Quarterly report pursuant to Section 13 or 15(d)

Note 16 - Segment Information

v3.22.1
Note 16 - Segment Information
9 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(16)

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 March 31, 2022, 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 85.2% of our consolidated net sales during the first nine months of fiscal 2022 compared with 79.8% a year prior. Our wholesale segment net sales accounted for the remaining 14.8%.

 

Segment information is provided below (in thousands):

 

   

Three months ended

   

Nine months ended

 
   

March 31,

   

March 31,

 
   

2022

   

2021

   

2022

   

2021

 

Net sales

                               

Wholesale segment

  $ 121,034     $ 107,820     $ 346,403     $ 306,704  

Less: intersegment sales

    (90,102 )     (72,254 )     (259,620 )     (204,153 )

Wholesale sales to external customers

    30,932       35,566       86,783       102,551  

Retail segment

    166,727       141,396       501,296       404,295  

Consolidated total

  $ 197,659     $ 176,962     $ 588,079     $ 506,846  
                                 

Income before income taxes

                               

Wholesale segment

  $ 16,536     $ 14,508     $ 39,099     $ 40,366  

Retail segment

    19,330       4,962       56,310       16,854  

Elimination of intercompany profit (a)

    (3,213 )     (483 )     896       (3,997 )

Operating income

    32,653       18,987       96,305       53,223  

Interest and other financing costs

    51       51       147       433  

Other income (expense), net

    (10 )     57       (8 )     (378 )

Consolidated total

  $ 32,592     $ 18,993     $ 96,150     $ 52,412  
                                 

Depreciation and amortization

                               

Wholesale segment

  $ 1,599     $ 1,744     $ 4,827     $ 5,091  

Retail segment

    2,254       2,470       7,213       7,268  

Consolidated total

  $ 3,853     $ 4,214     $ 12,040     $ 12,359  
                                 

Capital expenditures

                               

Wholesale segment

  $ 3,504     $ 1,491     $ 5,916     $ 4,615  

Retail segment

    1,797       2,973       3,115       5,727  

Consolidated total

  $ 5,301     $ 4,464     $ 9,031     $ 10,342  

 

 

(a)

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

 

 

(in thousands)

 

March 31,

   

June 30,

 

Total Assets

 

2022

   

2021

 

Wholesale segment

  $ 324,104     $ 298,332  

Retail segment

    417,120       412,066  

Inventory profit elimination (a)

    (26,321 )     (27,153 )

Consolidated total

  $ 714,903     $ 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.