Segment Information

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company has three reportable segments—Stores, Port Supply (wholesale) and Direct-to-Customer (which we formerly referred to as Direct Sales)—all of which sell merchandise directly to customers. The Stores segment sells products through the Company's store locations. The Port Supply segment sells products directly to wholesale customers through our wholesale website and our call center. The Direct-to-Customer segment sells products through our retail eCommerce website, direct mail catalogs and our call center. The customer base overlaps between the Company’s Stores and Port Supply segments, and between its Stores and Direct-to-Customer segments. All processes for the three segments within the supply chain are commingled, including purchases from vendors, distribution center activity and customer delivery. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue.

The Company considers its individual stores to be operating segments. Each store's operating performance has been aggregated into one reportable segment. The Company's individual store operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics; class of consumer; nature of products; and distribution methods. The Company believes that disaggregating its operating segments would not provide meaningful additional information.

In addition to the Company’s 10 stores located in Canada and five franchised stores located in Turkey, revenues are attributed to geographic locations based on the location to which the Company ships its products. Through the Direct-to-Customer segment, the Company promotes and sells products internationally through both its website and call center. The Company operates primarily in the United States with foreign revenues representing less than 5% of total net revenues during each of the 13-week and 26-week periods ended June 30, 2012 and July 2, 2011, and foreign long-lived assets totaled less than 2% of long-lived assets at each of these dates.

Segment assets are those directly allocated to an operating segment’s operations. For the Stores segment, assets primarily consist of leasehold improvements, computer assets, fixtures, land and buildings. For the Port Supply and Direct-to-Customer segments, assets primarily consist of information technology assets. Unallocated assets include merchandise inventory, shared technology infrastructure, distribution centers, corporate headquarters, prepaid expenses, deferred taxes and other assets. Capital expenditures and depreciation expense for each segment are allocated to the assets assigned to the segment. Contribution is defined as net revenues less product costs and direct expenses.

Following is financial information related to the Company’s business segments (in thousands):

	13 Weeks Ended						26 Weeks Ended
	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Net revenues:
Stores	$	222,881		$	214,842		$	330,975		$	315,000
Port Supply	8,061			8,438			14,324			14,933
Direct-to-Customer	12,630			12,683			19,741			19,847
Consolidated net revenues	$	243,572		$	235,963		$	365,040		$	349,780
Contribution:
Stores	$	52,030		$	53,015		$	56,413		$	53,534
Port Supply	(435		)	(241		)	(1,422		)	(1,122		)
Direct-to-Customer	2,413			2,568			3,764			3,585
Consolidated contribution	$	54,008		$	55,342		$	58,755		$	55,997
Reconciliation of consolidated contribution to net income:
Consolidated contribution	$	54,008		$	55,342		$	58,755		$	55,997
Less:
Indirect costs of goods sold not included in consolidated contribution	(6,903		)	(6,974		)	(12,931		)	(12,467		)
General and administrative expense	(8,817		)	(8,122		)	(17,944		)	(15,397		)
Interest expense	(224		)	(273		)	(444		)	(440		)
Benefit (provision) for income taxes	(15,448		)	4,770			(11,067		)	4,705
Net income	$	22,616		$	44,743		$	16,369		$	32,398

	13 Weeks Ended				26 Weeks Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
Assets:
Stores					$	35,539	$	30,419
Port Supply					8,736		7,784
Direct-to-Customer					578		445
Unallocated					349,335		324,875
Total assets					$	394,188	$	363,523
Capital expenditures:
Stores	$	4,642	$	4,156	$	7,707	$	8,161
Port Supply	—		—		—		—
Direct-to-Customer	303		27		610		27
Unallocated	460		1,188		489		2,445
Total capital expenditures	$	5,405	$	5,371	$	8,806	$	10,633
Depreciation and amortization:
Stores	$	2,604	$	2,269	$	5,051	$	4,584
Port Supply	3		9		6		21
Direct-to-Customer	1		34		4		68
Unallocated	1,305		1,207		2,612		2,353
Total depreciation and amortization	$	3,913	$	3,519	$	7,673	$	7,026