Segment Reporting

6 Months Ended

Aug. 03, 2013

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company determines its segments on the same basis that it uses to allocate resources and assess performance. All of the Company’s segments sell a similar group of products—casual sportswear apparel, personal care products and accessories for men, women and kids and bras, underwear and sleepwear for girls. The Company has three reportable segments: U.S. Stores, International Stores, and Direct-to-Consumer. Corporate functions, interest income and expense, and other income and expense are evaluated on a consolidated basis and are not allocated to the Company’s segments, and therefore are included in Other.

The U.S. Stores reportable segment includes the results of store operations in the United States and Puerto Rico. The International Stores reportable segment includes the results of store operations in Canada, Europe, Asia and Australia. The Direct-to-Consumer reportable segment includes the results of operations directly associated with on-line operations, both domestic and international.

Operating income is the primary measure of profit the Company uses to make decisions regarding the allocation of resources to its segments. For the U.S. Stores and International Stores reportable segments, operating income is defined as aggregate income directly attributable to individual stores on a four-wall basis plus sell-off of excess merchandise to authorized third-party resellers. Four-wall operating income includes: net sales, cost of merchandise, selling payroll and related costs, rent, utilities, depreciation, repairs and maintenance, supplies and packaging and other store sales-related expenses including credit card and bank fees and taxes. Operating income also reflects pre-opening charges related to stores not yet in operation. For the Direct-to-Consumer reportable segment, operating income is defined as aggregate income attributable to the direct-to-consumer business: net sales, shipping and handling revenue, call center costs, fulfillment and shipping expense, charge card fees and direct-to-consumer operations management and support expenses. The U.S. Stores, International Stores and Direct-to-Consumer segments exclude marketing, general and administrative expense; store management and support functions such as regional and district management and other functions not dedicated to an individual store; and distribution center costs. All costs excluded from the three reportable segments are included in Other.

The following table provides the Company’s segment information as of, and for the thirteen and twenty-six week periods ended August 3, 2013 and July 28, 2012.

	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
	(in thousands):
Thirteen Weeks Ended August 3, 2013
Net Sales	$	504,674	$	286,727	$	154,297	$	945,698	$	—		$	945,698
Operating Income (Loss)	58,871		66,647		55,008		180,526		(161,361		)	19,165
Thirteen Weeks Ended July 28, 2012
Net Sales	$	562,105	$	261,625	$	127,677	$	951,407	$	—		$	951,407
Operating Income (Loss) (2)	70,658		74,302		43,456		188,416		(163,410		)	25,006
	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
	(in thousands):
Twenty-Six Weeks Ended August 3, 2013
Net Sales	953,290		544,161		287,016		1,784,467		—			1,784,467
Operating Income (Loss)	98,693		120,180		111,191		330,064		(324,820		)	5,244
Twenty-Six Weeks Ended July 28, 2012
Net Sales	1,105,986		490,733		275,906		1,872,625		—			1,872,625
Operating Income (Loss) (2)	114,612		124,601		88,754		327,967		(331,904		)	(3,937		)

⁽¹⁾  Includes corporate functions such as Design, Merchandising, Sourcing, Planning, Allocation, Store Management and Support, Marketing, Distribution Center Operations, Information Technology, Real Estate, Finance, Legal, Human Resources and other corporate overhead. Operating Income includes: marketing, general and administrative expense; store management and support functions such as regional and district management and other functions not dedicated to an individual store; and distribution center costs.

⁽²⁾  Results reported above have been adjusted based on the change in accounting principle as noted in Note 3, “CHANGE IN ACCOUNTING PRINCIPLE”.

Geographic Information

Financial information relating to the Company’s operations by geographic area is as follows:

Net Sales:

Net sales includes net merchandise sales through stores and direct-to-consumer operations, including shipping and handling revenue. Net sales are reported by geographic area based on the location of the customer.

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
(in thousands):	August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
United States	$	597,259	$	648,017	$	1,132,156	$	1,292,277
Europe	267,764		250,339		504,418		469,925
Other	80,675		53,051		147,893		110,423
Total	$	945,698	$	951,407	$	1,784,467	$	1,872,625