This article first appeared on GuruFocus .
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Consolidated Net Sales (Fiscal 2026):$579 million.
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Fourth-Quarter Net Sales:$147 million.
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Wholesale Segment Written Orders (Q4):Declined 11.9%.
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Retail Segment Written Orders (Q4):Declined 10.8%.
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Wholesale Backlog (Fiscal Year-End):$44 million, down 9% from last year.
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Consolidated Gross Margin (Fiscal 2026):61.2%, comparable to 60.5% last year.
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Adjusted Gross Margin (Q4):59.7%.
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Operating Income (Fiscal 2026):$45 million with a margin of 7.8%.
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Adjusted Operating Income (Q4):$11 million with a margin of 7.4%.
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Adjusted Diluted EPS (Fiscal 2026):$1.61.
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Adjusted Diluted EPS (Q4):$0.36.
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Effective Tax Rate (Fiscal 2026):25%.
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Operating Cash Flow (Q4):$22 million.
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Operating Cash Flow (Fiscal 2026):$52 million.
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Cash and Investments (Fiscal Year-End):$187.5 million.
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Dividends Paid (Fiscal 2026):$46 million.
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Share Repurchases (Q4):250,000 shares for $5 million.
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Headcount (Fiscal Year-End):3,062, a decrease of 5% from a year ago.
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Design Centers in North America:171.
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Tariff Exposure Estimate:Approximately $15 million.
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Tariff Refunds Received (Q4):$5 million.
Release Date: July 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Ethan Allen Interiors Inc ( NYSE:ETD ) reported strong gross margins of 61.2% for fiscal 2026, driven by a favorable sales mix and higher average ticket prices.
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The company maintains a robust balance sheet with $187.5 million in cash and investments and remains debt-free, providing substantial liquidity.
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Ethan Allen Interiors Inc ( NYSE:ETD ) continues to reward shareholders with regular and special cash dividends, marking the sixth consecutive year of special dividends.
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The companys vertically integrated model, including North American manufacturing and a network of 171 design centers, supports operational efficiency and customization.
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Ethan Allen Interiors Inc ( NYSE:ETD ) received $5 million in tariff refunds during the quarter, which benefited gross and operating margins by 340 basis points.
Negative Points
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Consolidated net sales declined to $579 million for fiscal 2026, with fourth-quarter sales of $147 million impacted by lower contract sales and delivered unit volume.
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Wholesale segment written orders fell 11.9% and retail segment written orders dropped 10.8% due to macroeconomic uncertainty and lower consumer traffic.
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Adjusted operating margin decreased to 7.4% in the fourth quarter from 9.7% last year, pressured by higher tariffs and fixed cost de-leveraging from lower sales.
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The company faces ongoing tariff exposure estimated at $15 million, including new Section 301 tariffs and existing Section 232 tariffs on Mexican imports.
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Headcount was reduced by 5% to 3,062 employees, reflecting cost-cutting measures amid challenging economic conditions and lower order volumes.
Q & A Highlights
Q: Can you provide more color on the retail written order trends during the quarter, which decelerated from the third quarter? A: Farooq Kathwari (Chairman, President, and CEO): In the quarter, we did see consumers somewhat being concerned and holding back. Overall, our written orders during the quarter were down about close to 11%, 10.8%. However, we still maintain relatively good orders coming in, and our designers remain motivated, but it does reflect somewhat of a softer economy.
Q: Do you expect any incremental tariff refunds, and how do you think the industry is using these refunds? A: Matthew McNulty (CFO): The $5 million refund we got in this past quarter was substantially all of what we were expecting. There may be a little bit more, but this is substantially all that we anticipate to collect. As for what other companies do, it's a mixed bag. You've seen some of the bigger companies looking to potentially roll back prices, while others are returning it because they can directly attribute it to surcharges. It's still pretty early on from a timing perspective.
Q: How are you planning on using the $5 million tariff refund? Was it tied to the special dividend? A: Farooq Kathwari (Chairman, President, and CEO): It is a relatively small amount relative to the total amount of cash that we have, so we just put it in our cash. It is going to remain as part of our cash, and we want to maintain a healthy cash balance. The $5 million is important but not tremendously that much of a major factor. We want to continue to have strong cash and continue to do our regular and special dividends.
Q: Can you provide more detail on the initiatives to drive growth in fiscal year 2027, particularly in products, marketing, and real estate? A: Farooq Kathwari (Chairman, President, and CEO): Our focus remains to strengthen the various areas of our enterprise. In the last two years, we spent a fair amount of time making sure our design centers project well, making them smaller. Coming into this fiscal year, most of that has been done. Our interior design network is critical, and we want to make sure they do well. We have also been introducing very strong new products. Combining strong offerings, our interior design network, and technology gives us an opportunity to continue the progress. We are well-positioned going into this fiscal year.
Q: How should we think about CapEx for fiscal year 2027? A: Farooq Kathwari (Chairman, President, and CEO): At this stage, our objective would be to continue very similar to what we've done in this last fiscal year.
Q: Can you provide more color on the Wholesale segment's ability to return to growth, especially regarding the State Department business? A: Farooq Kathwari (Chairman, President, and CEO): In our first three quarters of our fiscal year, the State Department was down quite a bit due to government initiatives to reduce buying. However, in the fourth quarter, we did see some increases, and even this fiscal year just starting, we have seen some increases, which will have some impact on deliveries in this first quarter. The government is thinking of perhaps sending out new bids for contracts, but we haven't heard it yet. The good news is after really restraining their teams, in the fourth quarter we saw that they were starting to get back.
Q: What is the company's current tariff exposure? A: Matthew McNulty (CFO): Our current exposure is concentrated on the 25% tariff that took effect last October under Section 232 on upholstered wood products from Mexico. Our remaining exposure is primarily from the newly issued Section 301 tariffs, which apply a 10% tariff on products we manufacture in Honduras as well as our imports from Indonesia, India, and other countries. Based on our operating levels, we estimate our total tariff exposure to be approximately $15 million.
Q: What are the main areas of focus to grow the business and manage operations? A: Farooq Kathwari (Chairman, President, and CEO): The main areas include: continue to strengthen our talent in our vertically integrated enterprise; continue to be the interior design destination with approximately 500 interior designers providing complimentary services; strengthening our products under the design umbrella of classics with a modern design; combining technology with strong talent; expanding and enhancing our retail network, including opening interior design centers; further implementing initiatives to make our North American manufacturing more efficient; delivering products with personal service at one delivered price across North America; and maintaining a strong cash balance and providing good dividends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
