Quarterly report pursuant to Section 13 or 15(d)

Note 15 - Segment Information

v3.20.2
Note 15 - Segment Information
 3 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(15)     Segment Information

 

Our operating segments are aligned with how the Company, including our chief operating decision maker, 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 September 30, 2020, the Company operated 144 design centers (our retail segment) and our independent retailers operated 157 design centers. Our wholesale segment net sales include sales to our retail segment, which are eliminated in consolidation, and sales to our independent retailers and other third parties. Our retail segment net sales accounted for 78% of our consolidated net sales in the three months ended September 30, 2020. Our wholesale segment net sales accounted for the remaining 22%.

 

Segment information for the three months ended September 30, 2020 and 2019 is provided below (in thousands):

 

   

Three months ended

  
   

September 30,

  
   

2020

    

2019

  

Net sales

                

Wholesale segment

   $ 97,334     $ 101,329  

Retail segment

     118,081       137,266  

Elimination of intercompany sales

     (64,357 )     (64,674 )

Consolidated total

   $ 151,058     $ 173,921  
                 

Income before income taxes

                

Wholesale segment

   $ 13,138     $ 16,928  

Retail segment

     1,983       1,564  

Elimination of intercompany profit (a)

     (3,440 )     149  

Operating income

     11,681       18,641  

Interest (expense), net of interest income

     (440 )     19  

Consolidated total

   $ 11,241     $ 18,660  
                 

Depreciation and amortization

                

Wholesale segment

   $ 1,704     $ 1,890  

Retail segment

     2,436       2,086  

Consolidated total

   $ 4,140     $ 3,976  
                 

Capital expenditures

                

Wholesale segment

   $ 1,042     $ 1,163  

Retail segment

     1,397       2,251  

Consolidated total

   $ 2,439     $ 3,414  

 

 

(a)

Represents the change in wholesale profit contained in the retail segment inventory at the end of the period.

 

(in thousands)

  

September 30,

    

June 30,

  

Total Assets

  

2020

    

2020

  

Wholesale segment

   $ 244,572     $ 255,011  

Retail segment

     404,705       390,635  

Inventory profit elimination (a)

     (26,756 )     (22,857 )

Consolidated total

   $ 622,521     $ 622,789  

 

 

(a)

Represents 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.