It has been nearly four months since my previous coverage of Ethan Allen Interiors Inc. ( ETD ). From my cautious stance before, I was a bit too early to shift to an optimistic approach. The stockI have been working in the logistics sector for almost two decades. I have been into stock investing and macroeconomic analysis for almost a decade. Currently, I focus on ASEAN and NYSE/NASDAQ Stocks, particularly in banks, telco, logistics, and hotels. Since 2014, I have been trading on the PH stock market. I focu ...

It has been nearly four months since my previous coverage of Ethan Allen Interiors Inc. ( ETD ). From my cautious stance before, I was a bit too early to shift to an optimistic approach. The stockI have been working in the logistics sector for almost two decades. I have been into stock investing and macroeconomic analysis for almost a decade. Currently, I focus on ASEAN and NYSE/NASDAQ Stocks, particularly in banks, telco, logistics, and hotels. Since 2014, I have been trading on the PH stock market. I focu ...

On order activity, McNulty said retail written orders declined 17.9% and wholesaler orders were down 19.3% versus the prior year. He added that both measures declined sequentially throughout the quarter as year-ago comparisons became tougher. Management tied the demand trend to macroeconomic challenges and an 11% decline in design center traffic.Chief Financial Officer Matt McNulty said consolidated net sales were $149.9 million in the quarter ended December 31, 2025. He attributed the sales result to a hig ...

Ethan Allen (ETD) came out with quarterly earnings of $0.44 per share, beating the Zacks Consensus Estimate of $0.38 per share. This compares to earnings of $0.59 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +17.33%. A quarter ago, it was expected that this home furnishings company would post earnings of $0.44 per share when it actually produced earnings of $0.43, delivering a surprise of -2.27%.Over the last four quarters, ...

Financial Data and Key Metrics Changes - Consolidated net sales for the second quarter were $149.9 million, benefiting from a higher starting retail backlog and a higher average ticket price, but offset by fewer contract sales and lower demand [7] - Retail written orders declined by 17.9%, while wholesaler orders were down 19.3% compared to the previous year, reflecting macroeconomic challenges and a difficult prior year comparison [7] - Consolidated gross margin was 60.9%, an increase of 60 basis points from a year ago, attributed to a change in sales mix and reduced headcount [8] - Adjusted operating income was $13.5 million, with an operating margin of 9%, significantly higher than the 5.4% margin in the pre-pandemic second quarter of 2019 [8] - Adjusted diluted EPS was $0.44, with an effective tax rate of 25.3% [9] Business Line Data and Key Metrics Changes - Retail written orders showed a decline, with a notable decrease in design center traffic by 11% [7] - The wholesale backlog at the end of the quarter was $49.8 million, influenced by a lower volume of contract orders [8] Market Data and Key Metrics Changes - The company experienced a significant impact from the government shutdown, leading to lower consumer confidence and reduced traffic to design centers [4] - Positive written order growth was observed in January, indicating a potential recovery in consumer behavior [7][34] Company Strategy and Development Direction - The company aims to strengthen its vertically integrated structure, focusing on product programs, marketing, and logistics [13][16] - Approximately 75% of furniture is manufactured in North America, providing a competitive advantage and mitigating tariff exposure [12][13] - Increased advertising spend by 25%, primarily in digital media, is expected to yield future benefits despite not fully impacting the second quarter [15][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown had a major impact on orders, but there are signs of recovery as orders are beginning to come in again [21] - The company believes it can maintain strong gross margins due to improvements in talent and technology across its operations [22] - There is cautious optimism regarding consumer behavior returning to normal, with increased traffic noted in January [34] Other Important Information - The company has a robust balance sheet with total cash and investments of $179.3 million and no debt [9] - The company is exposed to tariffs on imported goods, with strategies in place to mitigate these costs through vendor cost sharing and selective price increases [11][30] Q&A Session Summary Question: Retail written orders trends during the quarter - Management acknowledged that retail written orders were impacted by difficult comparisons, with an average decrease of 18% throughout the quarter [19] Question: Improvement in contract side of the business post-government shutdown - Management reported that orders are coming in reasonably high but are lower than the previous year, with a gradual increase observed [21] Question: Sustainability of gross margins moving forward - Management expressed confidence in maintaining gross margins due to ongoing improvements in operations and technology [22] Question: Impact of tariffs and mitigation strategies - Management outlined a three-pronged approach to mitigate tariff impacts, including vendor cost sharing, sourcing diversification, and selective price increases [30][32] Question: January trends and marketing effectiveness - Management attributed improved trends in January to returning consumer confidence and effective marketing strategies [34][36]

