Segment Reporting

12 Months Ended

Jan. 29, 2016

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 revenues 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. Net revenue is aggregated by product category in the following table:

(in thousands)	Fiscal 2015		Fiscal 2014		Fiscal 2013
Net revenue:
Apparel	$	1,156,047	$	1,248,847	$	1,245,670
Non-apparel	183,073		220,385		226,302
Services and other	80,658		86,121		90,904
Total net revenue	$	1,419,778	$	1,555,353	$	1,562,876

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 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 29, 2016, January 30, 2015 and January 31, 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.

• 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 2015		Fiscal 2014		Fiscal 2013
Net revenue:
Direct	$	1,214,993	$	1,320,642	$	1,303,862
Retail	204,566		234,632		258,922
Corporate/ other	219		79		92
Total net revenue	$	1,419,778	$	1,555,353	$	1,562,876

(in thousands)	Fiscal 2015			Fiscal 2014			Fiscal 2013
Adjusted EBITDA:
Direct	$	141,936		$	192,763		$	166,313
Retail	(520		)	7,161			4,665
Corporate/ other	(34,128		)	(35,626		)	(20,968		)
Total adjusted EBITDA	$	107,288		$	164,298		$	150,010

(in thousands)	Fiscal 2015		Fiscal 2014		Fiscal 2013
Depreciation and amortization:
Direct	$	13,916	$	15,640	$	16,691
Retail	2,029		2,618		3,547
Corporate/ other	1,454		1,445		1,361
Total depreciation and amortization	$	17,399	$	19,703	$	21,599

(in thousands)	January 29, 2016		January 30, 2015
Total assets:
Direct	$	953,502	$	1,019,926
Retail	69,321		67,765
Corporate/ other	265,703		262,308
Total assets	$	1,288,526	$	1,349,999

(in thousands)	Fiscal 2015		Fiscal 2014		Fiscal 2013
Capital expenditures:
Direct	$	21,630	$	15,160	$	9,057
Retail	318		1,004		260
Corporate/ other	276		444		570
Total capital expenditures	$	22,224	$	16,608	$	9,887

The geographical allocation of Net revenue 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 2015		Fiscal 2014		Fiscal 2013
Net revenue:
United States	$	1,211,226	$	1,309,252	$	1,289,359
Europe	136,890		159,796		181,129
Asia	51,808		56,014		54,948
Other foreign	19,854		30,291		37,440
Total net revenue	$	1,419,778	$	1,555,353	$	1,562,876

(in thousands)	January 29, 2016		January 30, 2015
Property and equipment, net:
United States	$	98,153	$	88,300
Europe	10,980		12,380
Asia	698		543
Total property and equipment, net	$	109,831	$	101,223

Other than the United States, no one country is greater than 10% of total Net revenue or of total property and equipment, net except the United Kingdom, which had total property and equipment, net of $10,580 as of January 29, 2016 and $11,826 as of January 30, 2015.