Ethan Allen Written Orders Cool After a Steep Drop

The Tip Desk · November 12, 2026 · 4 min read

Consolidated net sales were $129.6 million in the three months ended September 30, 2026, down 11.8% from a year earlier, as Retail written orders fell 1.2% and Wholesale written orders fell 1.3%.

Ethan Allen Interiors Inc. (ETD), a leading interior design destination, reported consolidated net sales of $129.6 million for the three months ended September 30, 2026, down 11.8% from $147.0 million a year earlier.

Retail net sales were $114.4 million and Wholesale net sales were $79.0 million. The company said lower sales and tariffs pressured margins, partly offset by operating efficiencies.

Written orders, which had fallen double digits in the immediately preceding quarter, declined at a much slower year-over-year pace. Retail segment written orders were down 1.2% and Wholesale segment written orders were down 1.3%, versus a 10.8% Retail written-orders decline and an 11.9% Wholesale written-orders decline in the quarter ended June 30, 2026. The company attributed the year-over-year written-orders declines primarily to lower design center traffic, a soft housing market, global unrest and U.S. midterm election uncertainty.

Retail written orders rose 13.2% sequentially versus the fourth quarter of fiscal 2026, and the company said that momentum carried into October, which saw a 0.3% increase. Customer deposits from undelivered written orders totaled $74.3 million at September 30, 2026, up from $62.7 million at June 30, 2026, as the pace of incoming Retail written orders improved and outpaced delivered sales. Wholesale backlog was $55.0 million, an increase of 2.7% over the prior year.

Consolidated gross margin was 59.6%, compared with 61.4% a year earlier. The company said the current-year gross margin was impacted by incremental tariffs, higher designer floor sample sales and lower manufacturing production, partly offset by a change in the sales mix, reduced headcount and a higher average ticket price. New tariffs under Section 301 of the Trade Act of 1974 became effective on July 24, 2026, and range between 10% and 12.5%; those tariffs replaced previously issued 10% global tariffs imposed under Section 122.

GAAP operating margin was 1.3% and adjusted operating margin was 2.2%, compared with 6.8% and 7.2% in the prior year, respectively. The company said the current-year operating margin was impacted by higher tariffs and fixed-cost deleveraging from lower consolidated net sales. GAAP operating income was $1.6 million and adjusted operating income was $2.8 million. Diluted earnings were $0.07 a share and adjusted diluted earnings were $0.10 a share, versus $0.41 and $0.43 a year earlier.

Selling, general and administrative expenses decreased 5.8% from last year, reflecting lower variable expenses, cost controls, reduced headcount and lower marketing costs. Marketing spend totaled $4.7 million, or 3.6% of consolidated net sales. The company anticipates higher marketing expenses during the remainder of fiscal 2027. Headcount ended the quarter at 2,988 associates, 6.3% less than a year ago.

Cash used in operating activities totaled $0.8 million, a decrease from $16.8 million provided by operating activities in the prior year, due to lower net income, incremental restructuring payments and working-capital changes, partly offset by insurance proceeds received. Cash, cash equivalents and investments totaled $92.2 million at September 30, 2026, down from $187.5 million at June 30, 2026. The company said the $95.3 million decrease reflected the payment of $92.2 million in cash dividends and capital expenditures of $3.4 million. During the quarter, Ethan Allen paid $92.2 million in cash dividends, comprising special dividends totaling $3.25 a share and a regular quarterly dividend of $0.39 a share. Capital expenditures of $3.4 million supported new retail design centers, additional manufacturing equipment and technology upgrades.

The company ended the quarter with 172 Ethan Allen retail design centers in North America, including 142 company-operated and 30 independently owned and operated locations, after opening new company-operated centers in Aventura, Florida, and Victoria Gardens, California. Additional new design centers planned for fiscal 2027 include locations in Burlington, Vermont, Huntersville, North Carolina, and Naples, Florida. Net merchandise inventory was $153.8 million at September 30, 2026, up 3.6% since June 30, 2026, reflecting new product introductions and price increases. The company had no outstanding debt and credit availability of $121.5 million.