Ethan Allen Interiors Inc.

Fiscal 2026 consolidated net sales were $579 million, including fourth-quarter sales of $147 million. Full-year consolidated gross margin was 61.2% versus 60.5% last year; fourth-quarter adjusted gross margin was 59.7%, while fiscal 2026 operating income was $45 million with a 7.8% margin and fourth-quarter adjusted operating income was $11 million with a 7.4% margin versus 9.7% last year. Adjusted diluted EPS was $1.61 for the full year and $0.36 for the fourth quarter. Operating cash flow was $22 million in the fourth quarter and $52 million for the year, including $5 million of tariff refunds; cash and investments ended at $187.5 million. Management said wholesale backlog was $44 million, down 9% year over year, and estimated total tariff exposure at approximately $15 million. The company paid $46 million of dividends during the year, including a May quarterly dividend of $0.39 per share, repurchased 250 thousand shares for $5 million, and said the board approved a special and regular quarterly cash dividend payable in August. Management did not give formal next-quarter or full-year numerical guidance on the call, but said CapEx for fiscal 2027 should be similar to fiscal 2026.

Farooq Kathwari emphasized that Ethan Allen is positioned well despite a challenging economic backdrop and strong prior-year comparisons. He highlighted the company’s vertically integrated model, North American manufacturing, design centers, interior designers, technology, and product development as the main levers for growth. His tone was confident but measured, repeatedly noting the need for better traffic and consumer confidence while saying the business is well positioned going into the new fiscal year.

Matthew McNulty focused on the company’s margin profile, liquidity, and tariff impacts. He noted that adjusted gross margin in the fourth quarter benefited from mix, a higher average ticket, lower headcount, and lower financing costs, while tariffs, clearance margin pressure, and higher manufacturing inputs weighed on results; he also said the $5 million tariff refund benefited gross and operating margins by 340 basis points. He stressed the balance sheet remains debt free, with $187.5 million in cash and investments, $52 million of operating cash flow for the year, $46 million in dividends paid, and 250 thousand shares repurchased for $5 million.

Analysts pressed on soft retail written orders, tariff refunds, and the wholesale segment’s ability to return to growth. Management said retail orders were down about 10.8% because consumers were more cautious and traffic was softer, though May improved somewhat and the design team remained motivated. On tariffs, management said the $5 million refund was substantially all it expected to collect and that the cash was simply added to the balance sheet. On wholesale, management said State Department orders were down earlier in the year but improved in the fourth quarter and at the start of fiscal 2027, with a possible new bid still uncertain.