Annual report pursuant to Section 13 and 15(d)

Note 15 - Segment Information

v3.7.0.1
Note 15 - Segment Information
 12 Months Ended
Jun. 30, 2017
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, 2017,
the Company operated
148
design centers (our retail segment) and our independent retailers operated
155
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
79%
of our consolidated net sales in fiscal
2017.
Our wholesale segment net sales to independent retailers accounted for
21%,
including approximately
11.9%
of our consolidated net sales in fiscal
2017
to the
ten
largest independent retailers, who operate
101
design centers. Information for each of the last
three
fiscal years ended
June 30
is provided below (in thousands):
 
   
2017
    
2016
    
2015
  
Net sales:
                        
Wholesale segment
   $
453,326
    $
491,467
    $
469,384
 
Retail segment
    
603,677
     
626,511
     
579,713
 
Elimination of inter-company sales
    
(293,618
 )    
(323,776
 )    
(294,497
 )
Consolidated Total
   $
763,385
    $
794,202
    $
754,600
 
                         
Operating income (loss):
                        
Wholesale segment
   $
53,505
    $
74,412
    $
66,988
 
Retail segment
   
1,198
     
16,450
     
1,726
 
Adjustment of inter-company profit (1)
    
3,247
     
(1,683
 )    
(2,780
 )
Consolidated Total
   $
57,950
    $
89,179
    $
65,934
 
                         
Depreciation & Amortization:
                        
Wholesale segment
   $
7,550
    $
7,587
    $
8,044
 
Retail segment
    
12,565
     
11,766
     
11,098
 
Consolidated Total
   $
20,115
    $
19,353
    $
19,142
 
                         
Capital expenditures:
                        
Wholesale segment
   $
8,589
    $
12,446
    $
9,427
 
Retail segment
    
9,056
     
10,521
     
10,360
 
Acquisitions
    
676
     
165
     
1,991
 
Consolidated Total
   $
18,321
    $
23,132
    $
21,778
 
 
   
June 30,
    
June 30,
    
June 30,
  
   
2017
    
2016
    
2015
  
Total Assets:
                        
Wholesale segment
   $
279,364
    $
271,116
    $
295,949
 
Retail segment
    
319,341
     
339,942
     
341,886
 
Inventory profit elimination (2)
    
(30,483
 )    
(33,649
 )    
(31,858
 )
Consolidated Total
   $
568,222
    $
577,409
    $
605,977
 
 
 
(
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,
  
   
2017
    
2016
    
2015
  
Independent design centers
    
107
     
103
     
97
 
Company operated design centers
    
6
     
6
     
7
 
Total international design centers
    
113
     
109
     
104
 
                         
Percentage of consolidated net sales
    
10.0
 %    
9.2
 %    
11.6
 %