Financial Data and Key Metrics Changes - Consolidated net sales for the second quarter were $149.9 million, benefiting from a higher starting retail backlog and a higher average ticket price, despite a decline in retail written orders by 17.9% and wholesaler orders by 19.3% compared to the previous year [7][8] - Consolidated gross margin was 60.9%, an increase of 60 basis points from a year ago, attributed to a favorable sales mix and reduced headcount [8] - Adjusted operating income was $13.5 million, with an operating margin of 9%, significantly higher than the 5.4% margin in the pre-pandemic second quarter of 2019 [8][9] - Adjusted diluted EPS was $0.44, with an effective tax rate of 25.3% [9] Business Line Data and Key Metrics Changes - Retail written orders declined 17.9%, while wholesaler orders decreased by 19.3%, reflecting macroeconomic challenges and a tough prior year comparison [7] - The wholesale backlog at the end of the quarter was $49.8 million, reduced due to lower contract orders and improved customer lead times [8] Market Data and Key Metrics Changes - Design center traffic declined by 11%, contributing to lower demand trends [7] - Positive written order growth was observed in January, indicating a potential recovery in consumer confidence [4][7] Company Strategy and Development Direction - The company aims to strengthen its vertically integrated structure, focusing on product programs, marketing, and logistics [13][16] - Approximately 75% of furniture is manufactured in North America, providing a competitive advantage and mitigating tariff exposure [12][13] - Increased advertising spend by 25%, primarily in digital media, to enhance customer engagement and drive traffic [15][36] Management's Comments on Operating Environment and Future Outlook - The government shutdown negatively impacted consumer confidence and retail traffic, but there are signs of recovery as traffic improved in January [4][34] - Management is optimistic about maintaining strong gross margins due to disciplined expense management and leveraging technology [22][32] Other Important Information - The company has a robust balance sheet with total cash and investments of $179.3 million and no debt [9][10] - The company declared a regular quarterly cash dividend of 39 cents per share, reflecting its commitment to returning value to shareholders [10] Q&A Session Summary Question: Retail written orders trends during the quarter - Management noted that retail written orders decelerated due to difficult comparisons, with an average decrease of 18% throughout the quarter [19] Question: Improvement in contract side of the business post-government shutdown - Orders are coming in reasonably high but are lower than last year, with a gradual increase observed as the government resumes operations [21] Question: Sustainability of gross margins moving forward - Management believes there is a good opportunity to maintain margins due to improvements in talent and technology across operations [22] Question: Impact of tariffs and mitigation strategies - The company is employing vendor cost sharing, sourcing diversification, and selective retail price increases to mitigate tariff impacts, though some headwinds remain [30][32] Question: Attribution of improved trends in January - Increased consumer traffic is attributed to the resolution of uncertainties from the previous quarter, leading to better engagement with clients [34] Question: Future marketing spend and its effectiveness - The company plans to continue focusing on digital marketing while reducing spending in other mediums, aiming to enhance customer acquisition and traffic [38]

