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Note 17 - Segment Information
 9 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(17)

Segment Information

 

Ethan Allen conducts business globally and has strategically aligned its business into two reportable segments: Wholesale and Retail. These two segments represent strategic business areas of our vertically integrated enterprise that operate separately and provide their own distinctive services. Our operating segments are aligned with how the Company, including our chief operating decision maker, manages the business. We evaluate performance of our segments based upon sales and operating income.

 

Wholesale Segment. The wholesale segment is principally involved in the development of the Ethan Allen brand and encompasses all aspects of design, manufacturing, sourcing, merchandising, marketing and distribution of our broad range of home furnishings and accents. 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. Wholesale revenue is generated upon the sale and shipment of our products to our retail network of independently operated design centers, Company-operated design centers and other contract customers.

 

Retail Segment. The retail segment sells home furnishings and accents to clients through our 143 Company-operated design centers. Retail revenue is generated upon the retail sale and delivery of our products to our retail customers through our network of retail home delivery centers. Retail profitability reflects (i) the retail gross margin, which represents the difference between the retail net sales price and the cost of goods, purchased from the wholesale segment, and (ii) other operating costs associated with retail segment activities.

 

Intersegment. 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 income, net, interest and other financing costs, and income taxes. Sales are attributed to countries on the basis of the customer's location.

 

Segment information is provided below (in thousands):

 

   

Three months ended

    

Nine months ended

  
   

March 31,

    

March 31,

  
   

2025

    

2024

    

2025

    

2024

  

Net sales

                                

Wholesale segment

   $ 98,990     $ 89,825     $ 271,857     $ 279,882  

Less: intersegment sales

     (73,917 )     (66,020 )     (202,219 )     (197,707 )

Wholesale sales to external customers

     25,073       23,805       69,638       82,175  

Retail segment

     117,622       122,616       384,654       395,414  

Consolidated total

   $ 142,695     $ 146,421     $ 454,292     $ 477,589  
                                 

Income before income taxes

                                

Wholesale segment

   $ 14,331     $ 11,243     $ 35,823     $ 36,437  

Retail segment

     659       2,275       14,800       14,399  

Elimination of intercompany profit (a)

     (3,993 )     1,807       (3,904 )     4,528  

Operating income

     10,997       15,325       46,719       55,364  

Interest and other income, net

     1,599       2,037       5,826       5,541  

Interest and other financing costs

     60       64       183       177  

Consolidated total

   $ 12,536     $ 17,298     $ 52,362     $ 60,728  
                                 

Depreciation and amortization

                                

Wholesale segment

   $ 1,576     $ 1,590     $ 4,641     $ 4,819  

Retail segment

     2,240       2,439       7,029       7,217  

Consolidated total

   $ 3,816     $ 4,029     $ 11,670     $ 12,036  
                                 

Capital expenditures

                                

Wholesale segment

   $ 684     $ 942     $ 5,526     $ 3,232  

Retail segment

     1,297       1,353       3,826       4,304  

Consolidated total

   $ 1,981     $ 2,295     $ 9,352     $ 7,536  

 

 

(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

  

2025

    

2024

  

Wholesale segment

   $ 371,073     $ 379,693  

Retail segment

     398,816       392,243  

Inventory profit elimination (a)

     (31,149 )     (27,019 )

Consolidated total

   $ 738,740     $ 744,917  

 

 

(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.