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Note 16 - Segment Information
 6 Months Ended
Dec. 31, 2021
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 December 31, 2021, the Company operated 141 design centers (our retail segment) and our independent retailers operated 161 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 85.7% of our consolidated net sales during the first half of fiscal 2022 compared with 79.7% a year prior. Our wholesale segment net sales accounted for the remaining 14.3%.

 

Segment information is provided below (in thousands):

 

  

Three months ended

  

Six months ended

 
  

December 31,

  

December 31,

 
  

2021

  

2020

  

2021

  

2020

 

Net sales

                

Wholesale segment

 $115,921  $101,550  $225,369  $198,884 

Less: intersegment sales

  (87,411)  (67,542)  (169,518)  (131,899)

Wholesale sales to external customers

  28,510   34,008   55,851   66,985 

Retail segment

  179,583   144,818   334,569   262,899 

Consolidated total

 $208,093  $178,826  $390,420  $329,884 
                 

Income before income taxes

                

Wholesale segment

 $9,744  $12,720  $22,563  $25,858 

Retail segment

  22,635   9,909   36,980   11,892 

Elimination of intercompany profit (a)

  3,913   (74)  4,109   (3,514)

Operating income

  36,292   22,555   63,652   34,236 

Interest and other financing costs

  48   47   96   382 

Other income (expense), net

  (26)  (330)  2   (435)

Consolidated total

 $36,218  $22,178  $63,558  $33,419 
                 

Depreciation and amortization

                

Wholesale segment

 $1,588  $1,643  $3,228  $3,347 

Retail segment

  2,274   2,362   4,959   4,798 

Consolidated total

 $3,862  $4,005  $8,187  $8,145 
                 

Capital expenditures

                

Wholesale segment

 $1,324  $2,082  $2,412  $3,124 

Retail segment

  877   1,357   1,318   2,754 

Consolidated total

 $2,201  $3,439  $3,730  $5,878 

 

 

(a)

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

 

(in thousands)

December 31,

 

June 30,

 
 2021 2021 

Total Assets

 

 

 

 

Wholesale segment

$307,546 $298,332 

Retail segment

 404,529  412,066 

Inventory profit elimination (a)

 (22,747) (27,153)

Consolidated total

$689,328 $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.