Segment Information

9 Months Ended

Nov. 02, 2019

The Company’s businesses are grouped into five reportable segments for management and internal financial reporting purposes: Americas Retail, Americas Wholesale, Europe, Asia and Licensing. The Company’s Americas Retail, Americas Wholesale, Europe and Licensing reportable segments are the same as their respective operating segments. Certain components of the Company’s Asia operating segment are separate operating segments based on region, which have been aggregated into the Asia reportable segment for disclosure purposes. Management evaluates segment performance based primarily on revenues and earnings (loss) from operations before corporate performance-based compensation costs, asset impairment charges, net gains (losses) on lease terminations, restructuring charges and certain non-recurring charges, if any. The Company believes this segment reporting reflects how its business segments are managed and how each segment’s performance is evaluated by the Company’s chief operating decision maker to assess performance and make resource allocation decisions. The Americas Retail segment includes the Company’s retail and e-commerce operations in the Americas. The Americas Wholesale segment includes the Company’s wholesale operations in the Americas. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia and the Pacific. The Licensing segment includes the worldwide licensing operations of the Company. The business segment operating results exclude corporate overhead costs, which consist of shared costs of the organization, asset impairment charges, net gains (losses) on lease terminations, restructuring charges and certain non-recurring charges, if any. Corporate overhead costs are presented separately and generally include, among other things, the following unallocated corporate costs: accounting and finance, executive compensation, corporate performance-based compensation, facilities, global advertising and marketing, human resources, information technology and legal.

Net revenue and earnings (loss) from operations are summarized as follows for the three and nine months ended November 2, 2019 and November 3, 2018 (in thousands):



	Three Months Ended						Nine Months Ended
	Nov 2, 2019			Nov 3, 2018			Nov 2, 2019			Nov 3, 2018
Net revenue:
Americas Retail	$	177,824		$	186,925		$	553,213		$	555,390
Americas Wholesale	56,398			52,698			144,505			127,630
Europe	277,253			254,037			827,817			771,470
Asia	82,261			89,461			250,752			256,298
Licensing	22,208			22,286			59,568			61,779
Total net revenue	$	615,944		$	605,407		$	1,835,855		$	1,772,567
Earnings (loss) from operations:
Americas Retail	$	1,601		$	3,799		$	5,746		$	3,701
Americas Wholesale	11,216			10,392			27,452			21,743
Europe	19,475			7,410			54,742			17,608
Asia	(2,432		)	1,938			(10,435		)	7,637
Licensing	19,372			19,485			51,563			54,408
Total segment earnings from operations	49,232			43,024			129,068			105,097
Corporate overhead	(24,736		)	(20,824		)	(79,777		)	(72,316		)
European Commission fine¹	—			(42,428		)	—			(42,428		)
Asset impairment charges²	(1,847		)	(1,277		)	(5,126		)	(5,017		)
Net gains on lease terminations³	—			—			—			152
Total earnings (loss) from operations	$	22,649		$	(21,505	)	$	44,165		$	(14,512	)

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Notes:


¹	During the third quarter of fiscal 2019, the Company recorded a charge of €37.0 million ($42.4 million) related to an estimated fine imposed on the Company by the European Commission related to its inquiry concerning possible violations of European Union competition rules by the Company. Refer to Note 1 for further information.


²	During each of the periods presented, the Company recognized asset impairment charges for certain retail locations resulting from under-performance and expected store closures. Refer to Note 15 for more information regarding these asset impairment charges.


³	During the nine months ended November 3, 2018, the Company recorded net gains on lease terminations related primarily to the early termination of certain lease agreements in North America. The net gains on lease terminations were recorded during the three months ended May 5, 2018.

The table below presents information regarding geographic areas in which the Company operated. Net revenue is classified primarily based on the country where the Company’s customer is located (in thousands):



	Three Months Ended				Nine Months Ended
	Nov 2, 2019		Nov 3, 2018		Nov 2, 2019		Nov 3, 2018
Net revenue:
U.S.	$	164,807	$	172,043	$	505,735	$	497,155
Italy	61,952		63,353		198,884		205,687
Canada	47,042		48,804		129,624		133,383
South Korea	38,596		40,327		105,411		113,583
Spain	33,511		33,331		101,408		99,682
Other foreign countries	247,828		225,263		735,225		661,298
Total product sales	593,736		583,121		1,776,287		1,710,788
Net royalties	22,208		22,286		59,568		61,779
Net revenue	$	615,944	$	605,407	$	1,835,855	$	1,772,567

Due to the seasonal nature of the Company’s business segments, the above net revenue and operating results are not necessarily indicative of the results that may be expected for the full fiscal year.