Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Segment Information

v2.4.1.9
Note 13 - Segment Information
 6 Months Ended
Dec. 31, 2014
Notes to Financial Statements  
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 of our vertically integrated business which, although they operate separately and provide their own distinctive services, enable us to more efficiently control the quality and cost of our complete line of home furnishings and accents.
 
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 accents 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.
 
The retail segment sells home furnishings and accents 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.
 
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 accents 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 and six months ended December 31, 2014 and 2013 is provided as follows:
 
   
Three months ended
    
Six months ended
  
   
December 31,
    
December 31,
  
   
2014
    
2013
    
2014
    
2013
  
Case Goods
     32 %     33 %     34 %     34 %
Upholstered Products
     49 %     51 %     47 %     49 %
Home Accents and Other
     19 %     16 %     19 %     17 %
      100 %     100 %     100 %     100 %
 
Segment information for the three and six months ended December 31, 2014 and 2013 is provided below (in thousands):
 
   
Three months ended
    
Six months ended
  
   
December 31,
    
December 31,
  
   
2014
    
2013
    
2014
    
2013
  
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 116,210     $ 113,133     $ 240,810     $ 226,331  
Retail segment
     153,207       151,496       298,250       293,323  
Elimination of inter-company sales
     (72,350 )     (71,525 )     (151,287 )     (144,891 )
Consolidated Total
   $ 197,067     $ 193,104     $ 387,773     $ 374,763  
                                 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
  $ 13,155     $ 14,366     $ 34,697     $ 30,498  
Retail segment
     2,953       4,206       4,715       4,002  
Adjustment of inter-company profit (1)
     1,552       1,278       (1,282 )     1,294  
Consolidated Total
   $ 17,660     $ 19,850     $ 38,130     $ 35,794  
                                 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 1,995     $ 1,915     $ 4,089     $ 3,806  
Retail segment
     2,680       2,495       5,305       4,893  
Consolidated Total
   $ 4,675     $ 4,410     $ 9,394     $ 8,699  
                                 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 3,048     $ 3,018     $ 7,009     $ 4,492  
Retail segment
     4,657       2,235       6,106       4,066  
Acquisitions
    -       -       1,991       -  
Consolidated Total
   $ 7,705     $ 5,253     $ 15,106     $ 8,558  
 
   
December 31,
    
June 30,
  
   
2014
    
2014
  
Total Assets:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 330,770     $ 339,271  
Retail segment
     350,864       344,025  
Inventory profit elimination (2)
     (29,567 )     (28,862 )
Consolidated Total
   $ 652,067     $ 654,434  
 
(1)
R
epresents the change in wholesale profit contained in the retail segment inventory at the end of the period.
(2)
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.