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From Home Furnishing Business

Beneficial Owner at Ethan Allen Issues Statement After Cash Dividend Declared

August 20, 2026  by Karen Parrish in Business Strategy, Industry   

“Ethan Allen's August 19 announcement should be seen for what it is: a transparent attempt to deflect attention from mounting calls for change ahead of a contested election. It is an all too familiar tactic used by struggling boards facing a credible alternative slate. To be clear, a rash and reactive special dividend does not reflect a ‘disciplined approach to capital allocation.’ In Ethan Allen’s case, it reflects a rudderless company seeking to distract shareholders from the substantive issues at hand.

“Incredibly, the Company doubled down on a strategy that simply has not worked – reaffirming its track record of underinvesting in the business and its woefully inadequate marketing and digital capabilities. It is in these precise areas that Ethan Allen is so desperately in need of change. Ethan Allen has failed to effectively deploy its financial resources behind a program of brand investment, customer acquisition, store modernization, and omnichannel execution. Shareholders should put the Company’s claims of 13% increases in marketing spend in each of the past two years in context. Those increases are measured off of a historically depressed base following years of underinvestment. Even after recent increases, reported advertising spend remains below every year from 2006 through 2021, and is roughly half the level of premium furniture peers as a percentage of sales.

“Moreover, the Company repeatedly references its commitment to ‘disciplined growth,’ despite the fact that revenue, operating income, workforce, and enterprise value have all declined materially over the last two decades. The Company also points to a product assortment that has nearly doubled over five years while revenue has declined materially over the same period; $59 million of five-year capital investment that has not translated into growth; and a number of “new” design centers that appear to be little more than relocations. The fact is, Ethan Allen has managed to lose market share in a growing premium home furnishings category while competitors have built multibillion-dollar platforms.

“The Company continues to lack a credible succession plan for Chairman and CEO Farooq Kathwari, who has led the Company for 38 years despite a track record of chronic underperformance. Instead, Farooq, who beneficially owns approximately 8.4% of the Company's outstanding shares, the overwhelming majority of which he accumulated through compensation grants rather than open market purchases, stands to collect, together with his family and related entities, more than $6 million from this special dividend alone.

“A skeptical investor might reasonably ask whether the Company’s substantial cash generation can be used to build long-term value – or simply distributed while the underlying business continues to shrink. I, along with my fellow director nominees, believe Ethan Allen can do the former – reinvest in the business, reignite profitable growth, and restore this exceptional brand to the leadership position it should occupy.”

Two weeks after Mr. Bergeron nominated director candidates, and only upon direct inquiry – did the Company’s counsel privately advise Mr. Bergeron’s counsel that Ethan Allen’s Board of Directors had purportedly reduced its size from six to five directors in January 2026. Regardless of when this decision was actually made, it is extremely telling.

“The decision to shrink the Board to just four independent directors is particularly difficult to reconcile with the need for greater accountability and fresh operating expertise. None of the remaining independent directors have meaningful experience in retail, furniture, luxury goods, or e-commerce – capabilities we believe are critical to reinvigorating Ethan Allen. At a moment when improved governance and relevant operating expertise are desperately needed, the Board has chosen to become smaller rather than stronger. Clearly for Farooq, less governance is the best governance.

“We believe there is a better path forward. I invested in Ethan Allen because I believe, with the right board and the right strategy, the Company can restore profitable growth and unlock the full value of an iconic American brand. I have nominated a slate of highly qualified director candidates with complementary experience in modern retail, brand revitalization, digital and omnichannel execution, home furnishings, financial oversight, and capital allocation. Together, we are prepared to govern and drive the changes we believe are necessary to revitalize Ethan Allen and reignite growth at the Company.”

For more information on Mr. Bergeron’s campaign, including the case for change and nominee biographies, shareholders are encouraged to visit www.EthanAllenGrowth.com.