Quarterly report pursuant to Section 13 or 15(d)

Note 15 - Segment Information

v3.21.2
Note 15 - Segment Information
3 Months Ended
Sep. 30, 2021
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(15)

Segment Information

 

Our operating segments are aligned with how the Company, including our chief operating decision maker, manages the business. As such, our reportable operating segments are the wholesale segment and the retail segment. 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. We account for intersegment sales transactions between our segments consistent with independent third-party transactions, that is, at current market prices. As a result, the manufacturing profit related to sales to our retail segment is included within our wholesale segment. Operating income realized on intersegment revenue transactions is therefore generally consistent with the operating income realized on our revenue from independent third-party transactions. Segment operating income is based on profit or loss from operations before interest and other financing costs, other income (expense), net and income taxes. Sales are attributed to countries on the basis of the customer's location.

 

As of September 30, 2021, the Company operated 141 design centers (our retail segment) and our independent retailers operated 160 design centers. Our wholesale segment net sales include sales to our retail segment, which are eliminated in consolidation, and sales to our independent retailers and other third parties. Our retail segment net sales accounted for 85.0% of our consolidated net sales during the first quarter of fiscal 2022 compared with 78.2% a year prior. Our wholesale segment net sales accounted for the remaining 15.0%.

 

Segment information is provided below (in thousands):

 

    Three months ended  
   

September 30,

 
   

2021

   

2020

 

Net sales

               

Wholesale segment

  $ 109,448     $ 97,334  

Less: intersegment sales

    (82,107 )     (64,357 )

Wholesale sales to external customers

    27,341       32,977  

Retail segment

    154,986       118,081  

Consolidated total

  $ 182,327     $ 151,058  
                 

Income before income taxes

               

Wholesale segment

  $ 12,819     $ 13,138  

Retail segment

    14,345       1,983  

Elimination of intercompany profit (a)

    196       (3,440 )

Operating income

    27,360       11,681  

Interest and other financing costs

    48       335  

Other income (expense), net

    28       (105 )

Consolidated total

  $ 27,340     $ 11,241  
                 

Depreciation and amortization

               

Wholesale segment

  $ 1,640     $ 1,704  

Retail segment

    2,685       2,436  

Consolidated total

  $ 4,325     $ 4,140  
                 

Capital expenditures

               

Wholesale segment

  $ 1,088     $ 1,042  

Retail segment

    441       1,397  

Consolidated total

  $ 1,529     $ 2,439  

 

 

(a)

Represents the change in wholesale profit contained in the retail segment inventory at the end of the period.

 

(in thousands)

 

September 30,

   

June 30,

 

Total Assets

 

2021

   

2021

 

Wholesale segment

  $ 295,823     $ 298,332  

Retail segment

    409,615       412,066  

Inventory profit elimination (a)

    (27,144 )     (27,153 )

Consolidated total

  $ 678,294     $ 683,245  

 

 

(a)

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.