Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Segment Information

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Note 12 - Segment Information
 3 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
(12)
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 and online through ethanallen.com. 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 each segment, we maintain revenue information according to each respective product line (i.e. case goods, upholstery, or home accents and other). The proportion of wholesale segment sales by these product lines for the three months ended September 30, 2016 and 2015 is provided as follows:
 
   
Three months ended
Septermber 30,
  
   
2016
    
2015
  
Case Goods
     32 %     33 %
Upholstered Products
     52 %     49 %
Home Accents and Other
     16 %     18 %
      100 %     100 %
 
The proportion of retail segment sales by these product lines for the three months ended September 30, 2016 and 2015 is provided as follows:
 
   
Three months ended
September 30,
  
   
2016
    
2015
  
Case Goods
     30 %     30 %
Upholstered Products
     49 %     46 %
Home Accents and Other
     21 %     24 %
      100 %     100 %
 
Segment information for the three months ended September 30, 2016 and 2015 is provided below (in thousands):
 
   
Three months ended
September 30,
  
   
2016
    
2015
  
Net sales:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 114,564     $ 120,455  
Retail segment
     152,255       146,040  
Elimination of inter-company sales
     (73,532 )     (76,104 )
Consolidated Total
   $ 193,287     $ 190,391  
                 
Operating income:
 
 
 
 
 
 
 
 
Wholesale segment
  $ 16,491     $ 20,587  
Retail segment
     1,023       1,640  
Adjustment of inter-company profit (1)
     823       (1,327 )
Consolidated Total
   $ 18,337     $ 20,900  
                 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 1,910     $ 1,911  
Retail segment
     3,089       2,872  
Consolidated Total
   $ 4,999     $ 4,783  
                 
Capital expenditures:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 3,639     $ 1,516  
Retail segment
     3,801       1,622  
Acquisitions
    -       -  
Consolidated Total
   $ 7,440     $ 3,138  
 
 
   
September 30,
2016
    
June 30,
2016
  
Total Assets:
 
 
 
 
 
 
 
 
Wholesale segment
   $ 288,800     $ 271,116  
Retail segment
     335,711       339,942  
Inventory profit elimination (2)
     (32,918 )     (33,649 )
Consolidated Total
   $ 591,593     $ 577,409  
 
 
(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.