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Note 17 - Segment Information
 3 Months Ended
Sep. 30, 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 (the “CODM”) who is our Chairman of the Board, President and Chief Executive Officer, evaluates the operating results and performance of the business.

 

We evaluate the performance of our two segments based upon net sales and operating income in order to allocate resources. Segment operating income is based on operating income before interest and other financing costs, interest and other income, net and income tax expense. The CODM assesses performance by regularly reviewing each segment’s significant expense categories which include selling expenses and cost of sales, general and administrative expenses, and advertising expenses.

 

Wholesale Segment. The wholesale segment is principally involved in the development of the Ethan Allen brand and encompasses all aspects of design, manufacturing, sourcing, marketing, sale and distribution of our broad range of home furnishings and accents. Wholesale revenue is recorded upon the shipment of our products to our retail network of independently operated design centers, Company-operated design centers, and other third-party contract business clients. Our wholesale segment’s net sales to Company-operated design centers are eliminated in consolidation.

 

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.

 

The following tables present net sales and operating income by segment (in thousands):

 

   

Three months ended September 30, 2025

  
   

Wholesale

    

Retail

    

Eliminations

    

Consolidated

  

Net sales

   $ 86,961     $ 128,563     $ (68,540 )   $ 146,984  

Less significant expense categories:

                                

Selling expenses and cost of sales

     66,757       98,697       (69,182 )     96,272  

General and administrative expenses

     8,992       26,147       -       35,139  

Advertising expenses

     3,381       1,691       -       5,072  

Restructuring and other charges, net of gains

     (83 )     617       -       534  

Operating income

     7,914       1,411       642       9,967  

Interest and other income, net

     4,080       18       -       4,098  

Interest and other financing costs

     59       -       -       59  

Income before income taxes

   $ 11,935     $ 1,429     $ 642     $ 14,006  

 

   

Three months ended September 30, 2024

  
   

Wholesale

    

Retail

    

Eliminations

    

Consolidated

  

Net sales

   $ 86,056     $ 132,753     $ (64,472 )   $ 154,337  

Less significant expense categories:

                                

Selling expenses and cost of sales

     62,733       99,132       (62,695 )     99,170  

General and administrative expenses

     8,770       25,076       -       33,846  

Advertising expenses

     2,320       1,204       -       3,524  

Restructuring and other charges, net of gains

     378       (146 )     -       232  

Operating income

     11,855       7,487       (1,777 )     17,565  

Interest and other income, net

     2,181       17       -       2,198  

Interest and other financing costs

     60       -       -       60  

Income before income taxes

   $ 13,976     $ 7,504     $ (1,777 )   $ 19,703  

 

 

The following table presents additional information by segment (in thousands):

 

   

Three months ended

  
   

September 30,

  
   

2025

    

2024

  

Depreciation and amortization

                

Wholesale segment

   $ 1,619     $ 1,510  

Retail segment

     2,225       2,362  

Consolidated total

   $ 3,844     $ 3,872  
                 

Capital expenditures

                

Wholesale segment

   $ 398     $ 2,795  

Retail segment

     2,006       794  

Consolidated total

   $ 2,404     $ 3,589  
                 

Total Assets

                

Wholesale segment

   $ 370,474     $ 381,325  

Retail segment

     398,008       385,378  

Inventory profit elimination(1)

     (31,376 )     (28,999 )

Consolidated total

   $ 737,106     $ 737,704  

 

 

(1)

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.