13. 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 reportable segments:

§	Hooker Casegoods, an imported casegoods business;

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

§	Home Meridian, a business acquired at the beginning of fiscal 2017, is a stand-alone, mostly autonomous business that serves a different type or class of customer than do our other operating segments and at much lower margins; and

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.

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

	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	October 29,					October 30					October 29,					October 30
	2017					2016					2017					2016
			% Net					% Net					% Net					% Net
Net Sales			Sales					Sales					Sales					Sales
Hooker Casegoods	$	36,373		23.0	%	$	36,861		25.4	%	$	104,067		23.4	%	$	103,372		25.6	%
Upholstery		26,701		16.9	%		19,664		13.5	%		71,247		16.0	%		61,404		15.2	%
Home Meridian		92,068		58.3	%		86,053		59.2	%		262,173		58.9	%		231,391		57.4	%
All other		2,792		1.8	%		2,720		1.9	%		7,627		1.7	%		7,125		1.8	%
Intercompany eliminations		-					-					-					-
Consolidated	$	157,934		100.0	%	$	145,298		100	%	$	445,114		100.0	%	$	403,292		100	%

Gross Profit
Hooker Casegoods	$	11,346		31.2	%	$	12,081		32.8	%	$	32,984		31.7	%	$	32,897		31.8	%
Upholstery		6,190		23.2	%		4,311		21.9	%		17,255		24.2	%		14,029		22.8	%
Home Meridian		15,808		17.2	%		13,742		16.0	%		42,875		16.4	%		36,865		15.9	%
All other		934		33.4	%		791		29.1	%		2,420		31.7	%		2,204		30.9	%
Intercompany eliminations		-					1					4					8
Consolidated	$	34,278		21.7	%	$	30,926		21.3	%	$	95,538		21.5	%	$	86,003		21.3	%

Operating Income
Hooker Casegoods	$	3,990		11.0	%	$	5,092		13.8	%	$	11,918		11.5	%	$	11,514		11.1	%
Upholstery		2,199		8.2	%		1,178		6.0	%		6,807		9.6	%		4,256		6.9	%
Home Meridian		4,607		5.0	%		3,503		4.1	%		10,658		4.1	%		5,956		2.6	%
All other		409		14.6	%		165		6.1	%		721		9.5	%		430		6.0	%
Intercompany eliminations		-					1					4					8
Consolidated	$	11,205		7.1	%	$	9,939		6.8	%	$	30,108		6.8	%	$	22,164		5.5	%

Capital Expenditures
Hooker Casegoods	$	268				$	343				$	1,259				$	1,065
Upholstery		145					430					359					638
Home Meridian		580					122					1,090					193
All other		-					9					-					9
Consolidated	$	993				$	904				$	2,708				$	1,905

Depreciation & Amortization
Hooker Casegoods	$	490				$	566				$	1,452				$	1,650
Upholstery		538					253					929					718
Home Meridian		673					770					2,012					3,965
All other		1					3					6					7
Consolidated	$	1,702				$	1,592				$	4,399				$	6,340

	As of October 29, 2017		%Total			As of January 29, 2017			%Total
Assets			Assets						Assets
Hooker Casegoods	$	125,232		47.5	%	$	130,917			48.6	%
Upholstery		42,636		16.2	%		31,018			11.5	%
Home Meridian		95,483		36.2	%		107,101			39.7	%
All other		509		0.2	%		554			0.2	%
Intercompany eliminations		-		0.0	%		(4	)		0.0	%
Consolidated assets	$	263,860		100.0	%	$	269,586			100	%
Consolidated goodwill and intangibles		78,657					49,110
Total consolidated assets	$	342,517				$	318,696

Sales by product type are as follows:

	Net Sales (in thousands)
	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	October 29,					October 30,					October 29,					October 30,
	2017		%Total			2016		%Total			2017		%Total			2016		%Total
Casegoods	$	115,106		73	%	$	107,994		74	%	$	316,639		71	%	$	286,039		71	%
Upholstery		42,828		27	%		37,304		26	%		128,475		29	%		117,253		29	%
	$	157,934		100	%	$	145,298		100	%	$	445,114		100	%	$	403,292		100	%