ETD Stock Forecast & Price Target

Ethan Allen Interiors has demonstrated a noteworthy improvement in its financial performance, with a gross margin expansion of approximately 55 basis points year-over-year to reach 61.4%, despite facing challenges in its contract business and rising costs. The company's fourth quarter results reflected an operational recovery, as evidenced by earnings per share of $0.49, exceeding both TAG and FactSet consensus estimates by $0.04. Additionally, the anticipated operating margin expansion of 110 basis points to 9.2% signifies the potential for profitability growth as sales trends show signs of recovery.

Ethan Allen Interiors has experienced a significant decline in its operating margin, which fell approximately 434 basis points year-over-year to 7.2%, primarily due to increased selling, general, and administrative expenses. Sales trends remain concerning, with a year-over-year decline in traffic to design galleries by 11% and fluctuating order volumes, which were down mid-teens in April before showing only slight recovery in June during promotional periods. Additionally, expectations of further pressure on profitability are anticipated due to ongoing challenges such as tariffs and lower revenues compared to the previous year.