Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Segment Information

v2.4.1.9
Note 13 - Segment Information
 9 Months Ended
Mar. 31, 2015
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 nine months ended March 31, 2015 and 2014 is provided as follows:
 
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2015
    
2014
    
2015
    
2014
  
Case Goods
     35 %     38 %     34 %     35 %
Upholstered Products
     48 %     46 %     48 %     48 %
Home Accents and Other
     17 %     16 %     18 %     17 %
      100 %     100 %     100 %     100 %
 
 
Segment information for the three and nine months ended March 31, 2015 and 2014 is provided below (in thousands):
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2015
    
2014
    
2015
    
2014
  
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 112,265     $ 111,143     $ 353,075     $ 337,474  
Retail segment
     129,460       131,813       427,710       425,136  
Elimination of inter-company sales
     (68,466 )     (69,895 )     (219,753 )     (214,786 )
Consolidated Total
   $ 173,259     $ 173,061     $ 561,032     $ 547,824  
                                 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
  $ 14,450     $ 13,009     $ 49,147     $ 43,507  
Retail segment
     (5,126 )     (1,591 )     (411 )     2,411  
Adjustment of inter-company profit (1)
     (98 )     (1,866 )     (1,380 )     (572 )
Consolidated Total
   $ 9,226     $ 9,552     $ 47,356     $ 45,346  
                                 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 1,942     $ 2,018     $ 6,031     $ 5,824  
Retail segment
     2,878       2,559       8,183       7,452  
Consolidated Total
   $ 4,820     $ 4,577     $ 14,214     $ 13,276  
                                 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $ 1,349     $ 1,991     $ 8,358     $ 6,483  
Retail segment
     3,064       2,039       9,170       6,105  
Acquisitions
    -       -       1,991       -  
Consolidated Total
   $ 4,413     $ 4,030     $ 19,519     $ 12,588  
 
   
March 31,
    
June 30,
  
   
2015
    
2014
  
Total Assets:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 282,521     $ 339,271  
Retail segment
     356,921       344,025  
Inventory profit elimination (2)
     (30,404 )     (28,862 )
Consolidated Total
   $ 609,038     $ 654,434  
 
(1)
Represents 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.