Segment Reporting

3 Months Ended

May 02, 2014

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company is a leading multi-channel retailer of casual clothing, accessories and footwear, as well as home products, and has two reportable segments: Direct and Retail. Both segments sell similar products—apparel, which includes accessories and footwear, and products for the home. Apparel and home revenues constituted over 99% of total revenues during each of the 13 week periods ended May 2, 2014 and May 3, 2013. The Company identifies reportable segments according to how business activities are managed and evaluated. Each of the Company’s operating segments are reportable segments and are strategic business units that offer similar products and services but are sold either directly from our warehouses (Direct) or through our retail stores (Retail). Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is the primary measure used to make decisions on allocating resources and assessing performance of each operating segment. Adjusted EBITDA is computed as Income before taxes appearing on the Condensed Consolidated and Combined Statements of Comprehensive Operations net of interest expense, depreciation and amortization and other significant items which, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, which may affect comparability of results. Reportable segment assets are those directly used in or clearly allocable to an operating segment’s operations. Depreciation, amortization, and property and equipment expenditures are recognized in each respective segment. There were no material transactions between reporting segments for the 13 weeks endedMay 2, 2014 and May 3, 2013.

• The Direct segment sells products through the Company’s e-commerce websites and direct mail catalogs. Operating costs consist primarily of direct marketing costs (catalog and e-commerce advertising costs); order processing and shipping costs; direct labor and benefits costs and facility costs. Assets primarily include goodwill and trade name intangible assets, inventory, accounts receivable, prepaid expenses (deferred catalog costs), technology infrastructure, and property and equipment.

• The Retail segment sells products and services through dedicated Lands’ End Shops at Sears across the United States and the Company’s standalone Lands’ End Inlet stores. Operating costs consist primarily of labor and benefits costs; rent, CAM and occupancy costs; distribution costs; and in-store marketing costs. Assets primarily include inventory in the retail stores, fixtures and leasehold improvements.

Corporate overhead and other expenses include unallocated shared-service costs, which primarily consist of employee services and financial services, legal and corporate expenses. These expenses include labor and benefits costs, corporate headquarters occupancy costs and other administrative expenses. Assets include corporate headquarters and facilities, corporate cash and deferred income taxes.

Financial information by segment is presented in the following tables for the 13 weeks endedMay 2, 2014 and May 3, 2013.

SUMMARY OF SEGMENT DATA

(in thousands)	Direct		Retail		Corporate/ Other			Total
13 Weeks Ended May 2, 2014
Merchandise sales and services, net	$	276,041	$	54,430	$	12		$	330,483
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	139,112		29,349		—			168,461
Selling and administrative	107,666		22,755		7,785			138,206
Depreciation and amortization	4,015		644		343			5,002
Other operating expense, net	—		—		20			20
Total costs and expenses	250,793		52,748		8,148			311,689
Operating income (loss)	25,248		1,682		(8,136		)	18,794
Interest expense	—		—		1,925			1,925
Other income, net	—		—		137			137
Income (loss) before income taxes	25,248		1,682		(9,924		)	17,006
Interest expense	—		—		1,925			1,925
Other income, net	—		—		137			137
Depreciation and amortization	4,015		644		343			5,002
Loss on disposal of property and equipment	—		—		20			20
Adjusted EBITDA	$	29,263	$	2,326	$	(7,773	)	$	23,816
Total assets	$	1,077,769	$	66,808	$	83,177		$	1,227,754
Capital expenditures	$	1,467	$	—	$	81		$	1,548

(in thousands)	Direct		Retail		Corporate/ Other			Total
13 Weeks Ended May 3, 2013
Merchandise sales and services, net	$	263,322	$	55,700	$	13		$	319,035
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	136,901		27,546		—			164,447
Selling and administrative	105,134		24,968		6,874			136,976
Depreciation and amortization	4,428		887		337			5,652
Total costs and expenses	246,463		53,401		7,211			307,075
Operating income (loss)	16,859		2,299		(7,198		)	11,960
Other income, net	—		—		1			1
Income (loss) before income taxes	16,859		2,299		(7,197		)	11,961
Other income, net	—		—		1			1
Depreciation and amortization	4,428		887		337			5,652
Adjusted EBITDA	$	21,287	$	3,186	$	(6,861	)	$	17,612
Total assets	$	1,065,611	$	69,450	$	40,668		$	1,175,729
Capital expenditures	$	813	$	1	$	4		$	818