Segment Reporting

6 Months Ended

Aug. 01, 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 and 26 weeks endedAugust 1, 2014 and August 2, 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 and 26 weeks endedAugust 1, 2014 and August 2, 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 and 26 weeks endedAugust 1, 2014 and August 2, 2013, respectively.

SUMMARY OF SEGMENT DATA

(in thousands)	Direct		Retail		Corporate/ Other			Total
13 Weeks Ended August 1, 2014
Merchandise sales and services, net	$	292,562	$	54,625	$	35		$	347,222
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	148,600		30,216		—			178,816
Selling and administrative	105,442		23,449		9,392			138,283
Depreciation and amortization	3,845		651		329			4,825
Total costs and expenses	257,887		54,316		9,721			321,924
Operating income (loss)	34,675		309		(9,686		)	25,298
Interest expense	—		—		6,205			6,205
Other income, net	—		—		203			203
Income (loss) before income taxes	34,675		309		(15,688		)	19,296
Interest expense	—		—		6,205			6,205
Other income, net	—		—		203			203
Depreciation and amortization	3,845		651		329			4,825
Adjusted EBITDA	$	38,520	$	960	$	(9,357	)	$	30,123
Total assets	$	1,060,419	$	82,433	$	174,242		$	1,317,094
Capital expenditures	$	3,964	$	142	$	62		$	4,168

(in thousands)	Direct		Retail			Corporate/ Other			Total
13 Weeks Ended August 2, 2013
Merchandise sales and services, net	$	273,273	$	56,257		$	31		$	329,561
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	147,667		32,220			—			179,887
Selling and administrative	97,637		24,872			3,380			125,889
Depreciation and amortization	4,127		886			333			5,346
Other operating expense, net	—		—			52			52
Total costs and expenses	249,431		57,978			3,765			311,174
Operating income (loss)	23,842		(1,721		)	(3,734		)	18,387
Other income, net	—		—			22			22
Income (loss) before income taxes	23,842		(1,721		)	(3,712		)	18,409
Other income, net	—		—			22			22
Depreciation and amortization	4,127		886			333			5,346
Loss on property and equipment	—		—			52			52
Adjusted EBITDA	$	27,969	$	(835	)	$	(3,349	)	$	23,785
Total assets	$	1,093,478	$	93,351		$	50,008		$	1,236,837
Capital expenditures	$	924	$	—		$	20		$	944

(in thousands)	Direct		Retail		Corporate/ Other			Total
26 Weeks Ended August 1, 2014
Merchandise sales and services, net	$	568,603	$	109,055	$	47		$	677,705
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	287,712		59,565		—			347,277
Selling and administrative	213,108		46,204		17,177			276,489
Depreciation and amortization	7,860		1,295		672			9,827
Other operating expense, net	—		—		20			20
Total costs and expenses	508,680		107,064		17,869			633,613
Operating income (loss)	59,923		1,991		(17,822		)	44,092
Interest expense	—		—		8,130			8,130
Other income, net	—		—		340			340
Income (loss) before income taxes	59,923		1,991		(25,612		)	36,302
Interest expense	—		—		8,130			8,130
Other income, net	—		—		340			340
Depreciation and amortization	7,860		1,295		672			9,827
Loss on disposal of property and equipment	—		—		20			20
Adjusted EBITDA	$	67,783	$	3,286	$	(17,130	)	$	53,939
Total assets	$	1,060,419	$	82,433	$	174,242		$	1,317,094
Capital expenditures	$	5,431	$	142	$	143		$	5,716

(in thousands)	Direct		Retail		Corporate/ Other			Total
26 Weeks Ended August 2, 2013
Merchandise sales and services, net	$	536,595	$	111,957	$	44		$	648,596
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	284,568		59,766		—			344,334
Selling and administrative	202,771		49,840		10,254			262,865
Depreciation and amortization	8,555		1,773		670			10,998
Other operating expense, net	—		—		52			52
Total costs and expenses	495,894		111,379		10,976			618,249
Operating income (loss)	40,701		578		(10,932		)	30,347
Other income, net	—		—		23			23
Income (loss) before income taxes	40,701		578		(10,909		)	30,370
Other income, net	—		—		23			23
Depreciation and amortization	8,555		1,773		670			10,998
Loss on sale of property and equipment	—		—		52			52
Adjusted EBITDA	$	49,256	$	2,351	$	(10,210	)	$	41,397
Total assets	$	1,093,478	$	93,351	$	50,008		$	1,236,837
Capital expenditures	$	1,737	$	1	$	24		$	1,762