Note 5 - Inventories

3 Months Ended

Feb. 29, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

5. Inventories

Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to Lane Venture are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value.

Inventories were comprised of the following:

	February 29, 2020			November 30, 2019
Wholesale finished goods	$	26,897		$	27,792
Work in process		576			733
Raw materials and supplies		18,242			17,293
Retail merchandise		32,859			31,534
Total inventories on first-in, first-out method		78,574			77,352
LIFO adjustment		(8,772	)		(8,688	)
Reserve for excess and obsolete inventory		(2,287	)		(2,362	)
	$	67,515		$	66,302

We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, product is not shipped to our retail warehouses until a consumer has ordered and paid a deposit for the product. We do not typically hold retail inventory for stock purposes. Consequently, floor sample inventory and inventory for delivery to customers account for the majority of our inventory at retail. Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses.

Activity in the reserves for excess quantities and obsolete inventory by segment are as follows:

	Wholesale Segment			Retail Segment			Total
Balance at November 30, 2019	$	2,054		$	308		$	2,362
Additions charged to expense		383			89			472
Write-offs		(445	)		(102	)		(547	)
Balance at February 29, 2020	$	1,992		$	295		$	2,287

Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2020 and do not anticipate that our methodology is likely to change in the future.