13. Segment Information

As a public reporting 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 ASC 280 Segments (“ASC 280”), which are to allow the users of our financial statements to:

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better understand our performance;

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better assess our prospects for future net cash flows; and

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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.

We continually monitor our reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In the fourth quarter of fiscal 2018, we updated our reportable segments as follows: Hooker Upholstery was aggregated with Hooker Casegoods and reported as the Hooker Branded segment. The domestic upholstery operations of Shenandoah Furniture, Sam Moore and Bradington-Young were moved into All Other with the Company’s H Contract business and the remains of the Company’s Homeware division, which was shuttered earlier in fiscal 2018. The Home Meridian segment remains unchanged. Therefore, for financial reporting purposes, we are organized into two reportable segments and “All Other”, which includes the remainder of our businesses:

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Hooker Branded, consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses;

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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

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All Other, which includes the domestic upholstery manufacturing operations of Bradington-Young, Sam Moore and Shenandoah Furniture and H Contract and Homeware, the latter two businesses started in 2013. None of these operating segments met the ASC 280 aggregation criteria nor were individually reportable; therefore, we combined them in “All Other” 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										Twenty-Six Weeks Ended
	July 29, 2018					July 30, 2017					July 29, 2018					July 30, 2017
			% Net					% Net					% Net					% Net
Net Sales			Sales					Sales					Sales					Sales
Hooker Branded	$	40,551		24.0	%	$	40,889		26.2	%	$	83,322		26.7	%	$	78,361		27.3	%
Home Meridian		101,022		59.9	%		96,403		61.7	%		171,618		55.1	%		170,105		59.2	%
All Other		27,088		16.1	%		19,016		12.2	%		56,613		18.2	%		38,714		13.5	%
Consolidated	$	168,661		100.0	%	$	156,308		100.0	%	$	311,553		100.0	%	$	287,180		100.0	%

Gross Profit
Hooker Branded	$	12,616		31.1	%	$	12,547		30.7	%	$	27,038		32.5	%	$	25,081		32.0	%
Home Meridian		17,398		17.2	%		16,061		16.7	%		27,814		16.2	%		27,067		15.9	%
All Other		5,631		20.8	%		4,509		23.7	%		12,759		22.5	%		9,112		23.5	%
Consolidated	$	35,645		21.1	%	$	33,117		21.2	%	$	67,611		21.7	%	$	61,260		21.3	%

Operating Income
Hooker Branded	$	4,943		12.2	%	$	5,133		12.6	%	$	11,669		14.0	%	$	10,083		12.9	%
Home Meridian		5,628		5.6	%		5,265		5.5	%		5,339		3.1	%		6,111		3.6	%
All Other		1,294		4.8	%		1,528		8.0	%		4,240		7.5	%		2,971		7.7	%
Consolidated	$	11,865		7.0	%	$	11,926		7.6	%	$	21,248		6.8	%	$	19,165		6.7	%

Capital Expenditures
Hooker Branded	$	168				$	464				$	378				$	966
Home Meridian		122					190					158					492
All Other		173					144					297					207
Consolidated	$	463				$	798				$	833				$	1,665

Depreciation & Amortization
Hooker Branded	$	496				$	479				$	980				$	983
Home Meridian		601					663					1,192					1,318
All Other		764					196					1,517					396
Consolidated	$	1,861				$	1,338				$	3,689				$	2,697

	As of July 29,					As of January 28,
	2018		%Total			2018		%Total
Identifiable Assets			Assets					Assets
Hooker Branded	$	130,937		48.0	%	$	129,986	47.8	%
Home Meridian		106,959		39.2	%		107,139	39.6	%
All Other		35,149		12.9	%		34,394	12.6	%
Consolidated	$	273,045		100.0	%	$	271,519	100.0	%
Consolidated Goodwill and Intangibles		77,005					78,197
Total Consolidated Assets	$	350,050				$	349,716

Sales by product type are as follows:

Net Sales (in thousands)
	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	July 29, 2018		%Total			July 30, 2017		%Total			July 29, 2018		%Total			July 30, 2017		%Total
Casegoods	$	105,703		63	%	$	97,210		62	%	$	195,759		63	%	$	186,223		65	%
Upholstery		62,958		37	%		59,098		38	%		115,794		37	%		100,957		35	%
	$	168,661				$	156,308		100	%	$	311,553				$	287,180		100	%