Segment Reporting

3 Months Ended

May 03, 2014

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, Asia and Australia. The Direct-to-Consumer reportable segment includes the results of operations directly associated with on-line operations, both U.S. and international.

Operating income is the primary measure of profit the Company uses to make decisions regarding the allocation of resources to its segments. For the U.S. Stores and the International Stores reportable segments, operating income is defined as aggregate income directly attributable to individual stores on a four-wall basis plus sell-off of excess merchandise to authorized third-party resellers. Four-wall operating income includes: net sales, 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 indirect taxes. Operating income also reflects pre-opening charges related to stores not yet in operation. For the Direct-to-Consumer reportable segment, operating income is defined as aggregate income attributable to the direct-to-consumer business: net sales, shipping and handling revenue, call center costs, fulfillment and shipping expense, charge card fees and direct-to-consumer operations management and support expenses. The U.S. Stores, the International Stores and the 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, as well as distribution center costs. All costs excluded from the three reportable segments are included in Other.

The following table provides the Company’s segment information for the thirteen-week periods ended May 3, 2014 and May 4, 2013.

	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
	(in thousands):
Thirteen Weeks Ended May 3, 2014
Net Sales	$	399,148	$	252,882	$	170,398	$	822,428	$	—		$	822,428
Operating Income (Loss) (2)	31,284		42,723		56,232		130,239		(161,745		)	(31,506		)
Thirteen Weeks Ended May 4, 2013
Net Sales	$	448,616	$	257,434	$	132,719	$	838,769	$	—		$	838,769
Operating Income (Loss)	39,821		53,533		56,183		149,537		(163,458		)	(13,921		)

⁽¹⁾  Includes corporate functions not dedicated to an individual store or direct-to-consumer operations 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.

⁽²⁾  Includes charges related to the restructuring of the Gilly Hicks brand, the Company's profit improvement initiative and legal, advisory and other charges related to certain corporate governance matters of which $6.9 million is included for International Stores, $9.2 million is included for Other and $0.5 million of income related to the true-up of Gilly Hicks estimated liabilities, net of additional charges, is included in U.S. Stores for the thirteen-week period ended May 3, 2014.

Net Sales:

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

Brand Information

Net Sales by brand were as follows:

	Thirteen Weeks Ended
(in thousands):	May 3, 2014		May 4, 2013
Abercrombie & Fitch	$	317,818	$	324,748
abercrombie	68,460		73,223
Hollister	421,634		421,233
Gilly Hicks	14,516		19,565
Total	$	822,428	$	838,769

Geographic Information

Net Sales by geographic area were as follows:

	Thirteen Weeks Ended
(in thousands):	May 3, 2014		May 4, 2013
United States	$	504,396	$	534,897
Europe	235,614		236,654
Other	82,418		67,218
Total	$	822,428	$	838,769