By Katherine Hamilton

Shares of Ethan Allen Interiors rose after reporting that its gross margin increased slightly during the fiscal second quarter, despite tariffs and the government shutdown.

The stock rose 8.5% to $26.20 in after-hours trading Wednesday. Through the close, the stock was down 1.5% over the past three years.

The furniture company recorded lower sales and profit in the quarter ended Dec. 31, but its gross margin increased to 60.9% from 60.3% the year before.

Chief Financial Officer Matt McNulty said on a call that Ethan Allen reduced its headcount, had a higher average ticket price and logged lower inbound freight during the quarter.

The higher gross margin came as Section 232 tariffs were enacted in mid-October, adding a 25% duty on imported furniture and cabinetry. McNulty said management worked with vendors on cost sharing, diversified its sourcing and increased some retail prices by an average of 5%.

About 75% of Ethan Allen's furniture is made in North America, which McNulty said could give the company an advantage against competitors.

During the quarter, the government shutdown that ended in November also dampened consumer sentiment, resulting in less spending, executives said. But business started to pick back up in January.

Revenue in the quarter fell 4.7% to $149.9 million. Profit decreased to $11.7 million, or 46 cents a share, from $15.0 million, or 59 cents a share, the year prior.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

January 28, 2026 18:35 ET (23:35 GMT)

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