11. Segment Information

As a public entity, we are required to present disaggregated information by segment using the management approach. The objective of this approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions. The management approach requires segment information to be reported based on how management internally evaluates the operating performance of the company’s business units or segments. The objective of this approach is to meet the basic principles of segment reporting as outlined in Accounting Standards Codification Topic 280, “Segment Reporting” (“ASC 280”), which are to allow the users of our financial statements to:

§	better understand our performance;

§	better assess our prospects for future net cash flows; and

§	make more informed judgments about us as a whole.

We define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income, as determined by the information regularly reviewed by the CODM.

For financial reporting purposes, we are organized into four operating segments:

§	Hooker Casegoods, an imported casegoods business;

§	Upholstery, which includes the domestic upholstery manufacturing operations Bradington-Young and Sam Moore and the imported upholstery operations of Hooker Upholstery;

All other, which includes H Contract and Homeware, two businesses started in 2013. Neither of these segments met the ASC 280 aggregation criteria nor were individually reportable; therefore, we combined them in an “All other” segment in accordance with ASC 280. We note that Homeware failed to reach critical mass and its operations were wound down during the fiscal 2018 second quarter; and

§	Home Meridian, a business acquired at the beginning of fiscal 2017, is stand-alone, mostly autonomous business that serves a different type or class of customer than do the legacy Hooker businesses and at much lower margins.

The following table presents segment information for the periods, and as of the dates, indicated:

	Thirteen Weeks Ended											Twenty-Six Weeks Ended
	July 30,					July 31,						July 30,					July 31,
	2017					2016						2017					2016
			% Net						% Net					% Net					% Net
Net Sales			Sales						Sales					Sales					Sales
Hooker Casegoods	$	34,880		22.3	%	$	33,582			24.7	%	$	67,695		23.6	%	$	66,510		25.8	%
Upholstery		22,364		14.3	%		19,847			14.6	%		44,546		15.5	%		41,740		16.2	%
Home Meridian		96,403		61.7	%		80,362			59.0	%		170,105		59.2	%		145,338		56.3	%
All other		2,661		1.7	%		2,372			1.7	%		4,834		1.7	%		4,406		1.7	%
Intercompany eliminations		-					-						-					-
Consolidated	$	156,308		100.0	%	$	136,163			100	%	$	287,180		100.0	%	$	257,994		100	%

Gross Profit
Hooker Casegoods	$	10,766		30.9	%	$	10,662			31.7	%	$	21,638		32.0	%	$	20,816		31.3	%
Upholstery		5,442		24.3	%		4,642			23.4	%		11,065		24.8	%		9,718		23.3	%
Home Meridian		16,061		16.7	%		12,413			15.4	%		27,067		15.9	%		23,123		15.9	%
All other		847		31.8	%		757			31.9	%		1,487		30.8	%		1,413		32.1	%
Intercompany eliminations		1					4						3					7
Consolidated	$	33,117		21.2	%	$	28,478			20.9	%	$	61,260		21.3	%	$	55,077		21.3	%

Operating Income
Hooker Casegoods	$	3,999		11.5	%	$	4,341			12.9	%	$	7,928		11.7	%	$	6,422		9.7	%
Upholstery		2,314		10.3	%		1,316			6.6	%		4,608		10.3	%		3,078		7.4	%
Home Meridian		5,235		5.4	%		2,365			2.9	%		6,051		3.6	%		2,453		1.7	%
All other		246		9.2	%		198			8.4	%		313		6.5	%		265		6.0	%
Intercompany eliminations		1					4						3					7
Consolidated	$	11,795		7.5	%	$	8,224			6.0	%	$	18,903		6.6	%	$	12,225		4.7	%

Capital Expenditures
Hooker Casegoods	$	464				$	342					$	966				$	722
Upholstery		144					174						207					208
Home Meridian		190					(59	)					492					230
All other		-					-						-					-
Consolidated	$	798				$	457					$	1,665				$	1,160

Depreciation
& Amortization
Hooker Casegoods	$	479				$	548					$	983				$	1,084
Upholstery		193					236						391					465
Home Meridian		663					1,176						1,318					3,194
All other		3					3						5					5
Consolidated	$	1,338				$	1,963					$	2,697				$	4,748

	As of July 30,					As of January 29,
	2017		%Total			2017			%Total
Identifiable Assets			Assets						Assets
Hooker Casegoods	$	133,721		42.7	%	$	130,917			41.1	%
Upholstery		34,493		11.0	%		32,275			10.1	%
Home Meridian		144,111		46.1	%		154,954			48.6	%
All other		534		0.2	%		554			0.2	%
Intercompany eliminations		-					(4	)		0.0	%
Consolidated	$	312,859		100.0	%	$	318,696			100	%

Sales by product type are as follows:

	Net Sales (in thousands)
	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	July 30,					July 31,					July 30,					July 31,
	2017		%Total			2016		%Total			2017		%Total			2016		%Total
Casegoods	$	106,851		68	%	$	88,848		65	%	$	201,534		70	%	$	178,045		69	%
Upholstery		49,457		32	%		47,315		35	%		85,646		30	%		79,949		31	%
	$	156,308		100	%	$	136,163		100	%	$	287,180		100	%	$	257,994		100	%