Segment Information

9 Months Ended

Sep. 29, 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 to retail and wholesale customers 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 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 39-week periods ended September 29, 2012 and October 1, 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						39 Weeks Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net revenues:
Stores	$	174,990		$	163,839		$	505,965		$	478,839
Port Supply	6,674			7,030			20,998			21,963
Direct-to-Customer	10,260			9,400			30,001			29,247
Consolidated net revenues	$	191,924		$	180,269		$	556,964		$	530,049
Contribution:
Stores	$	33,162		$	29,415		$	89,575		$	82,949
Port Supply	(893		)	(728		)	(2,315		)	(1,850		)
Direct-to-Customer	1,978			1,878			5,742			5,463
Consolidated contribution	$	34,247		$	30,565		$	93,002		$	86,562
Reconciliation of consolidated contribution to net income:
Consolidated contribution	$	34,247		$	30,565		$	93,002		$	86,562
Less:
Indirect costs of goods sold not included in consolidated contribution	(7,577		)	(7,781		)	(20,508		)	(20,248		)
General and administrative expense	(9,499		)	(9,894		)	(27,443		)	(25,291		)
Interest expense	(217		)	(226		)	(661		)	(666		)
Benefit (provision) for income taxes	(6,682		)	(1,448		)	(17,749		)	3,257
Net income	$	10,272		$	11,216		$	26,641		$	43,614

	13 Weeks Ended						39 Weeks Ended
	September 29, 2012				October 1, 2011		September 29, 2012			October 1, 2011
Assets:
Stores							$	31,167		$	36,631
Port Supply							7,045			5,955
Direct-to-Customer							301			216
Unallocated							341,822			314,030
Total assets							$	380,335		$	356,832
Capital expenditures:
Stores	$	3,496			$	2,526	$	11,204		$	10,687
Port Supply	—				—		—			—
Direct-to-Customer	(228		)	*	26		382		*	53
Unallocated	757				480		1,245			2,925
Total capital expenditures	$	4,025			$	3,032	$	12,831		$	13,665
Depreciation and amortization:
Stores	$	2,556			$	2,395	$	7,607		$	6,980
Port Supply	3				7		9			28
Direct-to-Customer	—				35		4			103
Unallocated	1,281				1,423		3,893			3,775
Total depreciation and amortization	$	3,840			$	3,860	$	11,513		$	10,886

* Reflects a reclassification of capital expenditures to expense and a negotiated reduction in project costs during third quarter 2012.