Segment Reporting

9 Months Ended

Nov. 01, 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 thirty-nine weeks ended November 1, 2014 and November 2, 2013.

(in thousands)	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)			Total
Thirteen Weeks Ended November 1, 2014
Net Sales	$	475,717	$	248,221	$	187,515	$	911,453	$	—		$	911,453
Operating Income (Loss) (2)	71,764		44,927		59,439		176,130		(142,764		)	33,366
Thirteen Weeks Ended November 2, 2013
Net Sales	$	561,788	$	296,937	$	174,568	$	1,033,293	$	—		$	1,033,293
Operating Income (Loss)(3)	29,512		40,641		65,602		135,755		(171,125		)	(35,370		)
Thirty-Nine Weeks Ended November 1, 2014
Net Sales	$	1,324,066	$	768,985	$	531,435	$	2,624,486	$	—		$	2,624,486
Operating Income (Loss) (4)	153,745		152,043		170,533		476,321		(454,968		)	21,353
Thirty-Nine Weeks Ended November 2, 2013
Net Sales	$	1,515,079	$	841,096	$	461,585	$	2,817,760	$	—		$	2,817,760
Operating Income (Loss)(5)	128,205		160,821		176,793		465,819		(495,946		)	(30,127		)

⁽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 store-related asset impairments, store closures, 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 $6.0 million is included in U.S. Stores, $13.0 million is included in International Stores, $0.1 million is included in Direct-to-Consumer Operations and $1.2 million is included in Other for the thirteen week period ended November 1, 2014.

⁽³⁾  Includes charges related to store-related asset impairments, the restructuring of the Gilly Hicks brand and the Company's profit improvement initiative of which $51.5 million is included in U.S. Stores, $32.2 million is included in International Stores and $12.2 million is included in Other for the thirteen week period ended November 2, 2013.

⁽⁴⁾  Includes charges related to store-related asset impairments, store closures, 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 $5.5 million is included in U.S. stores, $20.7 million is included in International Stores, $0.1 million is included in Direct-to-Consumer Operations and $11.9 million is included in Other for the thirty-nine week period ended November 1, 2014.

⁽⁵⁾  Includes charges related to store-related asset impairments, the restructuring of the Gilly Hicks brand and the Company's profit improvement initiative of which $51.5 million is included in U.S. stores, $32.2 million is included in International Stores and $14.7 million is included in Other for the thirty-nine week period ended November 2, 2013.

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				Thirty-Nine Weeks Ended
(in thousands)	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
Abercrombie & Fitch	$	358,421	$	387,553	$	1,025,849	$	1,068,978
abercrombie	81,281		90,080		220,637		239,258
Hollister	468,118		534,011		1,354,330		1,443,706
Gilly Hicks	3,633		21,649		23,670		65,818
Total	$	911,453	$	1,033,293	$	2,624,486	$	2,817,760

Geographic Information

Net sales by geographic area were as follows:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(in thousands)	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
United States	$	594,713	$	674,871	$	1,645,354	$	1,807,027
Europe	222,631		272,212		706,641		776,630
Other	94,109		86,210		272,491		234,103
Total	$	911,453	$	1,033,293	$	2,624,486	$	2,817,760