Segment Reporting

6 Months Ended

Jul. 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 revenues 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:

	13 Weeks Ended				26 Weeks Ended
(in thousands)	July 29, 2016		July 31, 2015		July 29, 2016		July 31, 2015
Net revenue:
Apparel	$	241,822	$	258,168	$	472,980	$	511,613
Non-apparel	30,517		34,503		57,167		65,828
Service and other	19,671		19,743		35,296		34,360
Total net revenue	$	292,010	$	312,414	$	565,443	$	611,801

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 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 any periods presented.

• 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 retail inventory, 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 in the following tables.

SUMMARY OF SEGMENT DATA

	13 Weeks Ended				26 Weeks Ended
(in thousands)	July 29, 2016		July 31, 2015		July 29, 2016		July 31, 2015
Net revenue:
Direct	$	246,395	$	264,735	$	478,580	518,108
Retail	45,521		47,577		86,737		93,569
Corporate / other	94		102		126		124
Total net revenue	$	292,010	$	312,414	$	565,443	$	611,801

	13 Weeks Ended						26 Weeks Ended
(in thousands)	July 29, 2016			July 31, 2015			July 29, 2016			July 31, 2015
Adjusted EBITDA:
Direct	$	14,780		$	26,687		$	27,612		$	48,365
Retail	450			663			(3,480		)	807
Corporate / other	(7,970		)	(7,730		)	(16,236		)	(16,502		)
Total adjusted EBITDA	$	7,260		$	19,620		$	7,896		$	32,670

	13 Weeks Ended				26 Weeks Ended
(in thousands)	July 29, 2016		July 31, 2015		July 29, 2016		July 31, 2015
Depreciation and amortization:
Direct	$	3,720	$	3,200	$	7,070	$	6,895
Retail	406		499		825		996
Corporate / other	362		362		729		723
Total depreciation and amortization	$	4,488	$	4,061	$	8,624	$	8,614

(in thousands)	July 29, 2016		July 31, 2015		January 29, 2016
Total Assets:
Direct	$	980,173	$	1,078,682	$	953,502
Retail	78,011		76,593		69,321
Corporate / other	240,254		240,413		258,703
Total assets	$	1,298,438	$	1,395,688	$	1,281,526

	13 Weeks Ended				26 Weeks Ended
(in thousands)	July 29, 2016		July 31, 2015		July 29, 2016		July 31, 2015
Capital expenditures:
Direct	$	7,461	$	2,419	$	17,763	$	13,302
Retail	71		53		254		53
Corporate / other	—		74		—		165
Total capital expenditures	$	7,532	$	2,546	$	18,017	$	13,520