Dive Brief:
- Ethan Allen on Monday announced it has launched a search for its next CEO. The furniture retailer hired an executive search firm to consider both internal and external candidates.
- The retailer’s board will announce the new CEO no later than June 30, which is the date current CEO Farooq Kathwari’s contract ends.
- Kathwari will remain a nonexecutive member of the board after June 30 until the company’s 2027 annual shareholder meeting, which has historically been held in November.
Dive Insight:
Ethan Allen’s CEO announcement comes about two months after an activist investor pushed to overhaul the company’s entire board, including Kathwari.
Financier Doug Bergeron, who owns about 5% of the company’s stock, in early August criticized Ethan Allen’s management and nominated six candidates to replace the board, including former eBay Chief Strategy Officer Kristine Miller.
At the time, Bergeron called Ethan Allen’s fourth quarter and full-year results “deeply disappointing” and said its website traffic and digital marketing lags behind its peers.
In the fourth quarter, the furniture retailer reported net sales fell nearly 8.5% year over year to $146.8 million, with declines across both its retail and wholesale segments. For the full year, net sales fell 5.7% to $579.5 million.
Bergeron’s activism at Ethan Allen continued earlier this month as he organized an independent search to replace Kathwari as CEO, citing the executive’s age as a factor. Miller was tapped to lead that search.
By launching its own succession plan, Ethan Allen “should be able to control the process and find a CEO successor that best fits the company's needs at this point in time,” Telsey Advisory Group analyst Cristina Fernández said in a Monday note.
“The announcement of a CEO succession plan is a prudent move by the company in light of Mr. Kathwari's long tenure — he has been CEO of Ethan Allen since 1988 — and age (82),” Fernández said.
The retailer is looking for an executive to further its digital transformation, omnichannel retail strategies and supply chain efficiency, according to David Sable, Ethan Allen’s lead independent director, chair of the compensation committee and member of the corporate governance, nominations and sustainability committee.
“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,” Sable said.
