Amid mounting calls for board changes led by an activist investor, Ethan Allen has formally begun its search for a new chief executive officer. On Monday, the furniture retailer announced that it appointed an executive search firm to lead the process, and that candidates from both within and outside the company will be considered for the position.
Leadership to Transition as Contract Ends June 30
The board disclosed on Monday that it intends to unveil its incoming CEO by June 30, coinciding with the expiration of current CEO and chair Farooq Kathwari’s contract. After completing his term, Kathwari, who has served at the helm since 1988 and is now 82, will continue contributing as a nonexecutive board member until the 2027 annual shareholder meeting, which typically convenes each November. This succession plan signals the start of a new era for the longstanding leader and the company.
Activist Investor Pushes for Change
Ethan Allen’s leadership review comes on the heels of intensified activism by Doug Bergeron two months ago. Early in August, Bergeron, who owns about 5% of Ethan Allen’s shares, criticized the company’s executive team and urged a significant board reshuffle, putting forward a slate of six nominees—including former eBay Chief Strategy Officer Kristine Miller—while citing underwhelming financial outcomes.
In its most recent fourth quarter, net sales fell by nearly 8.5% from the previous year, totaling $146.8 million. Both the retail and wholesale segments experienced declines. Annual net sales dropped 5.7% to $579.5 million. Bergeron faulted Ethan Allen for being outperformed by competitors in website engagement and digital marketing strategies.
Continuing his campaign into September, Bergeron initiated an independent CEO search with Kristine Miller leading the process, emphasizing that Kathwari’s age underscored the urgency for new succession planning.
Board’s Strategic Focus for the Future
The board’s move to carry out an internal CEO search is intended “to control the process and find a CEO successor that best fits the company’s needs at this point in time,” according to Telsey Advisory Group analyst Cristina Fernández in a research note published Monday. Fernández highlighted the importance of this decision, in consideration of both Kathwari’s age and his extensive leadership tenure.
David Sable, lead independent director and chair of the compensation committee, indicated that the board is looking for a leader who can accelerate Ethan Allen’s digital transformation, expand its omnichannel presence, and optimize supply chain operations. Sable acknowledged Kathwari’s pivotal role: “We are grateful for Farooq’s leadership over the last four decades as he helped build an incredible brand known for craftsmanship and high-touch customer service and look forward to building on this legacy during our next chapter of growth.”
Company Poised for New Chapter
With the CEO search officially launched, Ethan Allen strives to address shareholder concerns and guide the retailer toward further innovation and growth. The board remains committed to introducing a new chief executive no later than June 30, marking a significant milestone for the company as it approaches its 100th year.