The latest 10-Q report from Ethan Allen Interiors Inc. has been released, providing an insight into the company's financial performance and operations. Ethan Allen Interiors Inc. is an interior design company, a manufacturer, and a retailer of home furnishings in the United States and internationally. The company operates through two segments, Wholesale and Retail, offering a wide range of home furnishing products under the Ethan Allen brand.
In the recently released report, Ethan Allen reported consolidated net sales of $149.9 million for the three months ended December 31, 2025, representing a 4.7% decrease from the same period in the prior year. The decrease was attributed to fewer contract sales, partially offset by higher average ticket prices, incremental designer floor sample sales, and fewer sales returns. Wholesale net sales decreased by 8.9%, primarily due to lower contract sales, while retail net sales remained relatively stable, showing a marginal increase of 0.1%.
The company's consolidated gross profit for the same period was $91.3 million, with a gross margin of 60.9%, reflecting a 3.8% decrease from the prior year. Despite the challenging environment, Ethan Allen maintained a strong gross margin due to a change in sales mix, selective price increases, and lower headcount, partially offset by increased promotional activity, incremental tariffs, and higher designer floor sample sales.
Ethan Allen's adjusted operating income for the three months ended December 31, 2025, was $13.5 million, representing a 25.8% decrease from the prior year. Similarly, adjusted diluted earnings per share (EPS) for the same period decreased by 25.4% to $0.44. The company also reported a decrease in cash flow from operating activities, which stood at ($1.8) million, reflecting a 115.7% decrease compared to the prior year.
Despite the challenging environment, Ethan Allen continued to focus on maintaining a strong network of design centers, with 187 retail design centers, including 142 Company-operated and 45 independently owned and operated locations. The company also emphasized its commitment to vertical integration, maintaining a competitive advantage through North American manufacturing and logistics operations.
In addition to financial performance, the report highlighted the company's recognition in various areas, including the designation of its upholstery operations in Silao, Mexico, as a Great Place to Work® for the eighth consecutive year, and a "High Score" on the 2025 Wood Furniture Scorecard prepared by the Sustainable Furnishings Council and the National Wildlife Federation.
Following these announcements, the company's shares moved -0.69%, and are now trading at a price of $24.66. For more information, read the company's full 10-Q submission here.
