Segment Reporting

6 Months Ended

Aug. 03, 2019

16. Segment Reporting

Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities.

The retail segment includes the results from our four retail merchandising brands: Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Moores Clothing for Men ("Moores") and K&G. These four brands are operating segments that have been aggregated into the retail reportable segment. Prior to its divestiture, MW Cleaners was also aggregated in the retail segment as its operations did not have a significant effect on our revenues or expenses. Specialty apparel merchandise offered by our four retail merchandising concepts include suits, suit separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear, dress shirts, shoes and accessories for men. Women's career and casual apparel, sportswear and accessories, including shoes, and children's apparel is offered at most of our K&G stores. Rental product is offered at our Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank and Moores retail stores.

The corporate apparel segment includes the results from our corporate apparel and uniform operations conducted by Dimensions, Alexandra, and Yaffy in the UK and Twin Hill in the U.S., which provide corporate apparel uniforms and workwear to workforces. Please see Note 19 of Notes to the Condensed Consolidated Financial Statements for information concerning the divestiture of our corporate apparel business on August 16, 2019.

We measure segment profitability based on operating income, defined as income before interest expense, interest income, loss on extinguishment of debt, net and income taxes, before shared service expenses. Shared service expenses include costs incurred and directed primarily by our corporate offices that are not allocated to segments.

Additional net sales information is as follows (in thousands):


	For the Three Months Ended				For the Six Months Ended
	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018
Net sales:
Men's Wearhouse⁽¹⁾	$	423,504	$	445,197	$	851,276	$	893,006
Jos. A. Bank		166,065		172,427		332,951		341,503
K&G		82,689		83,645		170,386		172,925
Moores		63,887		66,645		106,194		112,772
MW Cleaners⁽²⁾		—		—		—		2,551
Total retail segment		736,145		767,914		1,460,807		1,522,757
Total corporate apparel segment		53,343		55,516		110,068		118,637
Total net sales	$	789,488	$	823,430	$	1,570,875	$	1,641,394

(1)	Consists of Men's Wearhouse, Men's Wearhouse and Tux and Joseph Abboud.

(2)	On March 3, 2018, we completed the divestiture of our MW Cleaners business. Please see Note 2 for additional information.

Operating income by reportable segment, shared service expense, and the reconciliation to earnings before income taxes is as follows (in thousands):


	For the Three Months Ended				For the Six Months Ended
	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018
Operating income:
Retail	$	109,347	$	134,142	$	187,538	$	232,863
Corporate apparel		1,147		1,169		1,727		2,752
Shared service expense		(49,904)		(47,325)		(98,373)		(94,732)
Operating income		60,590		87,986		90,892		140,883
Interest income		157		122		253		207
Interest expense		(18,258)		(20,864)		(36,921)		(42,845)
Loss on extinguishment of debt, net		—		(8,122)		—		(20,833)
Earnings before income taxes	$	42,489	$	59,122	$	54,224	$	77,412

Total assets by reportable segment and shared services are as follows (in thousands):


	August 3,		August 4,		February 2,
	2019		2018		2019
Segment assets:
Retail	$	2,182,982	$	1,344,618	$	1,375,902
Corporate apparel		167,705		186,285		175,488
Shared services ⁽¹⁾		324,011		297,928		269,100
Total assets ⁽²⁾	$	2,674,698	$	1,828,831	$	1,820,490

(1)	Shared service assets consist primarily of cash and cash equivalents, assets related to our distribution network and tax-related assets.

(2)	The increase in total assets, as of August 3, 2019, is related to the recognition of operating lease right-of-use assets resulting from the adoption of ASC 842, effective February 3, 2019. Please see Note 12 for additional information.