Segment Reporting

6 Months Ended

Aug. 02, 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, Australia and the Middle East. 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 and twenty-six week periods ended August 2, 2014 and August 3, 2013.

(in thousands)	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
Thirteen Weeks Ended August 2, 2014
Net Sales	$	449,202	$	267,881	$	173,522	$	890,605	$	—		$	890,605
Operating Income (Loss) (2)	50,698		64,393		54,862		169,953		(150,460		)	19,493
Thirteen Weeks Ended August 3, 2013
Net Sales	$	504,674	$	286,727	$	154,297	$	945,698	$	—		$	945,698
Operating Income (Loss)(3)	58,871		66,647		55,008		180,526		(161,361		)	19,165
Twenty-Six Weeks Ended August 2, 2014
Net Sales	$	848,350	$	520,763	$	343,920	$	1,713,033	$	—		$	1,713,033
Operating Income (Loss) (4)	81,982		107,116		111,094		300,192		(312,205		)	(12,013		)
Twenty-Six Weeks Ended August 3, 2013
Net Sales	$	953,290	$	544,161	$	287,016	$	1,784,467	$	—		$	1,784,467
Operating Income (Loss)(3)	98,693		120,180		111,191		330,064		(324,820		)	5,244

⁽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 and the Company's profit improvement initiative of which $1.2 million is included in International Stores, $0.5 million is included in U.S. Stores and $0.7 million is included in Other for the thirteen week period ended August 2, 2014.

⁽³⁾  Includes charges related to the Company's profit improvement initiative of which $2.6 million is included in Other for the thirteen and twenty-six week periods ended August 3, 2013.

⁽⁴⁾  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 $8.1 million is included in International Stores and $9.9 million is included in Other; and $0.4 million of income is included in U.S. stores for the twenty-six week period ended August 2, 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				Twenty-Six Weeks Ended
(in thousands)	August 2, 2014		August 3, 2013		August 2, 2014		August 3, 2013
Abercrombie & Fitch	$	349,610	$	356,676	$	667,428	$	681,424
abercrombie	70,896		75,955		139,357		149,178
Hollister	464,579		488,462		886,212		909,695
Gilly Hicks	5,520		24,605		20,036		44,170
Total	$	890,605	$	945,698	$	1,713,033	$	1,784,467

Geographic Information

Net Sales by geographic area were as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
(in thousands)	August 2, 2014		August 3, 2013		August 2, 2014		August 3, 2013
United States	$	546,245	$	597,259	$	1,050,641	$	1,132,156
Europe	248,396		267,764		484,010		504,418
Other	95,964		80,675		178,382		147,893
Total	$	890,605	$	945,698	$	1,713,033	$	1,784,467