Annual report pursuant to Section 13 and 15(d)

Note 19 - Segment Information

v3.19.2
Note 19 - Segment Information
 12 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
(
19
)
Segment Information
 
Operating segments are defined as (i) components of an enterprise that engage in business activities from which they
may
earn revenue and incur expense, (ii) have operating results that are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. The Company’s Chief Executive Officer is its chief operating decision maker (“CODM”) and reviews financial information at the operating segment level and is responsible for making decisions about resources allocated amongst the operating segments based on actual results. Our operating segments are aligned with how the Company, including its CODM, manages the business. As such, our reportable operating segments are the Wholesale segment and the Retail segment.
 
Our wholesale and retail operating segments represent strategic business areas of our vertically integrated enterprise that operate separately and provide their own distinctive services. This vertical structure enables us to offer our complete line of home furnishings and accents more effectively while controlling quality and cost. We evaluate performance of the respective segments based upon revenues and operating income. Inter-segment transactions result, primarily, from the wholesale sale of inventory to the retail segment, including the related profit margin.
 
As of
June 30, 2019,
the Company operated
144
design centers (our retail segment) and our independent retailers operated
158
design centers. Our wholesale segment net sales include sales to our retail segment, which are eliminated in consolidation, and sales to our independent retailers. Our retail segment net sales accounted for
79%
of our consolidated net sales in fiscal
2019.
Our wholesale segment net sales to independent retailers and other
third
parties accounted for the remaining
21%.
Our
ten
largest customers were all within our wholesale segment and represent
12.4%
of our consolidated net sales in fiscal
2019.
These customers are the GSA and
nine
independent retailers who operate
116
design centers.
 
Information for each of the last
three
fiscal years ended
June 30
is provided below (in thousands):
 
   
2019
    
2018
    
2017
  
Net sales
                        
Wholesale segment
   $
441,551
     $
475,731
     $
453,326
  
Retail segment
    
589,829
      
587,502
      
603,677
  
Elimination of inter-company sales
    
(284,696
 )    
(296,449
 )    
(293,618
 )
Consolidated Total
   $
746,684
     $
766,784
     $
763,385
  
                         
Operating income
                        
Wholesale segment
   $
42,481
     $
48,499
     $
53,505
  
Retail segment
    
(10,529
 )    
(1,738
 )    
1,198
  
Adjustment of intercompany profit
(1)
    
1,995
      
2,106
      
3,247
  
Consolidated Total
   $
33,947
     $
48,867
     $
57,950
  
                         
Depreciation and amortization
                        
Wholesale segment
   $
7,560
     $
7,752
     $
7,550
  
Retail segment
    
12,077
      
12,079
      
12,565
  
Consolidated Total
   $
19,637
     $
19,831
     $
20,115
  
                         
Capital expenditures
                        
Wholesale segment
   $
3,340
     $
4,286
     $
8,589
  
Retail segment
    
5,780
      
8,200
      
9,056
  
Consolidated Total
   $
9,120
     $
12,486
     $
17,645
  
 
(
1
)
Represents the change in wholesale profit contained in Company-owned design center inventory at the end of the period.
 
   
June 30,
  
($ in thousands)
  
2019
    
2018
    
2017
  
Total Assets
                        
Wholesale segment
   $
237,354
     $
241,616
     $
279,364
  
Retail segment
    
299,125
      
317,590
      
319,341
  
Inventory profit elimination
(1)
    
(26,128
 )    
(28,773
 )    
(30,483
 )
Consolidated Total
   $
510,351
     $
530,433
     $
568,222
  
 
(
1
)
The wholesale profit contained in the retail segment inventory that has
not
yet been realized. These profits are realized when the related inventory is sold.
 
Geographic Information
 
Our international net sales are comprised of our wholesale segment sales to independent retailers and our retail segment sales to consumers through the Company operated design centers.
 
The number of international design centers and the related net sales as a percent of our consolidated net sales is shown in the following table.
 
   
Fiscal Year Ended June 30,   
  
   
2019
    
2018
    
2017
  
Independent design centers
    
118
      
104
      
107
  
Company operated design centers
    
6
      
6
      
6
  
Total international design centers
    
124
      
110
      
113
  
% of total design centers international
    
41.1
 %    
37.2
 %    
37.3
 %
% of consolidated net sales
    
6.8
 %    
10.2
 %    
10.0
 %
 
Sales by Country
  
2019
    
2018
    
2017
  
United States
    
93.2
 %    
89.8
 %    
90.0
 %
All Others
    
6.8
 %    
10.2
 %    
10.0
 %
 
The following table sets forth long-lived assets by geographic area at
June 30 (
in thousands):
 
   
2019
    
2018
    
2017
  
United States
   $
218,034
     $
239,567
     $
239,885
  
Mexico
    
18,144
      
18,323
      
20,142
  
Honduras
    
8,057
      
8,637
      
9,011
  
Canada
    
1,011
      
1,376
      
1,160
  
Total long-lived assets
(1)
   $
245,246
     $
267,903
     $
270,198
  
 
(
1
)
Long-lived assets consist of property, plant and equipment, net of accumulated depreciation and amortization and exclude goodwill, intangible assets, deferred taxes and other assets.