Segment Reporting

12 Months Ended

Feb. 02, 2013

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company operates exclusively in the retail apparel industry in which it sells trend right and contemporary fashion apparel and accessory items, primarily through mall-based chains of retail stores, to female consumers with a young, active lifestyle. The Company has identified two operating segments (“Wet Seal” and “Arden B”). E-commerce operations for Wet Seal and Arden B are included in their respective operating segments.

Information for fiscal 2012, 2011, and 2010 for the two reportable segments is set forth below (in thousands, except percentages):

Fiscal 2012	Wet Seal			Arden B			Corporate and Unallocated			Total
Net sales	$	495,027		$	85,370		$	—		$	580,397
Percentage of consolidated net sales	85		%	15		%	—			100		%
Operating loss	$	(13,086	)	$	(7,757	)	$	(49,446	)	$	(70,289	)
Depreciation and amortization expense	$	14,239		$	1,639		$	1,619		$	17,497
Interest income	$	—		$	—		$	142		$	142
Interest expense	$	—		$	—		$	(181	)	$	(181	)
Loss before provision for income taxes	$	(13,086	)	$	(7,757	)	$	(49,485	)	$	(70,328	)
Total identifiable assets as of year-end	$	182,207		$	28,763		$	15,536		$	226,506
Capital expenditures	$	16,027		$	1,745		$	2,634		$	20,406

Fiscal 2011	Wet Seal			Arden B			Corporate and Unallocated			Total
Net sales	$	526,105		$	93,992		$	—		$	620,097
Percentage of consolidated net sales	85		%	15		%	—			100		%
Operating income (loss)	$	55,661		$	1,491		$	(32,152	)	$	25,000
Depreciation and amortization expense	$	15,765		$	2,099		$	1,507		$	19,371
Interest income	$	—		$	—		$	241		$	241
Interest expense	$	—		$	—		$	(180	)	$	(180	)
Income (loss) before provision for income taxes	$	55,661		$	1,491		$	(32,091	)	$	25,061
Total identifiable assets as of year-end	$	234,405		$	38,540		$	57,588		$	330,533
Capital expenditures	$	19,081		$	4,442		$	2,963		$	26,486

Fiscal 2010	Wet Seal			Arden B			Corporate and Unallocated			Total
Net sales	$	486,959		$	94,235		$	—		$	581,194
Percentage of consolidated net sales	84		%	16		%	—			100		%
Operating income (loss)	$	46,429		$	8,384		$	(29,566	)	$	25,247
Depreciation and amortization expense	$	14,245		$	1,619		$	949		$	16,813
Interest income	$	—		$	—		$	337		$	337
Interest expense	$	—		$	—		$	(3,045	)	$	(3,045	)
Income (loss) before benefit for income taxes	$	46,429		$	8,384		$	(32,274	)	$	22,539
Total identifiable assets as of year-end	$	256,427		$	44,969		$	67,136		$	368,532
Capital expenditures	$	18,603		$	5,199		$	6,925		$	30,727

The “Corporate and Unallocated” column is presented solely to allow for reconciliation of segment contribution to consolidated operating (loss) income, interest income, interest expense and (loss) income before provision for income taxes. Wet Seal and Arden B segment results include net sales, cost of sales, asset impairment and other direct store and field management expenses, with no allocation of corporate overhead or interest income and expense. The application of accounting policies for segment reporting is consistent with the application of accounting policies for corporate reporting.

Wet Seal operating (loss) income during fiscal 2012, 2011, and 2010 includes $24.0 million, $2.6 million and $3.6 million, respectively, of asset impairment charges.

Arden B operating (loss) income during fiscal 2012, 2011, and 2010 includes $3.0 million, $1.9 million, and $0.6 million, respectively, of asset impairment charges.

The Company closed 24, 1 and 6 Arden B stores during fiscal 2012, 2011, and 2010, respectively. The sales and operating (loss) income generated from the 31 Arden B store closures since fiscal 2010 in each of the fiscal 2012, 2011, and 2010 years was $17.6 million, $21.7 million, and $25.6 million, respectively and ($1.9) million, ($0.4) million, and $0.8 million, respectively.

Corporate expenses during fiscal 2012 include $7.1 million of loss contingency charges for several litigation matters, $3.0 million in severance costs, net of stock forfeiture credits, resulting from the departure of the Company's previous chief executive officer and president and chief operating officer and $0.3 million of severance costs resulting from a workforce reduction executed on February 1, 2013. Additionally, corporate expenses during fiscal 2012 included a $0.5 million charge upon the early termination of two investment banker retention agreements and $1.9 million in professional fees associated with a proxy solicitation. The proxy solicitation ultimately led to an agreement to replace four of the Company's seven board members during October 2012.

Corporate expenses in fiscal 2010 include interest expense of $2.1 million, as a result of accelerated write-off of discounts on Notes and deferred financing costs upon conversions of Notes, and includes $0.7 million of interest expense for a conversion inducement associated with conversions of Notes and Preferred Stock. Additionally, corporate expenses in fiscal 2010 include $1.6 million in charges associated with a transition payment to a prior chief executive officer and recruiting fees for the succeeding chief executive officer.

Corporate total assets consist primarily of deferred income tax assets and net equipment and leasehold improvements located at the Company’s corporate offices and distribution facility, as well as receivables, prepaid expenses, and other miscellaneous assets not specifically related to the reporting segments.