Segment Reporting

3 Months Ended

Apr. 28, 2017

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company is a leading multi-channel retailer of clothing, accessories and footwear, as well as home products, and has three operating segments: Direct, Retail and Corporate. The Company has determined that the Direct and Retail segments meet the qualifications to be aggregated. 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
(in thousands)	April 28, 2017		April 29, 2016
Net revenue:
Apparel	$	231,028	$	231,158
Non-apparel	23,980		26,650
Service and other	13,357		15,625
Total net revenue	$	268,365	$	273,433

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 and the Company’s stand-alone Lands’ End stores. 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
(in thousands)	April 28, 2017		April 29, 2016
Net revenue:
Direct	$	228,290	$	232,185
Retail	40,047		41,216
Corporate / other	28		32
Total net revenue	$	268,365	$	273,433

	13 Weeks Ended
(in thousands)	April 28, 2017			April 29, 2016
Adjusted EBITDA:
Direct	$	11,839		$	12,832
Retail	(3,175		)	(3,930		)
Corporate / other	(7,367		)	(8,266		)
Total adjusted EBITDA	$	1,297		$	636
Loss (gain) on disposal of property and equipment	62			$	(14	)
Transfer of corporate functions	1,446			$	—
Depreciation and amortization	6,509			$	4,136
Operating loss	$	(6,720	)	$	(3,486	)
Interest expense	6,125			6,170
Other income, net	(742		)	(453		)
Income tax benefit	(4,264		)	(3,444		)
NET LOSS	$	(7,839	)	$	(5,759	)

	13 Weeks Ended
(in thousands)	April 28, 2017		April 29, 2016
Depreciation and amortization:
Direct	$	5,779	$	3,350
Retail	353		419
Corporate / other	377		367
Total depreciation and amortization	$	6,509	$	4,136

(in thousands)	April 28, 2017		April 29, 2016		January 27, 2017
Total Assets:
Direct	$	803,222	$	952,138	$	805,201
Retail	62,995		60,756		69,792
Corporate / other	165,543		199,173		239,398
Total assets	$	1,031,760	$	1,212,067	$	1,114,391

	13 Weeks Ended
(in thousands)	April 28, 2017		April 29, 2016
Capital expenditures:
Direct	$	11,381	$	10,302
Retail	1		183
Corporate / other	—		—
Total capital expenditures	$	11,382	$	10,485