Note 13 - Segment Information
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Sep. 30, 2012
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Segment Reporting Disclosure [Text Block] |
(13) Segment
Information
Our
operations are classified into two operating segments:
wholesale and retail. These operating segments represent
strategic business areas which, although they operate
separately and provide their own distinctive services, enable
us to more effectively offer our complete line of home
furnishings and accessories.
The
wholesale segment is principally involved in the development
of the Ethan Allen brand, which encompasses the design,
manufacture, domestic and offshore sourcing, sale and
distribution of a full range of home furnishings and
accessories to a network of independently operated and Ethan
Allen operated design centers as well as related marketing
and brand awareness efforts. Wholesale revenue is generated
upon the wholesale sale and shipment of our product to all
retail design centers, including those operated by Ethan
Allen. Wholesale profitability includes (i) the wholesale
gross margin, which represents the difference between the
wholesale sales price and the cost associated with
manufacturing and/or sourcing the related product, and (ii)
other operating costs associated with wholesale segment
activities.
The
retail segment sells home furnishings and accessories to
consumers through a network of Company operated design
centers. Retail revenue is generated upon the retail sale and
delivery of our product to our customers. Retail
profitability includes (i) the retail gross margin, which
represents the difference between the retail sales price and
the cost of goods purchased from the wholesale segment, and
(ii) other operating costs associated with retail segment
activities.
Inter-segment
eliminations result, primarily, from the wholesale sale of
inventory to the retail segment, including the related profit
margin.
We
evaluate performance of the respective segments based upon
revenues and operating income. While the manner in which our
home furnishings and accessories are marketed and sold is
consistent, the nature of the underlying recorded sales (i.e.
wholesale versus retail) and the specific services that each
operating segment provides (i.e. wholesale manufacturing,
sourcing, and distribution versus retail selling) are
different. Within the wholesale segment, we maintain revenue
information according to each respective product line (i.e.
case goods, upholstery, or home accessories and other). The
allocation of retail sales by product line is reasonably
similar to that of the wholesale segment. A breakdown of
wholesale sales by these product lines for the three months
ended September 30, 2012 and 2011 is provided as
follows:
Segment
information for the three months ended September 30, 2012 and
2011 is provided below (in thousands):
At
September 30, 2012, there were 90 independent retail design
centers located outside the United States compared with 78 at
September 30, 2011, with the increase occurring in China.
Approximately 6.2% of our net sales during the current three
months were derived from sales to international retail design
centers compared with 6.4% in the prior year.
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