Ethan Allen is actively seeking a new CEO to replace Farooq Kathwari as his tenure is set to conclude on June 30. The furniture company has engaged an executive search firm to evaluate both internal and external candidates for the position.
Board Transition Amidst Investor Pressure
This leadership search follows pressure from activist investor Doug Bergeron, who holds approximately 5% of Ethan Allen’s shares. In August, Bergeron criticised the current management’s performance, specifically targeting the board, and nominated six potential new members, including Kristine Miller, a former eBay Chief Strategy Officer.
Bergeron expressed disappointment in Ethan Allen’s recent financial results, highlighting the decline in their online presence and marketing efforts. The retailer’s financial report for the fourth quarter showed an 8.5% drop in net sales year-over-year, bringing in $146.8 million, while the full year saw a 5.7% decline to $579.5 million.
Succession Planning and Strategic Goals
Despite Bergeron’s push, Ethan Allen has decided to manage its own CEO transition process. Cristina Fernández, an analyst at Telsey Advisory Group, mentioned in a note that this self-directed approach allows the company to find a successor well-matched to its objectives, including advancing digital and omnichannel strategies and enhancing supply chain operations. Ethan Allen’s governance is poised to choose a new CEO by the end of June 2024.
Farooq Kathwari will continue as a nonexecutive board member until the annual shareholder meeting in 2027. Ethan Allen, under the guidance of lead independent director David Sable, is keen to build on Kathwari’s legacy of strong brand identity and customer service as it transitions into a new growth phase.
Sable underscored the importance of maintaining the brand’s reputation forged under Kathwari’s leadership and looks forward to driving the company towards future development.
Reporting based on coverage first published by retaildive.com.