Segment Information

6 Months Ended

Mar. 31, 2015

Segment Information

Segment Information

12. Segment Information

        We are organized by segments on a worldwide basis. We evaluate performance based on a number of factors; however, the primary measures of performance are the net sales and income or loss from operations (before corporate allocations) of each segment, as these are the key performance indicators that we review. Operating income or loss for each segment does not include the impact of any intercompany transfer pricing mark-up, corporate general and administrative expenses, interest expense and other miscellaneous income/expense items. Corporate general and administrative expenses include, but are not limited to, human resources, legal, finance, and various other corporate-level activity related expenses. Such unallocated expenses remain within Corporate/Manufacturing.

        All of our products fall into one or more of these four segments:

• Wholesale—This segment sells products worldwide under various brand names and third-party private labels, each targeting specific market groups which include virtually all major mass merchandisers, club stores, drug store chains and supermarkets. This segment also sells products to independent pharmacies, health food stores, the military and other retailers.

• European Retail—This segment generates revenue through its 992 Holland & Barrett and co-branded stores; including company-owned stores in the following countries: 684 in the UK, 145 in the Netherlands, 48 in Ireland, 17 in Belgium; and franchised stores in the following countries: 30 in China, 30 in Singapore, 14 in United Arab Emirates, 10 in Cyprus, five in each of Malta and the Netherlands, two in Kuwait and one in each of Gibraltar and Spain. We also have 49 GNC branded UK stores, as well as internet-based sales from www.hollandandbarrett.com, www.hollandandbarrett.co.uk, www.hollandandbarrett.ie,www.detuinen.nl and www.gnc.co.uk. Such revenue consists of sales of proprietary brand and third-party products as well as franchise fees. We are currently in the process of co-branding the De Tuinen, Essenza and Natures Way stores to leverage the value of the Holland & Barrett brand.

• Direct Response/E-Commerce—This segment generates revenue through the sale of proprietary brand and third-party products primarily through mail order catalogs and the internet under the Puritan's Pride tradename. Catalogs are strategically mailed to customers who order by mail, internet, or phone.

• North American Retail—This segment generates revenue through its 390 owned and operated Vitamin World stores selling proprietary brand and third-party products, as well as internet-based sales from www.vitaminworld.com.  

        The following table represents key financial information of our business segments:

	Total Reportable Business Segments
	Wholesale		European Retail		Direct Response/ E-Commerce		North American Retail		Total		Corporate/ Manufacturing			Consolidated
Three Months Ended March 31, 2015:(1)
Net sales	$	454,340	$	216,805	$	63,375	$	53,356	$	787,876	$	—		$	787,876
Income (loss) from operations		24,844		46,082		6,990		4,610		82,526		(31,897	)		50,629
Depreciation and amortization		9,026		5,107		2,839		905		17,877		11,856			29,733
Capital expenditures		627		12,449		258		648		13,982		12,896			26,878
Three Months Ended March 31, 2014:
Net sales	$	443,449	$	215,317	$	63,601	$	56,659	$	779,026	$	—		$	779,026
Income (loss) from operations		19,004		49,915		7,388		1,702		78,009		(27,741	)		50,268
Depreciation and amortization		9,081		4,133		2,833		767		16,814		9,020			25,834
Capital expenditures		172		9,547		113		3,957		13,789		12,208			25,997
Six Months Ended March 31, 2015:(1)(2)
Net sales	$	949,467	$	430,402	$	126,517	$	107,261	$	1,613,647	$	—		$	1,613,647
Income (loss) from operations		89,673		92,397		13,050		5,914		201,034		(54,880	)		146,154
Depreciation and amortization		18,028		10,156		5,670		1,800		35,654		22,144			57,798
Capital expenditures		700		23,153		271		1,671		25,795		20,172			45,967
Six Months Ended March 31, 2014:
Net sales	$	948,723	$	420,229	$	123,963	$	113,216	$	1,606,131	$	—		$	1,606,131
Income (loss) from operations		101,732		93,875		14,363		4,494		214,464		(50,014	)		164,450
Depreciation and amortization		18,167		8,177		5,645		1,473		33,462		17,937			51,399
Capital expenditures		203		14,868		682		7,590		23,343		23,901			47,244

(1)	Included in the North American Retail segment's income (loss) from operations for the three and six months ended March 31, 2015, is an adjustment to correct the Company's accounting for prepaid rent, whereby a benefit of $2,520 was recorded.
(2)	Included in the income (loss) from operations for the six months ended March 31, 2015, is an adjustment to correct the valuation of our labels inventory, whereby a benefit of $3,708 was recorded and benefited the Wholesale, Direct Response / E-Commerce and North American Retail segments by $2,975, $397, and $336, respectively.

        Total assets by segment are as follows:

	March 31, 2015		September 30, 2014
Reportable Business Segments:
Wholesale	$	2,469,040	$	2,500,659
European Retail		890,472		948,010
Direct Response / E-Commerce		513,248		512,642
North American Retail		108,801		107,442
Total Reportable Business Segments:		3,981,561		4,068,753
Corporate / Manufacturing		801,239		750,369
Consolidated assets	$	4,782,800	$	4,819,122