Segment Reporting

9 Months Ended

Oct. 27, 2012

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company determines its segments on the same basis that it uses to allocate resources and assess performance. All of the Company’s segments sell a similar group of products—casual sportswear apparel, personal care products and accessories for men, women and kids and bras, underwear and sleepwear for girls. The Company has three reportable segments: U.S. Stores, International Stores, and Direct-to-Consumer. Corporate functions, interest income and expense, and other income and expense are evaluated on a consolidated basis and are not allocated to the Company’s segments, and therefore are included in Other.

The U.S. Stores reportable segment includes the results of store operations in the United States and Puerto Rico. The International Stores reportable segment includes the results of store operations in Canada, Europe and Asia. The Direct-to-Consumer reportable segment includes the results of operations directly associated with the on-line operations, both domestic and international.

Operating income is the primary measure of profit the Company uses to make decisions on allocating resources to its operating segments. For the U.S. Stores and International Stores reportable segments, operating income is defined as aggregate income directly attributable to individual stores on a four-wall basis. Four-wall expense includes all expenses contained “within the four walls of the stores.” These include expenses such as cost of merchandise, selling payroll and related costs, rent, utilities, depreciation, repairs and maintenance, supplies and packaging and other store sales-related expenses including credit card and bank fees and taxes. Operating income also reflects pre-opening charges related to stores not yet in operation and period-end markdown reserves. For the Direct-to-Consumer reportable segment, operating income is defined as aggregate income attributable to the direct-to-consumer business, less call center, fulfillment and shipping expense, charge card fees and direct-to-consumer operations management and support expenses. The U.S. Stores, International Stores and Direct-to-Consumer segments exclude marketing, general and administrative expense, store management and support functions such as regional and district management and other functions not dedicated to an individual store, distribution center costs and markdowns on merchandise held in distribution centers. All costs excluded from the three reportable segments are included in Other.

Reportable segment assets include those used directly in or resulting from the operations of each reportable segment. Total assets for the U.S. Stores and International Stores reportable segments primarily consist of store cash, credit card receivables, prepaid rent, store packaging and supplies, lease deposits, merchandise inventory, leasehold acquisition costs, restricted cash and the net book value of store long-lived assets. Total assets for International Stores also include VAT receivables. Total assets for the Direct-to-Consumer reportable segment primarily consist of credit card receivables, merchandise inventory, and the net book value of long-lived assets. Total assets for Other include cash, investments, distribution center inventory, the net book value of home office and distribution center long-lived assets, foreign currency hedge assets and tax-related assets.

The following table provides the Company’s segment information as of, and for the thirteen and thirty-nine week periods ended October 27, 2012 and October 29, 2011:

	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
	(in thousands):
Thirteen Weeks Ended October 27, 2012
Net Sales	$	709,368	$	298,959	$	158,314	$	1,166,641	$	3,008		$	1,169,649
Operating Income (Loss)	162,360		87,163		69,647		319,170		(206,772		)	112,398
Thirteen Weeks Ended October 29, 2011
Net Sales	$	725,351	$	214,959	$	132,446	$	1,072,756	$	3,100		$	1,075,856
Operating Income (Loss)	139,841		58,929		58,983		257,753		(177,903		)	79,850

	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
	(in thousands):
Thirty-Nine Weeks Ended October 27, 2012
Net Sales	$	1,813,757	$	778,750	$	434,220	$	3,026,727	$	15,547		$	3,042,274
Operating Income (Loss)	329,969		204,690		190,194		724,853		(579,170		)	145,683
Thirty-Nine Weeks Ended October 29, 2011
Net Sales	$	1,905,147	$	571,615	$	340,307	$	2,817,069	$	12,223		$	2,829,292
Operating Income (Loss)	345,299		173,973		159,511		678,783		(513,013		)	165,770

⁽¹⁾  Includes corporate functions such as Design, Merchandising, Sourcing, Planning, Allocation, Store Management and Support, Marketing, Distribution Center Operations, Information Technology, Real Estate, Finance, Legal, Human Resources and other corporate overhead. Net Sales consist of third party sell-off of inventory. Operating Income includes: marketing, general and administrative expense, store management and support functions such as regional and district management and other functions not dedicated to an individual store; distribution center costs; and markdowns on merchandise held in distribution centers.

Total assets as of October 27, 2012, were approximately $549.7 million for U.S. Stores, $834.0 million for International Stores, $78.5 million for Direct-to-Consumer Operations and $1.387 billion for Other.

Geographic Information

Financial information relating to the Company’s operations by geographic area is as follows:

Net Sales:

Net sales includes net merchandise sales through stores and direct-to-consumer operations, including shipping and handling revenue. Net sales are reported by geographic area based on the location of the customer.

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(in thousands):	October 27, 2012		October 29, 2011		October 27, 2012		October 29, 2011
United States	$	818,558	$	820,188	$	2,110,835	$	2,146,029
Europe	273,909		193,566		743,834		528,429
Other	77,182		62,102		187,605		154,834
Total	$	1,169,649	$	1,075,856	$	3,042,274	$	2,829,292

Long-Lived Assets:

(in thousands):	October 27, 2012		January 28, 2012
United States	$	769,292	$	794,723
Europe	480,440		366,647
Other	184,579		156,361
Total	$	1,434,311	$	1,317,731

Long-lived assets in the table above include primarily property and equipment (net), store supplies and lease deposits.