Note 13 - Segment Information

6 Months Ended

Jun. 01, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

13. Segment Information

We have strategically aligned our business into three reportable segments as defined in ASC 280, Segment Reporting, and as described below:

● Wholesale. The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (Company-owned and licensee-owned retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations, which now include Lane Venture (see Note 3, Business Combinations), as well as all corporate selling, general and administrative expenses, including those corporate expenses related to both Company- and licensee-owned stores. Our wholesale segment also includes our holdings of short-term investments and retail real estate previously leased as licensee stores. The earnings and costs associated with these assets are included in other loss, net, in our condensed consolidated statements of income.

● Retail – Company-owned stores. Our retail segment consists of Company-owned stores and includes the revenues, expenses, assets and liabilities and capital expenditures directly related to these stores and the Company-owned distribution network utilized to deliver products to our retail customers.

● Logistical services. Our logistical services segment reflects the operations of Zenith. In addition to providing shipping and warehousing services for the Company, Zenith also provides similar services to other customers, primarily in the furniture industry. Revenue from the performance of these services to other customers is included in logistical services revenue in our condensed consolidated statements of income. Zenith’s total operating costs, including those associated with providing logistical services to the Company as well as to third-party customers, are included in selling, general and administrative expenses and were $19,841 and $40,880 for the three and six months ended June 1, 2019, and $20,940 and $42,032 for the three and six months ended May 26, 2018, respectively.

During the fourth quarter of fiscal 2018, we substantially completed transferring operational control of home delivery services for BHF stores from Zenith to our retail segment, including the transfer of the assets and many of the employees used in providing that service. Accordingly, the results for the retail and logistical services segments for all periods presented have been restated to present the depreciation and amortization, capital expenditures and identifiable assets associated with home delivery services formerly provided by Zenith to the Bassett retail segment as though they had been incurred within the retail segment, and intercompany revenues for those services are no longer included in the logistical services segment. The impact of the restatement upon the income (loss) from operations for both the logistical services and retail segments was not material. Concurrently with the transfer of home delivery operations to retail, Zenith also ceased providing such services to third party customers. Revenues from Zenith’s home delivery services formerly provided to third party customers and the associated costs thereof continue to be reported in the logistical services segment. Zenith continues to provide other intercompany shipping and warehousing services to Bassett which are eliminated in consolidation.

Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores and the elimination of Zenith logistics revenue from our wholesale and retail segments. Inter-company income elimination includes the embedded wholesale profit in the Company-owned store inventory that has not been realized. These profits will be recorded when merchandise is delivered to the retail consumer. The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate, and the elimination of shipping and handling charges from Zenith for services provided to our wholesale and retail operations.

The following table presents our segment information:

	Quarter Ended						Six Months Ended
	June 1, 2019			May 26, 2018			June 1, 2019			May 26, 2018
Sales Revenue
Wholesale	$	63,131		$	63,788		$	135,912		$	126,888
Retail - Company-owned stores		62,568			68,682			132,197			133,343
Logistical services		20,093			21,229			41,844			42,651
Inter-company eliminations:
Furniture and accessories		(29,875	)		(29,795	)		(64,929	)		(61,433	)
Logistical services		(7,727	)		(6,924	)		(15,993	)		(14,197	)
Consolidated	$	108,190		$	116,980		$	229,031		$	227,252
Income from Operations
Wholesale	$	3,173		$	3,039		$	7,355		$	6,103
Retail - Company-owned stores		(2,953	)		1,626			(5,999	)		113
Logistical services		252			289			964			619
Inter-company elimination		229			709			165			878
Early retirement program		-			-			(835	)		-
Consolidated	$	701		$	5,663		$	1,650		$	7,713
Depreciation and Amortization
Wholesale	$	827		$	757		$	1,645		$	1,460
Retail - Company-owned stores		1,544			1,603			3,049			3,201
Logistical services		994			1,024			2,041			2,027
Consolidated	$	3,365		$	3,384		$	6,735		$	6,688
Capital Expenditures
Wholesale	$	1,075		$	1,113		$	2,140		$	2,330
Retail - Company-owned stores		1,373			1,861			5,390			4,478
Logistical services		313			730			783			854
Consolidated	$	2,761		$	3,704		$	8,313		$	7,662

	As of		As of
Identifiable Assets	June 1, 2019		November 24, 2018
Wholesale	$	133,828	$	144,209
Retail - Company-owned stores		101,658		96,241
Logistical services		45,015		51,191
Consolidated	$	280,501	$	291,641

Wholesale shipments by type

	Quarter Ended								Six Months Ended
	June 1, 2019				May 26, 2018				June 1, 2019				May 26, 2018
Bassett Custom Upholstery	$	36,853	58.4	%	$	36,506	57.2	%	$	78,391	57.7	%	$	70,074	55.2	%
Bassett Leather		4,463	7.1	%		5,082	8.0	%		10,234	7.5	%		11,606	9.1	%
Bassett Custom Wood		10,526	16.7	%		11,184	17.5	%		22,201	16.3	%		22,171	17.5	%
Bassett Casegoods		9,979	15.8	%		9,948	15.6	%		22,619	16.6	%		20,745	16.3	%
Accessories		1,310	2.1	%		1,068	1.7	%		2,467	1.8	%		2,292	1.8	%
Total	$	63,131	100.0	%	$	63,788	100.0	%	$	135,912	100.0	%	$	126,888	100.0	%