Segment information

9 Months Ended

Nov. 01, 2014

Segment information

2. Segment information

On May 29, 2014, the Company completed the Acquisition (see Note 20 for further information). Prior to the Acquisition, the Company managed its business as two geographical reportable segments, being the US and UK divisions. In connection with the Acquisition, the Company will no longer report its segments geographically, but by store brand grouping. The former US division operates retail stores under brands including Kay Jewelers, Jared The Galleria Of Jewelry and various regional brands and will be known as Sterling Jewelers division. The former UK division’s retail stores operate under brands including H.Samuel and Ernest Jones and will be known as UK Jewelry division.

In connection with the Acquisition, the Zale division was added, consisting of two new reportable segments: Zale Jewelry and Piercing Pagoda. Zale Jewelry is comprised of three core national brands, Zales Jewelers, Zales Outlet and Peoples Jewellers and two regional brands, Gordon’s Jewelers and Mappins Jewellers. Each brand specializes in fine jewelry and watches, with merchandise and marketing emphasis focused on diamond products. Zales Jewelers is a national brand in the US providing moderately priced jewelry to a broad range of customers. Zales Outlet operates in outlet malls and neighborhood power centers in the US and capitalizes on Zales Jewelers’ national marketing and brand recognition. Gordon’s Jewelers is a value-oriented regional jeweler. Peoples Jewellers is Canada’s largest fine jewelry retailer. Mappins Jewellers offers customers classic fine jewelry also in Canada. Piercing Pagoda operates mall-based kiosks focused on the opening price point customer. Piercing Pagoda specializes in gold, silver and non-precious metal products that capitalize on the latest fashion trends.

In the fourth quarter of Fiscal 2014, subsequent to the November 4, 2013 acquisition of a diamond polishing factory in Gaborone, Botswana, management established a separate reportable segment, Other, which consists of all non-reportable segments including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones. This segment will be aggregated with corporate administrative functions for segment reporting. Prior year results have been revised to reflect this change. All inter-segment sales and transfers are eliminated.

	13 weeks ended						39 weeks ended
(in millions)	November 1, 2014			November 2, 2013			November 1, 2014			November 2, 2013
Sales:
Sterling Jewelers	$	692.8		$	631.3		$	2,406.7		$	2,229.6
UK Jewelry		151.0			139.3			465.6			413.4
Zale Jewelry		289.1			—			504.1			—
Piercing Pagoda		42.3			—			74.8			—
Other		2.7			0.8			8.7			2.2
Total sales	$	1,177.9		$	771.4		$	3,459.9		$	2,645.2
Operating income (loss):
Sterling Jewelers	$	68.1		$	60.6		$	364.3		$	325.3
UK Jewelry		(2.7	)		(4.4	)		(1.6	)		(9.3	)
Zale Jewelry		(26.7	)(1)		—			(34.7	)(1)		—
Piercing Pagoda		(7.8	)(2)		—			(9.6	)(2)		—
Other		(20.2	)(3)		(4.6	)		(73.5	)(3)		(16.1	)
Total operating income	$	10.7		$	51.6		$	244.9		$	299.9

(1) Includes net operating loss of $11.0 million and $20.4 million related to purchase accounting adjustments associated with the acquisition of Zale Corporation for the 13 and 39 weeks ended November 1, 2014, respectively. See Note 20 for additional information.

(2) Includes net operating loss of $2.6 million and $4.7 million related to purchase accounting adjustments associated with the acquisition of Zale Corporation for the 13 and 39 weeks ended November 1, 2014, respectively. See Note 20 for additional information.

(3) Includes $11.4 million and $50.6 million of transaction-related and integration expense as well as severance-related costs for the 13 and 39 weeks ended November 1, 2014, respectively.

(in millions)	November 1, 2014		February 1, 2014		November 2, 2013
Total assets:
Sterling Jewelers	$	3,477.2	$	3,311.0	$	3,174.3
UK Jewelry		484.5		484.6		495.3
Zale Jewelry		1,942.6		—		—
Piercing Pagoda		158.8		—		—
Other		115.4		233.6		95.8
Total assets	$	6,178.5		$4,029.2	$	3,765.4