by Doug Bergeron said the retailer and manufacturer has grown stagnant, losing revenue and market share as its key competitors have grown
DANBURY, Conn. — In an effort to revitalize growth amid competition from various lifestyle retailers, a major individual shareholder in Ethan Allen has said the company needs new leadership, from the CEO level to the entire board of directors.
Doug Bergeron, who own 5% of the company’s common stock, said that through his corporate entity DBG Investment Inc., he is nominating six “highly qualified and experienced candidates” for election to the board of directors, replacing the entire board. He also suggested a change at the CEO level.
“For too long, Ethan Allen’s board has allowed the company to stagnate and shrink under the same leadership that has failed to deliver meaningful growth for nearly two decades,” Bergeron wrote in a letter to shareholders. “Despite years of Chairman, President and CEO Farooq Kathwari’s promises of being “well-positioned,” the company has only paid lip service to shareholder demands for investment in innovation, modernization and the digital capabilities needed to compete in today’s growing luxury furniture market. The result is a business whose revenue has declined for two decades, shrinking while competitors have taken market share and grown into multibillion-dollar platforms. This underperformance, in light of the impressive underlying assets, is, in my view, unjustifiable and inexcusable: Ethan Allen possesses all the ingredients needed to compete. What it lacks is a board and an executive leadership team with the skills, urgency and accountability required to modernize the business, restore profitable growth and unlock the company’s full potential.”
He said while the company has “an exceptional brand, deep North American manufacturing capabilities and an impressive national retail footprint,” it should be producing stronger growth.
“With the right board, leadership, strategy and execution, I believe the company has potential to triple shareholder value over the next three years,” he said. “The obstacle to growth is not the brand or the underlying business: It is the governance and leadership overseeing it.”
His letter noted that the company’s annual revenue has declined from nearly $1.1 billion in 2006 to $794 million in 2016 and $579 million in 2025, while the revenue of competitors such as Williams-Sonoma, RH and Arhaus has more than doubled — and even tripled in the case of RH — over the same period.
“Right now, Ethan Allen’s business is behaving like a melting ice cube,” he wrote. “And melting ice cubes eventually disappear. On last week’s earnings call, the CFO acknowledged that lower sales are driving fixed cost deleveraging and pressuring operating margins. If sales continue to decline, operating margins will continue to come under pressure and further threaten the earnings power that should support future reinvestment in brand, digital capabilities and stores. If allowed to continue for too long, the melting ice cube analogy becomes a self-fulfilling prophecy. This reinforces the case for broad governance and leadership change now.”
He added that as revenue continues to decline, Ethan Allen’s market share has eroded and that the company “remains behind in the digital, omnichannel and brand capabilities required to compete in today’s highly fragmented and increasingly omnichannel home furnishings market.”
“This is not simply a matter of spending more; it is a matter of execution,” he wrote. “The current leadership continues to talk about technology, marketing, product introductions and design center improvements, but the results have not followed. Without change, I believe the gap between Ethan Allen and its peers will only continue to widen.”
He also said the company’s “outdated strategy is alienating the next generation of customers.”
“In an era where approximately 75% of furniture purchases begin online, digital should be central to Ethan Allen’s growth strategy – not simply as an e-commerce channel, but as the front door to brand discovery, inspiration, customer acquisition and designer-led conversion. Instead, the company appears to view e-commerce as a threat. In last year’s 10-K, management went so far as to warn that a significant shift in consumer preference toward online purchasing “could have a materially adverse impact on our sales and operating margin.” This reads as something out of a 10-K published in 2002, not one just published in 2025!”
He said that in addition to ceding market share, Ethan Allen faces a loss of relevance to a growing customer base.
“Ethan Allen’s failure to modernize its business raises the risk of missing out on an entire generation of design-conscious customers who are now buying homes and are in their peak home improvement years. What previously might have been merely a marketing or branding challenge has become, today, a fundamental obstacle to growth, and the data on the company’s digital strategy paints an unambiguous picture.”
He cited the following points regarding the company’s digital strategy:
+ Ethan Allen has the lowest website traffic among all premium peers with just 420,000 monthly site views. “Even Bassett Furniture – half the size of Ethan Allen – generates more site traffic.”
+ Ethan Allen materially underinvests in digital marketing compared to its premium peers, who are generating 25%-37% of traffic from paid search and social compared to less than 20% for Ethan Allen.
+ The company stopped publicly disclosing data on its online sales in 2022, when it last reported its “total e-commerce net sales remained less than 5% of our total consolidated net sales in all periods presented.”
He noted that the company now has a choice to address these and other challenges: “continue managing a shrinking business with the same leadership that has failed to produce growth or embrace the bold strategic and leadership changes needed to transform this iconic brand and recapture market share. Personally, I am energized by this opportunity. By prioritizing profitable growth, modernizing the customer experience and improving execution across brand, digital, stores and operations, we can revitalize Ethan Allen.”
He went on to further challenge the leadership of Farooq Kathwari.
“At 82, Mr. Kathwari has served as chairman and CEO since 1988 and has been part of Ethan Allen’s leadership for more than four decades. That unusually long continuity extends well beyond the CEO role, with key decision-makers across strategy, design center development, technology, digital engagement, retail operations and marketing who have spent decades at the company, including several who have served for more than 40 years. Tenure can be a strength, and Ethan Allen’s history and culture are important assets. But against a record of prolonged underperformance, weak digital execution and declining revenue, this degree of internal continuity raises a serious question for shareholders: has the board allowed stability to harden into organizational inertia?”
He has nominated a new board that includes himself and a group of what he described as “National Retail Superstars” They are:
+ Doug Bergeron, former VeriFone CEO & Cantaloupe chairman
+ Anna Brockway, Chairish co-founder and former president
+ Kristine Miller, former eBay chief strategy officer and Bain Head of North America retail practice
+ Steve Oblak, former Wayfair chief commercial officer
+ Lindsay O’Reilly, former Barclays Group chief internal auditor
+ Stefanie Tsen Ward, former Neiman Marcus chief integrated retail and customer officer
Home News Now has reached out to Ethan Allen for a response and will update this story as that and other information becomes available.
Very interesting story. I had absolutely no idea of what was happening with their revenue. I thought they were doing just fine. I remember in the mid 80’s I was a rep for Pennsylvania House Furniture. Some Ethan Allen retailers were not so happy with Farooq as they were with Nat Ancell. So I was able to take some of that share away in the Ny market. Ethan Allen /Florida and I think Georgia also left to go to Pennsylvania House Furniture back then. . But it seemed that whatever was going on Farooq seemed to stop the bleeding and move forward. He lasted this long because he must have been doing a lot right when so many of his competitors went by the wayside. Maybe the current board waited way too long to do something. Maybe the current board was not up to the job in the first place. I have no idea. If blame is to be given, maybe it goes to everyone there for not keeping up with the times.
They have been calling for Mr. Kathwari to step down since 2014, maybe longer. I agree with the author of this article. At 84 he needs to step aside. What should happen in companies this size is that the board needs to create an enforced retirement age for executives and build in a time-frame to begin the process to vet replacement candidates. Proper planning of executive transition should be written into every organization and a 1-2 year period to vet new candidates and initiate the ‘process’ of stepping down should happen.