Segment Reporting

9 Months Ended

Oct. 31, 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 39 weeks endedOctober 31, 2014 and November 1, 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 39 weeks endedOctober 31, 2014 and November 1, 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, the Company’s stand-alone Lands’ End Inlet stores and international shop-in-shops. 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 39 weeks endedOctober 31, 2014 and November 1, 2013, respectively.

SUMMARY OF SEGMENT DATA

(in thousands)	Direct		Retail		Corporate/ Other			Total
13 Weeks Ended October 31, 2014
Merchandise sales and services, net	$	320,286	$	52,776	$	20		$	373,082
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	160,807		28,980		—			189,787
Selling and administrative	111,712		22,980		8,678			143,370
Depreciation and amortization	3,822		643		337			4,802
Other operating expense, net	—		—		25			25
Total costs and expenses	276,341		52,603		9,040			337,984
Operating income (loss)	43,945		173		(9,020		)	35,098
Interest expense	—		—		6,194			6,194
Other income, net	—		—		507			507
Income (loss) before income taxes	43,945		173		(14,707		)	29,411
Interest expense	—		—		6,194			6,194
Other income, net	—		—		507			507
Depreciation and amortization	3,822		643		337			4,802
Loss on property and equipment	—		—		25			25
Adjusted EBITDA	$	47,767	$	816	$	(8,658	)	$	39,925
Total assets	$	1,127,221	$	80,406	$	146,386		$	1,354,013
Capital expenditures	$	4,962	$	310	$	153		$	5,425

(in thousands)	Direct		Retail			Corporate/ Other			Total
13 Weeks Ended November 1, 2013
Merchandise sales and services, net	$	324,179	$	59,639		$	33		$	383,851
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	171,226		38,175			—			209,401
Selling and administrative	114,111		25,636			6,170			145,917
Depreciation and amortization	4,035		882			338			5,255
Other operating expense, net	—		—			7			7
Total costs and expenses	289,372		64,693			6,515			360,580
Operating income (loss)	34,807		(5,054		)	(6,482		)	23,271
Other income, net	—		—			10			10
Income (loss) before income taxes	34,807		(5,054		)	(6,472		)	23,281
Other income, net	—		—			10			10
Depreciation and amortization	4,035		882			338			5,255
Loss on property and equipment	—		—			7			7
Adjusted EBITDA	$	38,842	$	(4,172	)	$	(6,137	)	$	28,533
Total assets	$	1,176,621	$	90,149		$	34,846		$	1,301,616
Capital expenditures	$	1,618	$	—		$	249		$	1,867

(in thousands)	Direct		Retail		Corporate/ Other			Total
39 Weeks Ended October 31, 2014
Merchandise sales and services, net	$	888,889	$	161,831	$	67		$	1,050,787
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	448,519		88,545		—			537,064
Selling and administrative	324,820		69,184		25,855			419,859
Depreciation and amortization	11,682		1,938		1,009			14,629
Other operating expense, net	—		—		45			45
Total costs and expenses	785,021		159,667		26,909			971,597
Operating income (loss)	103,868		2,164		(26,842		)	79,190
Interest expense	—		—		14,324			14,324
Other income, net	—		—		847			847
Income (loss) before income taxes	103,868		2,164		(40,319		)	65,713
Interest expense	—		—		14,324			14,324
Other income, net	—		—		847			847
Depreciation and amortization	11,682		1,938		1,009			14,629
Loss on disposal of property and equipment	—		—		45			45
Adjusted EBITDA	$	115,550	$	4,102	$	(25,788	)	$	93,864
Total assets	$	1,127,221	$	80,406	$	146,386		$	1,354,013
Capital expenditures	$	10,393	$	452	$	296		$	11,141

(in thousands)	Direct		Retail			Corporate/ Other			Total
39 Weeks Ended November 1, 2013
Merchandise sales and services, net	$	860,774	$	171,596		$	77		$	1,032,447
Costs and expenses:
Cost of sales (excluding depreciation and amortization)	455,794		97,941			—			553,735
Selling and administrative	316,882		75,476			16,424			408,782
Depreciation and amortization	12,590		2,655			1,008			16,253
Other operating expense, net	—		—			59			59
Total costs and expenses	785,266		176,072			17,491			978,829
Operating income (loss)	75,508		(4,476		)	(17,414		)	53,618
Other income, net	—		—			33			33
Income (loss) before income taxes	75,508		(4,476		)	(17,381		)	53,651
Other income, net	—		—			33			33
Depreciation and amortization	12,590		2,655			1,008			16,253
Loss on sale of property and equipment	—		—			59			59
Adjusted EBITDA	$	88,098	$	(1,821	)	$	(16,347	)	$	69,930
Total assets	$	1,176,621	$	90,149		$	34,846		$	1,301,616
Capital expenditures	$	3,355	$	1		$	273		$	3,629