Annual report pursuant to Section 13 and 15(d)

Note 15 - Segment Information

v3.10.0.1
Note 15 - Segment Information
12 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
(
15
)
Segment Information
 
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, 2018,
the Company operated
148
design centers (our retail segment) and our independent retailers operated
148
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
77%
of our consolidated net sales in fiscal
2018.
Our wholesale segment net sales to independent retailers and other
third
parties accounted for
23%,
including approximately
15.5%
of our consolidated net sales in fiscal
2018
to our
ten
largest customers, including the GSA and
nine
independent retailers who operate
105
design centers. Information for each of the last
three
fiscal years ended
June 30
is provided below (in thousands):
 
   
2018
   
2017
   
2016
 
Net sales:
                       
Wholesale segment
  $
475,731
    $
453,326
    $
491,467
 
Retail segment
   
587,502
     
603,677
     
626,511
 
Elimination of inter-company sales
   
(296,449
)    
(293,618
)    
(323,776
)
Consolidated Total
  $
766,784
    $
763,385
    $
794,202
 
                         
Operating income (loss):
                       
Wholesale segment
  $
48,499
    $
53,505
    $
74,412
 
Retail segment
   
(1,738
)    
1,198
     
16,450
 
Adjustment of inter-company profit (1)
   
2,106
     
3,247
     
(1,683
)
Consolidated Total
  $
48,867
    $
57,950
    $
89,179
 
                         
Depreciation & Amortization:
                       
Wholesale segment
  $
7,752
    $
7,550
    $
7,587
 
Retail segment
   
12,079
     
12,565
     
11,766
 
Consolidated Total
  $
19,831
    $
20,115
    $
19,353
 
                         
Capital expenditures:
                       
Wholesale segment
  $
4,286
    $
8,589
    $
12,446
 
Retail segment
   
14,487
     
9,732
     
10,686
 
Consolidated Total
  $
18,773
    $
18,321
    $
23,132
 
 
   
June 30,
   
June 30,
   
June 30,
 
   
2018
   
2017
   
2016
 
Total Assets:
                       
Wholesale segment
  $
241,616
    $
279,364
    $
271,116
 
Retail segment
   
317,590
     
319,341
     
339,942
 
Inventory profit elimination (2)
   
(28,773
)    
(30,483
)    
(33,649
)
Consolidated Total
  $
530,433
    $
568,222
    $
577,409
 
 
  (
1
)
Represents the change in wholesale profit contained in Ethan Allen design center inventory at the end of the period.
 
 
(
2
)
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.
 
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,
 
   
2018
   
2017
   
2016
 
Independent design centers
   
104
     
107
     
103
 
Company operated design centers
   
6
     
6
     
6
 
Total international design centers
   
110
     
113
     
109
 
                         
Percentage of consolidated net sales
   
10.2
%    
10.0
%    
9.2
%