Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Segment Information

v3.7.0.1
Note 12 - Segment Information
 9 Months Ended
Mar. 31, 2017
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
and
nine
months ended
March
31,
2017
and
2016
is provided as follows:
 
 
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2017
    
2016
    
2017
    
2016
  
Case Goods
    
32
 %    
33
 %    
32
 %    
33
 %
Upholstered Products
    
53
 %    
50
 %    
52
 %    
50
 %
Home Accents and Other
    
15
 %    
17
 %    
16
 %    
17
 %
     
100
 %    
100
 %    
100
 %    
100
 %
 
The proportion of retail segment sales by these product lines for the
three
and
nine
months ended
March
31,
2017
and
2016
is provided as follows:
 
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2017
    
2016
    
2017
    
2016
  
Case Goods
    
30
 %    
32
 %    
30
 %    
31
 %
Upholstered Products
    
48
 %    
46
 %    
48
 %    
47
 %
Home Accents and Other
    
22
 %    
22
 %    
22
 %    
22
 %
     
100
 %    
100
 %    
100
 %    
100
 %
 
Segment information for the
three
and
nine
months ended
March
31,
2017
and
2016
is provided below (in thousands):
 
 
 
   
Three months ended
    
Nine months ended
  
   
March 31,
    
March 31,
  
   
2017
    
2016
    
2017
    
2016
  
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $
110,819
    $
117,164
    $
339,076
    $
364,032
 
Retail segment
    
141,948
     
152,174
     
450,495
    $
462,917
 
Elimination of inter-company sales
    
(72,266
 )    
(78,755
 )    
(221,111
 )    
(238,440
 )
Consolidated Total
   $
180,501
    $
190,583
    $
568,460
    $
588,509
 
                                 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
  $
9,729
    $
15,764
    $
40,399
    $
56,041
 
Retail segment
    
(7,319
 )    
629
     
(4,149
 )    
8,958
 
Adjustment of inter-company profit (1)
    
1,510
     
(384
 )    
3,101
     
(1,583
 )
Consolidated Total
   $
3,920
    $
16,009
    $
39,351
    $
63,416
 
                                 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $
1,832
    $
2,079
    $
5,611
    $
5,899
 
Retail segment
    
3,192
     
2,963
     
9,412
     
8,732
 
Consolidated Total
   $
5,024
    $
5,042
    $
15,023
    $
14,631
 
                                 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale segment
   $
2,193
    $
3,774
    $
7,776
    $
7,630
 
Retail segment
    
1,665
     
2,676
     
7,336
     
6,194
 
Acquisitions
   
-
     
-
     
-
     
-
 
Consolidated Total
   $
3,858
    $
6,450
    $
15,112
    $
13,824
 
 
 
 
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 
 
   
March 31,
    
June 30,
  
   
2017
    
2016
  
Total Assets:
 
 
 
 
 
 
 
 
Wholesale segment
   $
292,097
    $
271,116
 
Retail segment
    
318,388
     
339,942
 
Inventory profit elimination (2)
    
(30,582
 )    
(33,649
 )
Consolidated Total
   $
579,903
    $
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.