Segment Reporting

12 Months Ended

Jan. 31, 2015

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 had three reportable segments as of January 31, 2015: 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 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, International Stores and Direct-to-Consumer reportable 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.

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 the International Stores reportable segment 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. Reportable segment capital expenditures are direct purchases of property and equipment for that segment.

The following table provides the Company’s segment information as of, and for the fiscal years ended January 31, 2015, February 1, 2014 and February 2, 2013.

(in thousands)	U.S. Stores		International Stores		Direct-to- Consumer Operations		Segment Total		Other(1)		Total
January 31, 2015
Net Sales	$	1,878,542	$	1,032,946	$	832,542	$	3,744,030	—		$	3,744,030
Depreciation and Amortization	55,339		98,243		16,298		169,880		56,541		226,421
Operating Income(2)	261,446		204,262		269,564		735,272		(621,753	)	113,519
Total Assets	349,088		616,336		150,228		1,115,652		1,389,515		2,505,167
Capital Expenditures(3)	41,887		44,429		55,007		141,323		33,301		174,624
February 1, 2014
Net Sales	2,161,183		1,178,798		776,916		4,116,897		—		4,116,897
Depreciation and Amortization	75,297		92,474		7,850		175,621		59,619		235,240
Operating Income(4)	194,582		249,331		294,951		738,864		(658,041	)	80,823
Total Assets	414,463		805,257		122,381		1,342,101		1,508,896		2,850,997
Capital Expenditures	18,599		82,805		15,633		117,037		46,887		163,924
February 2, 2013
Net Sales	2,615,138		1,195,016		700,651		4,510,805		—		4,510,805
Depreciation and Amortization	94,367		67,972		5,198		167,537		56,708		224,245
Operating Income(5)	432,040		350,871		269,479		1,052,390		(678,157	)	374,233
Total Assets	587,334		840,317		63,063		1,490,714		1,496,687		2,987,401
Capital Expenditures	3,016		218,933		22,567		244,516		95,346		339,862

⁽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. 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; as well as distribution center costs. A reconciliation of segment operating income to consolidated operating income is provided below.

⁽²⁾  Includes charges related to asset impairment, lease terminations and store closures, the restructuring of the Gilly Hicks brand, the Company's profit improvement initiative, CEO transition costs and corporate governance matters of which $6.1 million is included in U.S. stores, $43.6 million is included in International Stores, $0.4 million is included in Direct-to-Consumer Operations and $28.1 million is included in Other for Fiscal 2014.

⁽³⁾  Capital expenditures of $35.6 million related to the conversion of one of the Company's Columbus, Ohio distribution centers to a dedicated Direct-to-Consumer distribution center are included in Direct-to-Consumer Operations.

⁽⁴⁾  Includes charges related to asset impairment, restructuring plans of the Gilly Hicks brand and the Company's profit improvement initiative of $94.9 million for U.S. Stores, $33.3 million for International Stores and $13.8 million for Other for Fiscal 2013.

⁽⁵⁾  Includes charges for asset impairments of $7.4 million for U.S. Stores for Fiscal 2012.

A reconciliation of the Company's segment operating income to the consolidated operating income reported in the Company's Consolidated Statements of Operations and Comprehensive (Loss) Income follows:

(in thousands)	Fiscal 2014			Fiscal 2013			Fiscal 2012
Segment Operating Income	$	735,272		$	738,864		$	1,052,390
Operating (Loss) Income Not Attributable to Segments:
Stores and Distribution Expense	(164,765		)	(198,910		)	(223,611		)
Marketing, General and Administrative Expense	(460,917		)	(481,783		)	(473,880		)
Restructuring Charges	—			(421		)	—
Asset Impairment	(11,310		)	—			—
Other Operating Income, Net	15,239			23,073			19,334
Operating Income	$	113,519		$	80,823		$	374,233

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.

Brand Information

Net sales by brand were as follows:

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
Abercrombie & Fitch	$	1,449,946	$	1,547,216	$	1,704,190
abercrombie	321,353		346,739		382,509
Hollister	1,947,869		2,127,816		2,314,462
Gilly Hicks	24,862		95,126		109,644
Total	$	3,744,030	$	4,116,897	$	4,510,805

Geographic Information

Net sales by geographic area were as follows:

(in thousands)	Fiscal 2014		Fiscal 2013		Fiscal 2012
United States	$	2,408,427	$	2,659,089	$	3,087,205
Europe	959,981		1,116,781		1,137,664
Other International	375,622		341,027		285,936
Total	$	3,744,030	$	4,116,897	$	4,510,805

Net long-lived assets by geographic area, which include primarily property and equipment (net), store supplies and lease deposits, were as follows:

(in thousands)	January 31, 2015		February 1, 2014
United States	$	581,430	$	606,758
Europe	326,726		438,931
Other International	158,743		191,312
Total	$	1,066,899	$	1,237,001