Segment Reporting

3 Months Ended

May 01, 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:

	13 Weeks Ended
(in thousands)	May 1, 2015		May 2, 2014
Merchandise sales and services, net:
Apparel	$	253,445	$	275,857
Non-apparel	31,325		37,617
Services and other	14,617		17,009
Total merchandise sales and services, net	$	299,387	$	330,483

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 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 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 First Quarter 2015 and First Quarter 2014.

• 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.

• The Corporate segment records revenues related to a licensing agreement with Sears Holdings Management Corporation, a subsidiary of Sears Holdings Corporation, whereby royalties are paid in consideration for sharing or use of intellectual property.

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 in the following tables for the First Quarter 2015 and the First Quarter 2014.

SUMMARY OF SEGMENT DATA

	13 Weeks Ended
(in thousands)	May 1, 2015		May 2, 2014
Merchandise sales and services, net:
Direct	$	253,373	$	276,041
Retail	45,992		54,430
Corporate/ other	22		12
Total merchandise sales and services, net	$	299,387	$	330,483

	13 Weeks Ended
(in thousands)	May 1, 2015			May 2, 2014
Adjusted EBITDA:
Direct	$	21,678		$	29,263
Retail	144			2,326
Corporate/ other	(8,772		)	(7,773		)
Total adjusted EBITDA	$	13,050		$	23,816

	13 Weeks Ended
(in thousands)	May 1, 2015		May 2, 2014
Depreciation and amortization:
Direct	$	3,695	$	4,015
Retail	497		644
Corporate/ other	361		343
Total depreciation and amortization	$	4,553	$	5,002

(in thousands)	May 1, 2015		May 2, 2014		January 30, 2015
Total assets:
Direct	$	1,032,589	$	1,077,769	$	1,023,364
Retail	57,549		66,808		67,765
Corporate/ other	218,028		83,177		262,308
Total assets	$	1,308,166	$	1,227,754	$	1,353,437

	Fiscal Quarter Ended
(in thousands)	May 1, 2015		May 2, 2014
Capital expenditures:
Direct	$	10,883	$	1,467
Retail	—		—
Corporate/ other	91		81
Total capital expenditures	$	10,974	$	1,548