Bloomberg Talks: Ethan Allen CEO Farooq Kathwari Talks Tariffs, Cautious Consumers

Date: April 2, 2026
Host: Bloomberg
Guest: Farooq Kathwari, Chairman, President and CEO, Ethan Allen

Episode Overview

This episode features an in-depth interview with Farooq Kathwari, the longstanding CEO of Ethan Allen, one of America's iconic furniture makers. The conversation revolves around the recent changes in U.S. tariff policy, challenges facing American retail and manufacturing, the cautious behavior of consumers amid economic uncertainty, and how Ethan Allen has uniquely positioned itself through its vertical integration and North American manufacturing base.

Key Discussion Points & Insights

1. Ethan Allen’s Manufacturing Strategy and Tariffs

• North American Focus:
  Kathwari highlights Ethan Allen’s long-standing commitment to basing most of its manufacturing within North America, operating five U.S. plants (two in Vermont, three in North Carolina), with 80% of products made domestically.
• Tariffs' Impact—Minimal:
  Despite broader impacts on manufacturing and retail, Kathwari notes tariffs have not significantly affected Ethan Allen due to its U.S.-based production. The only exception is some tariffs imposed on operations in Mexico, but these are mitigated by the company owning those plants directly.
  • Quote:

    "It has created a more of a positive perspective for us...In fact, it's interesting that today, 20 years later, a customer does not know if a piece of furniture is made in Vermont or made in Mexico or in Honduras. The level of quality. Everything is the same, right?" — Farooq Kathwari (01:27–02:52)

2. Cautious Consumer Behavior

• Reduced Foot Traffic, Higher Conversion:
  Kathwari observes that overall, fewer customers are visiting their stores, but those who do are more likely to make a purchase.
  • Quote:

    "Consumers are cautious. We have seen...a significant decline in people coming in. The only good news is that people who are coming in are more likely to buy." — Farooq Kathwari (03:14)

• Strong Logistics as a Buffer:
  Ethan Allen’s vertical integration and logistics (nationwide single-price delivery, strong designer-client relationships) cushion some negative impacts and provide a competitive edge.

3. Economic Pressures & Vertical Integration

• Rising Oil and Shipping Costs:
  The company is feeling the squeeze from increased fuel prices, but vertical integration and operational efficiencies have softened the blow relative to competitors.
  • Quote:

    "The impact of the oil prices...has increased our fuel costs and our costs have gone up. But at this stage, because of...the efficiencies we have, we are impacted, but somewhat less..." — Farooq Kathwari (04:27)

• Brands and Pricing Strategy:
  Selling under a single brand helps in managing costs and pricing stability.

4. Industry Comparison and Broader Retail Challenges

• Reference to Housing Market & Competition:
  The host references RH (Restoration Hardware), whose CEO called the current housing market "the most dire...in decades," highlighting tough times for home furnishing companies.
• Competing on Price Increases:
  With rising costs, Ethan Allen raised prices by an average of 5%. The company is cautious about further increases, monitoring costs closely.
  • Quote:

    "We did take some relatively small price increase only because of...our vertical integration...we have been able to not go out of the way and still operate well." — Farooq Kathwari (05:59)

5. Import Products & Margins

• Sourcing from Abroad:
  Some items, such as rugs, accessories, and lighting, are still imported and thus more directly affected by tariffs and supply chain costs. Nonetheless, efficient operations keep the company competitive.

Notable Quotes & Memorable Moments

• On Tariffs & Quality Parity:

  "A customer does not know if a piece of furniture is made in Vermont or made in Mexico or in Honduras. The level of quality. Everything is the same, right?" — Farooq Kathwari (02:31)

• On Changing Consumer Behavior:

  "Consumers are cautious...people who are coming in are more likely to buy." — Farooq Kathwari (03:14)

• On Managing Through Efficiency:

  "If it was not the fact that we have a vertically integrated company...do not have the fact that we maintain one brand ... we don't sell a lot of different brands." — Farooq Kathwari (04:27)

• On Pricing Decisions:

  "We did take some relatively small price increase...we have been able to not go out of the way and still operate well." — Farooq Kathwari (05:59)

Timestamps for Important Segments

• 00:31–01:27: Introduction & Overview of Ethan Allen's U.S. manufacturing footprint
• 01:27–02:52: Tariffs, Mexico operations, and quality parity
• 02:52–03:14: Cautious consumers and changing in-store dynamics
• 03:14–04:12: Logistics network and service differentiation
• 04:12–04:27: Impact of oil prices and cost structure
• 04:27–05:11: Vertical integration as a cost buffer
• 05:11–05:59: Industry context—housing market & price adjustments
• 05:59–06:51: Retail price increases, imports, and margin management

Conclusion

Farooq Kathwari’s conversation provided an insightful look at how Ethan Allen’s decades-long investment in North American manufacturing and company-owned operations has insulated it from many of the shocks affecting the broader retail and furniture industries. While tariffs and economic uncertainty weigh heavily on competitors, Ethan Allen leverages strong logistics, vertical integration, and a stable brand to maintain profitability and customer satisfaction in a challenging market. The message is clear: strategic foresight, operational efficiency, and a direct relationship with customers can serve as significant competitive advantages in volatile times.