Financial Data and Key Metrics Changes - Consolidated net sales for the second quarter were $149.9 million, impacted by lower consumer confidence and traffic due to the government shutdown, with retail written orders declining by 17.9% and wholesaler orders down 19.3% year-over-year [7][10] - Consolidated gross margin improved to 60.9%, up 60 basis points from the previous year, attributed to a favorable sales mix and reduced headcount [8][10] - Adjusted operating income was $13.5 million, with an operating margin of 9%, compared to 5.4% in the same quarter of 2019 [8][9] - Adjusted diluted EPS was $0.44, with an effective tax rate of 25.3% [10] Business Line Data and Key Metrics Changes - Retail written orders experienced a decline of 17.9%, while wholesaler orders decreased by 19.3%, reflecting a challenging comparison to the previous year [7][10] - The wholesale backlog at the end of the quarter was $49.8 million, influenced by a lower volume of contract orders [8] Market Data and Key Metrics Changes - Design center traffic declined by 11%, contributing to the overall decrease in demand [7] - Positive written order growth was observed in January, indicating a potential recovery in consumer behavior [7] Company Strategy and Development Direction - The company aims to strengthen its vertically integrated structure, focusing on product development, marketing, and logistics [14][16] - Approximately 75% of furniture is manufactured in North America, providing a competitive advantage and mitigating tariff exposure [12][13] - Increased marketing spend by 25%, primarily in digital media, is expected to yield future benefits despite not fully impacting the second quarter [15][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown significantly impacted results, but there are signs of recovery with improved traffic and orders in January [5][20] - The company is optimistic about maintaining strong gross margins due to disciplined expense management and operational improvements [22] Other Important Information - The company has a robust balance sheet with total cash and investments of $179.3 million and no debt [10][11] - A quarterly cash dividend of $10 million was declared, reflecting the company's commitment to returning value to shareholders [11] Q&A Session Summary Question: Retail written orders trends during the quarter - Management indicated that retail written orders averaged a decrease of 18% during the quarter, with a stronger start in October that decelerated due to the government shutdown and tough prior year comparisons [18][19] Question: Improvement in contract side of the business post-government shutdown - Management confirmed that new orders are coming in, albeit at a lower rate than the previous year, with a gradual increase observed [20] Question: Sustainability of gross margins moving forward - Management expressed confidence in maintaining gross margins due to improvements in talent and technology across operations [22] Question: Impact of tariffs and mitigation strategies - Management outlined a three-pronged approach to mitigate tariff impacts, including vendor cost sharing, sourcing diversification, and selective retail price increases [29][30] Question: January trends and consumer behavior - Management attributed improved trends in January to returning consumer confidence and effective engagement by interior designers [33] Question: Future marketing spend and its effectiveness - Management plans to continue focusing on digital marketing while reducing spending in other areas, emphasizing the importance of adapting to changing marketing mediums [36]

Financial Performance - Consolidated net sales for Q2 FY2026 were $149.9 million, down from $157.3 million in the prior year[3] - Adjusted operating income was $13.5 million, with an adjusted operating margin of 9.0%, down from 11.5% in the prior year[3] - Diluted EPS for the quarter was $0.46, with adjusted diluted EPS at $0.44, compared to $0.59 in the prior year[3] - Net sales for the three months ended December 31, 2025, were $149.916 million, a decrease of 4.7% compared to $157.260 million for the same period in 2024[21] - Operating income for the three months ended December 31, 2025, was $14.228 million, a decrease of 21.6% from $18.157 million in 2024[25] - Net income for the six months ended December 31, 2025, was $22.195 million, down 25.3% from $29.723 million in 2024[25] - Adjusted diluted EPS for the three months ended December 31, 2025, was $0.44, a decrease of 25.4% compared to $0.59 in 2024[25] - The company reported a GAAP operating margin of 9.5% for the three months ended December 31, 2025, compared to 11.5% in 2024[25] - Adjusted operating income for the three months ended December 31, 2025, was $13.468 million, a decline of 25.8% from $18.163 million in 2024[25] Cash and Investments - Total cash and investments at the end of the quarter were $179.3 million, with no outstanding debt[5][11] - Total current assets as of December 31, 2025, were $312.043 million, slightly up from $309.933 million as of June 30, 2025[22] - Total liabilities decreased to $236.683 million as of December 31, 2025, from $254.830 million as of June 30, 2025[22] - Shareholders' equity as of December 31, 2025, was $478.083 million, down from $482.269 million as of June 30, 2025[22] Sales and Orders - Written orders in the retail segment decreased by 17.9%, while wholesale segment written orders fell by 19.3%[3] - Customer deposits from undelivered written orders totaled $63.6 million, down from $75.1 million at the end of the previous quarter[10] Expenses and Dividends - Marketing expenses increased by 25.2% to $4.9 million, representing 3.2% of consolidated net sales[3] - A regular quarterly cash dividend of $0.39 per share was declared, payable on February 25, 2026[12] Workforce - The company operates 172 retail design centers, with a total headcount of 3,149, which is 5.1% lower than a year ago[8] Gross Margin - Gross margin improved to 60.9%, compared to 60.3% in the prior year[3] - Gross profit for the six months ended December 31, 2025, was $181.469 million, down from $188.706 million in 2024, reflecting a decline of 3.8%[21]

