Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.5.0.2
Segment Reporting
6 Months Ended
Jul. 30, 2016
Segment Reporting  
Segment Reporting

 

14.  Segment Reporting

 

In the first quarter of 2016, we revised our segment reporting presentation to reflect changes in how we manage our business, including resource allocation and performance assessment. Specifically, we are now presenting expenses related to our shared services platform separately from the results of our operating segments to promote enhanced comparability of our operating segments. Previously, these shared service expenses were primarily included in our retail segment. Comparable prior period information has been recast to reflect our revised segment presentation.

 

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.  MW Cleaners is also aggregated in the retail segment as these operations have not had 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, business casual, sportswear, outerwear, dress and casual shirts, shoes and accessories for men. Ladies’ career apparel, sportswear and accessories, including shoes, as well as children’s apparel are also offered at most of our K&G stores.  Tuxedo and suit rentals are offered at our Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank and Moores retail stores and tuxedo shops within Macy’s stores.

 

The corporate apparel segment includes the results from our corporate apparel and uniform operations conducted by Twin Hill in the U.S. and Dimensions, Alexandra, and Yaffy in the United Kingdom (“UK”).

 

The two corporate apparel and uniform concepts are operating segments that have been aggregated into the reportable corporate apparel segment. The corporate apparel segment provides corporate clothing uniforms and workwear to workforces.

 

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.

 

Net sales by brand and reportable segment are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

    

July 30, 2016

    

August 1, 2015

    

July 30, 2016

    

August 1, 2015

 

Net sales:

 

 

    

 

 

    

 

 

    

 

 

    

 

MW(1)

 

$

482,895

 

$

470,010

 

$

924,541

 

$

926,386

 

Jos. A. Bank

 

 

186,040

 

 

221,706

 

 

364,490

 

 

437,768

 

K&G

 

 

86,374

 

 

88,719

 

 

181,133

 

 

184,715

 

Moores

 

 

66,454

 

 

69,899

 

 

109,683

 

 

117,419

 

MW Cleaners

 

 

8,418

 

 

8,579

 

 

16,576

 

 

16,896

 

Total retail segment

 

 

830,181

 

 

858,913

 

 

1,596,423

 

 

1,683,184

 

Dimensions and Alexandra (UK)

 

 

46,361

 

 

49,790

 

 

99,903

 

 

102,030

 

Twin Hill

 

 

33,142

 

 

11,371

 

 

42,180

 

 

19,949

 

Total corporate apparel segment

 

 

79,503

 

 

61,161

 

 

142,083

 

 

121,979

 

Total net sales

 

$

909,684

 

$

920,074

 

$

1,738,506

 

$

1,805,163

 


(1)

MW includes Men’s Wearhouse, Men’s Wearhouse and Tux, Joseph Abboud and tuxedo shops within Macy’s.

 

The following table sets forth supplemental products and services sales information for the Company (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

    

July 30, 2016

    

August 1, 2015

    

July 30, 2016

    

August 1, 2015

 

Net sales:

 

 

    

 

 

    

 

 

    

 

 

    

 

Men's tailored clothing product

 

$

349,226

 

$

372,060

 

$

698,754

 

$

758,396

 

Men's non-tailored clothing product

 

 

246,154

 

 

255,439

 

 

488,087

 

 

511,449

 

Ladies' clothing product

 

 

18,468

 

 

18,967

 

 

40,314

 

 

40,599

 

Other

 

 

2,098

 

 

2,724

 

 

4,459

 

 

5,608

 

Total retail clothing product

 

 

615,946

 

 

649,190

 

 

1,231,614

 

 

1,316,052

 

Rental services

 

 

165,009

 

 

157,049

 

 

264,840

 

 

260,178

 

Alteration services

 

 

40,808

 

 

44,095

 

 

83,393

 

 

90,058

 

Retail dry cleaning services

 

 

8,418

 

 

8,579

 

 

16,576

 

 

16,896

 

Total alteration and other services

 

 

49,226

 

 

52,674

 

 

99,969

 

 

106,954

 

Corporate apparel clothing product

 

 

79,503

 

 

61,161

 

 

142,083

 

 

121,979

 

Total net sales

 

$

909,684

 

$

920,074

 

$

1,738,506

 

$

1,805,163

 

 

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

 

 

    

July 30, 2016

    

August 1, 2015

    

July 30, 2016

    

August 1, 2015

 

Operating income:

 

 

    

 

 

    

 

 

    

 

 

    

 

Retail

 

$

101,227

 

$

137,324

 

$

181,102

 

$

232,630

 

Corporate apparel

 

 

11,920

 

 

2,494

 

 

13,974

 

 

3,806

 

Shared service expense

 

 

(53,515)

 

 

(41,695)

 

 

(104,450)

 

 

(83,024)

 

Operating income

 

 

59,632

 

 

98,123

 

 

90,626

 

 

153,412

 

Interest income

 

 

37

 

 

62

 

 

50

 

 

90

 

Interest expense

 

 

(25,876)

 

 

(26,535)

 

 

(52,377)

 

 

(53,018)

 

Loss on extinguishment of debt, net

 

 

(71)

 

 

 —

 

 

(71)

 

 

(12,675)

 

Earnings before income taxes

 

$

33,722

 

$

71,650

 

$

38,228

 

$

87,809

 

 

As a result of our revised segment presentation, total assets for our reportable segments have changed. There were no changes to consolidated total assets. Total assets by reportable segment are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

    

July 30,

    

August 1,

 

January 30,

 

 

    

2016

    

2015

    

2016

 

Segment assets:

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,696,408

 

$

2,815,962

 

$

1,705,728

 

Corporate apparel

 

 

235,364

 

 

211,173

 

 

211,820

 

Shared services(1)

 

 

252,782

 

 

489,217

 

 

326,771

 

Total assets

 

$

2,184,554

 

$

3,516,352

 

$

2,244,319

 


(1)

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