10.

Segment Information

The Company’s operations are conducted through

three

operating segments consisting of direct-to-consumer (DTC), commercial and international franchising. The DTC segment includes the operating activities of corporately-managed stores in the United States, Canada, the United Kingdom, Ireland, Denmark and China and other retail delivery operations, including the Company’s e-commerce sites and temporary stores. The international franchising segment includes the activities of the Company’s franchisees with store locations in Europe (outside of the United Kingdom, Ireland and Denmark), Asia, Australia, the Middle East, Africa and Mexico. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for

third

party use and wholesale activities. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The

three

reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.

Following is a summary of the financial information for the Company’s reportable segments (in thousands):

	Direct-to-					International
	Consumer			Commercial		Franchising			Total

Thirteen weeks ended August 4, 2018
Net sales to external customers	$	81,037		$	1,055	$	1,086		$	83,178
Income (loss) before income taxes		(3,148	)		289		314			(2,545	)
Capital expenditures		4,081			-		-			4,081
Depreciation and amortization		4,021			-		2			4,023
Thirteen weeks ended July 29, 2017
Net sales to external customers	$	76,383		$	2,086	$	711		$	79,180
Income (loss) before income taxes		(1,006	)		930		(88	)		(164	)
Capital expenditures		5,518			-		-			5,518
Depreciation and amortization		3,970			-		15			3,985
Twenty-six weeks ended August 4, 2018
Net sales to external customers	$	162,462		$	2,074	$	1,826		$	166,362
Income (loss) before income taxes		(3,171	)		651		621			(1,899	)
Capital expenditures		7,111			-		-			7,111
Depreciation and amortization		8,137			1		-			8,138
Twenty-six weeks ended July 29, 2017
Net sales to external customers	$	165,126			4,124		1,133			170,383
Income (loss) before income taxes		2,472			1,722		66			4,260
Capital expenditures		9,326			-		-			9,326
Depreciation and amortization		7,859			1		32			7,892
Total Assets as of:
August 4, 2018	$	163,907		$	5,847	$	5,055		$	174,809
July 29, 2017		174,017			6,041		2,227			182,285

The Company’s reportable segments are primarily determined by the types of products and services that each offers. Each reportable segment

may

operate in many geographic areas. The Company allocates revenues to geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

	North
	America (1)		Europe (2)		Other (3)		Total
Thirteen weeks ended August 4, 2018
Net sales to external customers	$	71,964	$	10,604	$	610	$	83,178
Thirteen weeks ended July 29, 2017
Net sales to external customers		66,220		12,466		494		79,180

Twenty-six weeks ended August 4, 2018
Net sales to external customers		141,932		23,430		1,000		166,362
Property and equipment, net		66,606		9,530		21		76,157
Twenty-six weeks ended July 29, 2017
Net sales to external customers		142,963		26,502		918		170,383
Property and equipment, net		66,203		9,617		34		75,854

For purposes of this table only:

(

) North America includes the United States, Canada, Puerto Rico and international franchising revenue in Mexico

(

) Europe includes the United Kingdom, Ireland, Denmark and international franchising revenue in Europe

(

) Other includes international franchising revenue outside of North America and Europe and a corporately-managed store in China