v3.26.1
Note 19 - Segment Information
 12 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

(19)

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 141 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 13,700 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, 2026

  
   

Wholesale

    

Retail

    

Intersegment Eliminations

    

Consolidated

  

Net sales

   $ 330,695     $ 511,195     $ (262,403 )   $ 579,487  
                                 

Less significant expense categories:

                                

Selling expenses and cost of sales

     256,768       394,480       (272,108 )     379,140  

General and administrative expenses

     33,508       101,247       -       134,755  

Advertising expenses

     11,878       7,589       -       19,467  

Restructuring and other charges, net of gains

     (103 )     1,212       -       1,109  

Operating income

     28,644       6,667       9,705       45,016  

Interest and other income, net

     8,339       49       -       8,388  

Interest and other financing costs

     227       -       -       227  

Income before income taxes

   $ 36,756     $ 6,716     $ 9,705     $ 53,177  

 

   

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 and other charges, net of gains

     455       (112 )     -       343  

Operating income (loss)

     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 (loss) 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 and other charges, net of gains

     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  

 

 

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

 

   

Fiscal Year Ended June 30,

  
   

2026

    

2025

    

2024

  

Depreciation and amortization

                        

Wholesale segment

   $ 6,536     $ 6,232     $ 6,336  

Retail segment

     8,708       9,291       9,620  

Consolidated total

   $ 15,244     $ 15,523     $ 15,956  
                         

Capital expenditures

                        

Wholesale segment

   $ 4,423     $ 6,337     $ 4,240  

Retail segment

     6,618       4,931       5,366  

Consolidated total

   $ 11,041     $ 11,268     $ 9,606  
                         

Total Assets

                        

Wholesale segment

   $ 372,065     $ 375,126     $ 379,693  

Retail segment

     374,729       393,918       392,243  

Inventory profit elimination (1)

     (27,121 )     (31,945 )     (27,019 )

Consolidated total

   $ 719,673     $ 737,099     $ 744,917  

 

(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

 

Sales are attributed to countries on the basis of the client's location. Net sales reported within “All Others” below represent 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.

 

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

  

2026

    

2025

    

2024

  

U.S.

     97.5 %     97.3 %     96.7 %

All Others

     2.5 %     2.7 %     3.3 %

 

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

 

   

2026

    

2025

    

2024

  

U.S.

   $ 281,518     $ 287,379     $ 296,849  

Mexico

     17,612       17,627       17,986  

Honduras

     10,395       10,773       11,245  

Canada

     3,836       3,632       3,420  

Total long-lived assets(1)

   $ 313,361     $ 319,411     $ 329,500  

 

(1)

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