Activist DGB Wins Three of Five Ethan Allen Board Seats
Company Background
Ethan Allen Interiors, a Danbury, Connecticut–based premium furniture retailer and interior design company, manufactures approximately 75% of its custom furniture in its own North American facilities and operates 171 retail design centers across the continent. With a market capitalization of approximately $521 million and no outstanding debt, the company carries $187.5 million in cash and investments — a durable balance sheet even as its top line has contracted.
Revenue has been declining steadily. Full-year net sales for fiscal 2026 (ended June 30, 2026) fell to $579.5 million from $614.6 million the prior year, while adjusted operating margin compressed from 10.2% to 8.1%. The most recent quarter disclosed — the fiscal third quarter ended March 31, 2026 — showed consolidated net sales of $135.8 million, down from $142.7 million, with adjusted operating margin of 5.0% versus 8.0% a year earlier. Management cited tariff headwinds, reduced U.S. State Department business, and weak consumer demand.
The financial slide helped draw in activist investor Douglas Bergeron. DGB Investment disclosed a 5.0% stake in August 2026 and simultaneously nominated a full slate of six director candidates, arguing the company was "underperforming with revenue consistently declining" and that "urgent change is needed to address the Issuer's increasingly outdated strategy." The company separately announced in September 2026 that longtime CEO M. Farooq Kathwari — who has led the company for four decades — would be succeeded no later than June 30, 2027, with the independent directors overseeing a formal search process.
What Was Disclosed
At the November 4, 2026 annual meeting, stockholders voted on a contested slate of ten nominees competing for five board seats — five put forward by the company's board and five by DGB Investment. With plurality voting operative under the company's bylaws, the five candidates receiving the most FOR votes prevailed.