with substantial liquidity to support long-term growth. During the just completed third quarter we generated $15.1 million in operating cash flow, up from $10.2 million a year ago. Our strong operating cash flow combined with disciplined capital management reflects our commitment to delivering long-term value while maintaining the financial strength needed in a challenging environment. We ended the quarter with total cash and investments of $180.9 million, which included the payment of $10.0 million in regular quarterly cash dividends and $3.0 million of capital expenditures. We are also pleased to announce that yesterday our Board approved a regular quarterly cash dividend of $0.39 per share, payable on May 27, 2026.”

“Our vertical integration and focus on one brand are our strengths. We offer relevant quality products, provide complimentary interior design service and manufacture 75% of the custom furniture in our own North American facilities. Our complimentary interior design service and strategic marketing investments combined with recent product introductions are beginning to resonate with clients. Our Spring 2026 collection represents innovative and expressive assortments that represent the Ethan Allen brand while emphasizing quality, North American craftsmanship, and style that define us. We look forward to continuing our progress and remain cautiously optimistic,” concluded Mr. Kathwari.

FISCAL 2026 THIRD QUARTER HIGHLIGHTS*

- Consolidated net sales of $135.8 million; prior year $142.7 million

- Retail net sales of $116.2 million; prior year $117.6 million

- Wholesale net sales of $84.9 million; prior year $99.0 million

- Written orders

- Retail segment written orders flat versus last year

- Wholesale segment written orders decreased 7.6%

- Consolidated gross margin of 59.4%; prior year 61.2%

- Selling, general and administrative expenses decreased 3.1% from last year

- Marketing spend totaled $4.8 million or 3.6% of consolidated net sales; comparable to 3.4% last year

- Operating margin of 4.8%; adjusted operating margin of 5.0%; adjusted prior year 8.0%

- Diluted EPS of $0.23; adjusted diluted EPS of $0.24; adjusted prior year $0.38

- Paid total cash dividends of $10.0 million or $0.39 per share in February 2026

- Capital expenditures were $3.0 million; $2.0 million a year ago

- Ended the quarter with $180.9 million in total cash and investments; no outstanding debt

- Inventories, net totaled $148.6 million at March 31, 2026, down 1.2% from a year ago

- Ended the quarter with 3,105 associates; 5.7% fewer than a year ago

- Operated 172 Ethan Allen retail design centers in North America, including 142 Company-operated and 30 independently owned and operated; new design centers to be opened during 2026 include locations in Rancho Cucamonga, California and Aventura, Florida

- Ethan Allen’s upholstery operation in Silao, Mexico was recognized as “Empresa Socialmente Responsible” (Environmentally and Socially Responsible) for the seventh consecutive year

- On February 20, 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Protection Act (“IEEPA”) during 2025; shortly thereafter, a new 10% global import tariff under Section 122 of the Trade Act of 1974 was made effective

- The U.S. Customs and Border Protection (“CBP”) released guidance regarding IEEPA duty refunds, including the April 20, 2026 launch of Phase 1 of the Consolidated Administration and Processing of Entries (“CAPE”) tool in the Automated Commercial Environment (“ACE”) system, which will enable CBP to process IEEPA duty refund claims at scale; Ethan Allen continues to monitor tariff developments and assess their potential impact on its business, including recoverability of IEEPA refunds

BALANCE SHEET and CASH FLOW

Cash and investments totaled $180.9 million at March 31, 2026 compared with $196.2 million at June 30, 2025. The decrease during the first nine months of fiscal 2026 was due to $36.3 million in cash dividends paid and capital expenditures of $8.3 million, partially offset by $30.1 million in cash generated from operating activities.

Cash from operating activities totaled $30.1 million during fiscal 2026, a decrease from $36.9 million in the prior year period due to lower net income and changes in working capital, including lower customer deposits.

Cash dividends paid during the first nine months of fiscal 2026 totaled $36.3 million, which included a special cash dividend of $6.4 million, or $0.25 per share, and regular quarterly cash dividends totaling $29.9 million.

Inventories, net totaled $148.6 million at March 31, 2026, an increase of 5.5% since June 30, 2025 as new product introductions and price increases drove higher levels of on-hand inventory.

Customer deposits from undelivered written orders totaled $72.2 million at March 31, 2026, down from $75.1 million at June 30, 2025 as delivered sales outpaced incoming retail written orders. Wholesale backlog was $42.0 million at March 31, 2026, a decrease of 14.1% during the first nine months of fiscal 2026 primarily due to a slowdown in contract orders.

No debt outstanding at March 31, 2026.

DIVIDENDS
On January 27, 2026, the Company’s Board of Directors declared a $0.39 per share regular quarterly cash dividend, which was paid on February 25, 2026. More recently, on April 28, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.39 per share, payable on May 27, 2026 to shareholders of record as of May 13, 2026.

CONFERENCE CALL

Ethan Allen hosted a conference call on April 29. 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.