Ethan Allen launches CEO search after activist Doug Bergeron pressure

Ethan Allen has launched a formal search for a new chief executive, moving to replace Farooq Kathwari, who has run the furniture retailer since 1988. The decision follows nearly two months of pressure from activist investor Doug Bergeron, who owns about 5% of the company's stock and has been campaigning for board and leadership change since early August.

Bergeron nominated six candidates to replace Ethan Allen's board in early August, including Kristine Miller, the former eBay chief strategy officer. He called the retailer's fourth quarter and full year results deeply disappointing, and said its website traffic and digital marketing trail behind those of its peers in home furnishings.

The numbers he was pointing to were stark. Ethan Allen's fourth quarter net sales fell nearly 8.5% year over year to $146.8 million, with declines recorded across both its retail and wholesale segments. Full year net sales fell 5.7% to $579.5 million.

What Bergeron did next

Bergeron did not stop at nominating a rival slate. Earlier this month he organised his own independent search to replace Kathwari as chief executive, citing the 82 year old's age as a factor in the case for change, and put Miller in charge of running that separate process.

That left Ethan Allen facing a search it did not initiate, run by the very investor agitating against its board. By announcing its own succession plan, the company effectively took the process back in house rather than letting an outside search set the terms of who succeeds Kathwari.

Telsey Advisory Group analyst Cristina Fernandez called the move a prudent one, given Kathwari's tenure and age. In a note issued Monday, she said the announcement of a succession plan lets Ethan Allen control the process and find a successor that best fits the company's needs at this point in time.

What the new chief executive is meant to fix

David Sable, Ethan Allen's lead independent director and chair of its compensation committee, said the retailer is looking for an executive who can further its digital transformation, its omnichannel retail strategies and its supply chain efficiency. Those are the same weaknesses Bergeron cited when he first went public with his criticism in August.

Sable is also a member of Ethan Allen's corporate governance, nominations and sustainability committee, a position that puts him at the centre of both the succession process and the wider governance dispute Bergeron's campaign has opened around the boardroom.

The wider retail sector is entering a year the source material frames as marked by tariffs and falling consumer sentiment, pressure that has already forced leadership change elsewhere in retail.

JD Sports named John Mersho to run its North America business as sales there declined, while Space NK replaced chief executive Andy Lightfoot after a decade in the job, and Lululemon brought in a new chief executive as leggings sales fell 20% against a downgraded outlook.

Furniture and home retailers have not been exempt from that boardroom churn either. Poltrona Frau named Giovanni Baldi, formerly Dolce & Gabbana's EMEA president, as its new chief executive, a reminder that succession pressure in home furnishings now moves at the same pace as it does in apparel and beauty.

Two processes competing to name a successor

The dispute over Ethan Allen's direction is also a dispute over two rival processes running in parallel. Bergeron's independent search, led by Miller, and the company's own board led effort now compete to define who eventually replaces Kathwari and on what mandate.

Kathwari's departure, whenever it is finalised, would end one of the longest tenures of any chief executive in American furniture retailing.

Sable added that the board looks forward to building on that legacy during Ethan Allen's next chapter of growth, language that frames the search as continuity rather than a repudiation of Kathwari's tenure, even as it responds directly to an activist's demands.

Ethan Allen has not named a timeline for concluding its search, nor has it said whether Bergeron's nominated candidates, including Miller, will be considered as part of the board's own process rather than only through the activist's separate effort.

Fernandez's note framed the succession plan as a way for the company to set its own pace rather than be forced into a decision by continued activist pressure, a distinction that will shape how the board and Bergeron negotiate over the coming months.

The parallel in the executive search world is not confined to furniture. Bang & Olufsen turned to Gianfilippo Testa, formerly chief executive of Alexander McQueen, and Autry brought in Golden Goose veteran Danilo Piarulli, both boards reaching outside their own category to find a successor rather than promoting from within.

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Image: Ethan Allen