v3.25.2
Note 20 - Segment Information
 12 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

(20)

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.

 

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 142 Company-operated design centers. Ethan Allen design centers are typically located in retail settings as freestanding destinations or as part of town centers, lifestyle centers, and suburban shopping malls, and average approximately 14,000 square feet in size. The geographic distribution of our retail design center locations is disclosed under Item 2, Properties, contained in Part I of this Annual Report on Form 10-K.

 

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 revenue from independent third-party transactions.

 

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. The accounting policies of the operating segments are the same as those described in Note 3, Summary of Significant Accounting Policies. 

 

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

 

   

Fiscal Year Ended June 30, 2025

  
   

Wholesale

    

Retail

    

Intersegment Eliminations

    

Consolidated

  

Net sales

   $ 359,057     $ 523,142     $ (267,550 )   $ 614,649  
                                 

Less significant expense categories:

                                

Selling expenses and cost of sales

     267,556       396,156       (262,768 )     400,944  

General and administrative expenses

     33,260       100,411       -       133,671  

Advertising expenses

     10,797       6,906       -       17,703  

Restructuring expenses

     455       (112 )     -       343  

Operating income

     46,989       19,781       (4,782 )     61,988  

Interest and other income, net

     7,214       61       -       7,275  

Interest and other financing costs

     243       -       -       243  

Income before income taxes

   $ 53,960     $ 19,842     $ (4,782 )   $ 69,020  

 

   

Fiscal Year Ended June 30, 2024

  
   

Wholesale

    

Retail

    

Intersegment Eliminations

    

Consolidated

  

Net sales

   $ 371,087     $ 540,550     $ (265,416 )   $ 646,221  
                                 

Less significant expense categories:

                                

Selling expenses and cost of sales

     280,504       409,065       (269,996 )     419,573  

General and administrative expenses

     31,058       101,309       -       132,367  

Advertising expenses

     8,433       7,934       -       16,367  

Restructuring expenses

     2,385       (2,462 )     -       (77 )

Operating income

     48,707       24,704       4,580       77,991  

Interest and other income, net

     7,562       138       -       7,700  

Interest and other financing costs

     245       -       -       245  

Income before income taxes

   $ 56,024     $ 24,842     $ 4,580     $ 85,446  

 

   

Fiscal Year Ended June 30, 2023

  
   

Wholesale

    

Retail

    

Intersegment Eliminations

    

Consolidated

  

Net sales

   $ 449,591     $ 662,555     $ (320,764 )   $ 791,382  
                                 

Less significant expense categories:

                                

Selling expenses and cost of sales

     337,034       492,153       (321,912 )     507,275  

General and administrative expenses

     34,204       99,260       -       133,464  

Advertising expenses

     9,371       7,796       -       17,167  

Restructuring expenses

     190       (3,910 )     -       (3,720 )

Operating income

     68,792       67,256       1,148       137,196  

Interest and other income, net

     3,939       103       -       4,042  

Interest and other financing costs

     213       -       -       213  

Income before income taxes

   $ 72,518     $ 67,359     $ 1,148     $ 141,025  

 

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

 

   

Fiscal Year Ended June 30,

  
   

2025

    

2024

    

2023

  

Depreciation and amortization

                        

Wholesale segment

   $ 6,232     $ 6,336     $ 6,328  

Retail segment

     9,291       9,620       9,286  

Consolidated total

   $ 15,523     $ 15,956     $ 15,614  
                         

Capital expenditures

                        

Wholesale segment

   $ 6,337     $ 4,240     $ 6,787  

Retail segment

     4,931       5,366       7,098  

Consolidated total

   $ 11,268     $ 9,606     $ 13,885  
                         

Total Assets

                        

Wholesale segment

   $ 375,126     $ 379,693     $ 373,921  

Retail segment

     393,918       392,243       403,651  

Inventory profit elimination (1)

     (31,945 )     (27,019 )     (32,119 )

Consolidated total

   $ 737,099     $ 744,917     $ 745,453  

 

(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.

 

Geographic Information

 

International net sales are comprised of our wholesale segment sales to non-U.S. independent retailers and our retail segment sales to clients through our Company-operated design centers in Canada. Sales are attributed to countries on the basis of the client's location.

 

The following table sets forth consolidated net sales by geographic area for each of the past three fiscal years:

 

   

Fiscal Year Ended June 30,

  

Sales by Country

  

2025

    

2024

    

2023

  

U.S.

     97.3 %     96.7 %     97.0 %

All Others

     2.7 %     3.3 %     3.0 %

 

The following table sets forth long-lived assets by geographic area at June 30 (in thousands):

 

   

2025

    

2024

    

2023

  

U.S.

   $ 287,379     $ 296,849     $ 301,951  

Mexico

     17,627       17,986       20,695  

Honduras

     10,773       11,245       10,686  

Canada

     3,632       3,420       4,696  

Total long-lived assets(1)

   $ 319,411     $ 329,500     $ 338,028  

 

(1)

Long-lived assets consist of property, plant and equipment and operating lease right-of-use assets and exclude goodwill, intangible assets, deferred income taxes and other assets.