Segment Reporting

6 Months Ended

Jul. 28, 2012

Segment Reporting

Note 11 – Segment Reporting

The Company has four reporting segments: (i) Payless Domestic, (ii) Payless International, (iii) PLG Wholesale and (iv) PLG Retail. The Company has defined its reporting segments as follows:

(i) The Payless Domestic reporting segment is comprised primarily of domestic retail stores under the Payless ShoeSource name, the Company’s sourcing unit and Collective Licensing.

(ii) The Payless International reporting segment is comprised of international retail stores under the Payless ShoeSource name in Canada, the South American Region, the Central American Region, Puerto Rico, and the U.S. Virgin Islands, as well as franchising arrangements under the Payless ShoeSource name.

(iii) The PLG Wholesale reporting segment consists of PLG’s global wholesale operations.

(iv) The PLG Retail reporting segment consists of PLG’s owned Stride Rite children’s stores, PLG’s outlet stores, store-in-stores at select Macy’s Department Stores and Sperry Top-Sider retail stores.

Payless International’s operations in the Central American and South American Regions are operated as joint ventures in which the Company maintains a 60% ownership interest. Noncontrolling interest represents the Company’s joint venture partners’ share of net earnings or losses on applicable international operations. Certain management costs for services performed by Payless Domestic and certain royalty fees and sourcing fees charged by Payless Domestic are allocated to the Payless International segment. These total costs and fees amounted to $10.9 million and $10.1 million during the thirteen weeks ended July 28, 2012 and July 30, 2011, respectively, and $22.0 million and $18.9 million during the twenty-six weeks ended July 28, 2012 and July 30, 2011, respectively. The reporting period for operations in the Central and South American Regions use a December 31 year-end. The effect of this one-month lag on the Company’s financial position and results of operations is not significant. All intercompany amounts have been eliminated. Information on the Company’s reporting segments is as follows:

	13 Weeks Ended						26 Weeks Ended
(dollars in millions)	July 28, 2012			July 30, 2011			July 28, 2012		July 30, 2011
Reporting segment net sales:
Payless Domestic	$	477.0		$	494.5		$	990.9	$	992.9
Payless International		119.4			117.2			220.6		214.7
PLG Wholesale		231.0			217.7			461.2		430.2
PLG Retail		58.6			53.0			125.4		113.6
Total net sales	$	886.0		$	882.4		$	1,798.1	$	1,751.4
Reporting segment operating profit (loss):
Payless Domestic	$	(7.7	)	$	(63.8	)	$	15.6	$	(50.8	)
Payless International		7.8			8.6			6.4		11.6
PLG Wholesale		24.3			(0.3	)		47.2		25.0
PLG Retail		(3.2	)		(6.9	)		1.2		(5.8	)
Total operating profit (loss)	$	21.2		$	(62.4	)	$	70.4	$	(20.0	)

(dollars in millions)	July 28, 2012		July 30, 2011		January 28, 2012
Reporting segment total assets:
Payless Domestic	$	910.6	$	973.2	$	834.6
Payless International		224.9		218.7		232.3
PLG Wholesale		918.2		931.4		912.0
PLG Retail		85.2		75.0		68.3
Total assets	$	2,138.9	$	2,198.3	$	2,047.2