Segment Reporting

12 Months Ended

Jan. 30, 2015

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 and provide services. Product sales are divided by product categories: Apparel and Non-apparel. The Non-apparel sales include accessories, footwear, and home goods. Services and other revenue includes embroidery, monogramming, gift wrapping, shipping and other services. Merchandise sales and services, net are aggregated by product category in the following table:

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Merchandise sales and services, net:
Apparel	$	1,248,847	$	1,245,670	$	1,269,685
Non-apparel	220,385		226,302		224,057
Services and other	86,121		90,904		92,185
Total merchandise sales and services, net	$	1,555,353	$	1,562,876	$	1,585,927

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 its warehouses (Direct) or through its 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 Consolidated and Combined Statements of Comprehensive Operations net of interest expense, depreciation and amortization and other significant items that while periodically affecting the Company's 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 years ended January 30, 2015, January 31, 2014 and February 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 marketing 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 cash equivalents and deferred income taxes.

Financial information by segment is presented as follows:

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Merchandise sales and services, net:
Direct	$	1,320,642	$	1,303,862	$	1,304,009
Retail	234,632		258,922		281,821
Corporate/ other	79		92		97
Total merchandise sales and services, net	$	1,555,353	$	1,562,876	$	1,585,927

(in thousands)	Fiscal 2014			Fiscal 2013			Fiscal 2012
Adjusted EBITDA:
Direct	$	192,763		$	166,313		$	141,390
Retail	7,161			4,665			(5,650		)
Corporate/ other	(35,626		)	(20,968		)	(28,067		)
Total adjusted EBITDA	$	164,298		$	150,010		$	107,673

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Depreciation and amortization:
Direct	$	15,640	$	16,691	$	17,173
Retail	2,618		3,547		4,606
Corporate/ other	1,445		1,361		1,342
Total depreciation and amortization	$	19,703	$	21,599	$	23,121

(in thousands)	January 30, 2015		January 31, 2014
Total assets:
Direct	$	1,023,364	$	1,074,018
Retail	67,765		75,755
Corporate/ other	262,308		44,502
Total assets	$	1,353,437	$	1,194,275

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Capital expenditures:
Direct	$	15,160	$	9,057	$	14,657
Retail	1,004		260		84
Corporate/ other	444		570		252
Total capital expenditures	$	16,608	$	9,887	$	14,993

The geographical allocation of Merchandise sales and services, net is based upon country of order fulfillment. Other foreign amounts represent orders fulfilled from the United States and shipped to customers in another country. The following presents summarized geographical information:

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Merchandise sales and services, net:
United States	$	1,309,252	$	1,289,359	$	1,282,803
Europe	159,796		181,129		199,548
Asia	56,014		54,948		59,731
Other foreign	30,291		37,440		43,845
Total merchandise sales and services, net	$	1,555,353	$	1,562,876	$	1,585,927

(in thousands)	January 30, 2015		January 31, 2014
Property and equipment, net:
United States	$	88,300	$	86,085
Europe	12,380		14,320
Asia	543		691
Total property and equipment, net	$	101,223	$	101,096

Other than the United States, no one country is greater than 10% of total merchandise sales and services, net or of total property and equipment, net except the United Kingdom, which had total property and equipment, net of $11,826 as of January 30, 2015 and $13,586 as of January 31, 2014 .