Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.19.2
Segment Reporting
6 Months Ended
Aug. 03, 2019
SEGMENT REPORTING  
SEGMENT REPORTING

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.