Note 19 - Segment Information

12 Months Ended

Nov. 30, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

19. 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 stores retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations 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 consolidated statements of operations.

● 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. With our acquisition of Zenith on February 2, 2015, we created the logistical services operating segment which 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 logistics revenue in our consolidated statement of operations. Zenith’s operating costs are included in selling, general and administrative expenses and total $78,220, $81,468 and $80,068 for fiscal 2019, 2018 and 2017, 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 prior to fiscal 2019 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 sales elimination represents the elimination of wholesale sales to our Company-owned stores and the elimination of Zenith logistics revenue from our wholesale segment. 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 operations.

The following table presents segment information for each of the last three fiscal years:

	2019			2018			2017
Net Sales
Wholesale	$	261,105		$	255,958		$	249,193
Retail		268,693			268,883			268,264
Logistical services		80,074			82,866			83,030
Inter-company eliminations:
Furniture and accessories		(125,933	)		(122,372	)		(119,360	)
Logistical services		(31,852	)		(28,480	)		(28,624	)
Consolidated	$	452,087		$	456,855		$	452,503
Income (loss) from Operations
Wholesale	$	11,456		$	12,274		$	19,121
Retail		(7,009	)		(312	)		3,490
Logistical services		1,855			1,398			2,962
Inter-company elimination		1,144			1,494			1,445
Asset impairment charges		(4,431	)		(469	)		-
Goodwill impairment charge		(1,926	)		-			-
Early retirement program		(835	)		-			-
Litigation expense		(700	)		-			-
Lease exit costs		(149	)		(301	)		-
Consolidated income from operations	$	(595	)	$	14,084		$	27,018
Depreciation and Amortization
Wholesale	$	3,178		$	3,038		$	2,648
Retail		6,303			6,096			6,355
Logistical services		4,019			4,069			4,309
Consolidated	$	13,500		$	13,203		$	13,312
Capital Expenditures
Wholesale	$	5,650		$	4,194		$	4,875
Retail		8,473			12,769			8,108
Logistical services		3,627			1,338			2,517
Consolidated	$	17,750		$	18,301		$	15,500
Identifiable Assets
Wholesale	$	144,392		$	144,209		$	152,181
Retail		91,997			96,241			90,186
Logistical services		39,377			51,191			51,381
Consolidated	$	275,766		$	291,641		$	293,748

A breakdown of wholesale sales by product category for each of the last three fiscal years is provided below:

	2019				2018				2017
Bassett Custom Upholstery	$	152,415	58.4	%	$	141,321	55.2	%	$	136,366	54.7	%
Bassett Leather		19,220	7.4	%		21,589	8.4	%		22,528	9.0	%
Bassett Custom Wood		46,082	17.6	%		46,074	18.0	%		43,793	17.6	%
Bassett Casegoods		40,920	15.7	%		42,875	16.8	%		42,874	17.2	%
Accessories (1)		2,468	0.9	%		4,099	1.6	%		3,632	1.5	%
Total	$	261,105	100.0	%	$	255,958	100.0	%	$	249,193	100.0	%

(1) Beginning with the third quarter of fiscal 2019, our wholesale segment no longer purchases accessory items for resale to our retail segment or to third party customers such as licensees or independent furniture retailers. Our retail segment and third party customers now source their accessory items directly from the accessory vendors.