Bergeron is not waiting for Ethan Allen Interiors Inc. to act. He has hired a global executive search firm and started evaluating potential chiefs, saying he already has prospects in mind and that outside executives have reached out about the job. His group has outlined the profile for the role: a proven operating leader with experience in retail and consumer businesses. Kristine Miller, one of his nominees and formerly eBay's chief strategy officer, is leading the process with support from the other nominees.
He has also submitted a preliminary proxy to the U.S. Securities and Exchange Commission, setting up the possibility of a proxy fight. According to Bergeron, he wants complete control of Ethan Allen's board, and he has proposed five nominees, including himself and former leaders linked to eBay, Wayfair and Neiman Marcus Group.
Bergeron wants CEO Farooq Kathwari replaced. Kathwari has been CEO and chairman since 1988. Bergeron argues the leadership team and directors are over-tenured and following an outdated strategy that is not driving growth, especially online.
He says the brand and its North American manufacturing are strong, but the company's strategy lacks digital initiatives. People familiar with the matter say he could announce the CEO search as soon as Thursday.
Ethan Allen did not immediately comment. In an August Bloomberg TV interview, Kathwari defended his approach, saying the retailer puts longer-horizon retail revenue ahead of quick-turn digital sales. He said the board had never raised succession with him and emphasized the company's focus on showrooms and on in-person and interior design services rather than online and other channels.
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Ethan Allen, headquartered in Danbury, Connecticut, offers free interior design services and sells home furnishings ranging from dressers and sofas to wall decor. Net sales declined 5.7% in the fiscal year that ended June 30. Shares are down 26% over the past year and ended Wednesday in New York at $21.71, which puts the company's market value at $547 million. Bergeron, through DGB Investments, his family office, and family trusts, holds a 5.2% stake.
"Without a new, brand-focused strategy, disciplined capital allocation and materially improved execution across digital marketing and retail, Ethan Allen will continue to shrink, and shareholders will pay the price," Bergeron said Friday. He also contends the company could potentially increase shareholder value threefold within the next three years.
Bergeron, who lives in Park City, Utah, previously co-managed Hudson Executive Capital. In 2020 he led a successful proxy contest at Cantaloupe Inc. that resulted in a full board turnover, and he subsequently served as chairman. This year, Cantaloupe was acquired by the retail technology company 365 Retail Markets for $848 million.
If you follow furniture names or care about steady dividends, the moving parts here can reshape earnings, capital allocation and the valuation investors assign. Watch whether Bergeron's slate gains traction and how quickly Ethan Allen addresses the digital and retail mix he keeps highlighting.
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