Core Insights - Ethan Allen Interiors Inc. reported its fiscal 2026 second quarter results, highlighting strong margins and a robust balance sheet despite challenges such as the U.S. government shutdown [2][3] Financial Performance - Consolidated net sales for the second quarter were $149.9 million, down from $157.3 million in the prior year, reflecting a 4.7% decrease [3][4] - Gross margin improved to 60.9%, compared to 60.3% in the prior year [3][4] - Adjusted operating income was $13.5 million, with an adjusted operating margin of 9.0%, down from 11.5% in the prior year [3][4] - Diluted EPS was reported at $0.46, with adjusted diluted EPS at $0.44, both lower than the previous year's $0.59 [3][4] Operational Highlights - Retail net sales remained stable at $134.3 million, while wholesale net sales decreased to $79.1 million from $86.8 million [3][4] - Written orders in the retail segment decreased by 17.9%, and wholesale segment written orders fell by 19.3% [3][4] - The company ended the quarter with total cash and investments of $179.3 million and no outstanding debt [3][5] Strategic Initiatives - The company is focusing on strengthening its vertically integrated enterprise, including talent, product offerings, marketing, technology, and logistics [2] - Recent product introductions are resonating with clients, and the company operates 172 retail design centers across North America [2][3] Dividends and Shareholder Returns - The company paid total cash dividends of $10.0 million or $0.39 per share in November 2025 and declared another $0.39 per share dividend payable on February 25, 2026 [3][10] Sustainability and Recognition - Ethan Allen received a "High Score" on the 2025 Wood Furniture Scorecard for its commitment to sustainable wood use [9] - The upholstery operation in Silao, Mexico, was certified as a Great Place to Work® for the eighth consecutive year [9]

Core Viewpoint - Ethan Allen Interiors Inc. is set to release its financial and operational results for the fiscal 2026 second quarter on January 28, 2026, after market close, followed by a conference call to discuss these results [1]. Group 1: Financial Results Announcement - The financial results for the second quarter ended December 31, 2025, will be released after the stock market closes on January 28, 2026 [1]. - A conference call will be held at 5:00 p.m. Eastern Time to discuss the results, which will be webcast live on the Company's Investor Relations website [1]. Group 2: Conference Call Participation - An archived recording of the conference call will be available on the Company's Investor Relations website for six months [2]. - A telephone replay of the conference call will be accessible for one month following the call [2]. Group 3: Company Overview - Ethan Allen is recognized as America's 1 Premium Furniture Retailer by Newsweek for three consecutive years [3]. - The Company combines advanced technology with personal service, offering complimentary interior design services and a full range of home furnishings [3]. - Approximately 75% of Ethan Allen's custom-crafted furniture is manufactured in its own North American facilities, highlighting its commitment to product quality and craftsmanship since 1932 [3].