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Segment Reporting
 12 Months Ended
Feb. 02, 2014
Segment Reporting

Note L: Segment Reporting

We have two reportable segments, direct-to-customer and retail. The direct-to-customer segment has seven merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Rejuvenation and Mark and Graham) which sell our products through our e-commerce websites and direct-mail catalogs. Our direct-to-customer merchandising concepts are operating segments, which have been aggregated into one reportable segment, direct-to-customer. The retail segment has five merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Rejuvenation) which sell our products through our retail stores. Our retail merchandising concepts are operating segments, which have been aggregated into one reportable segment, retail. Management’s expectation is that the overall economic characteristics of each of our operating segments will be similar over time based on management’s judgment that the operating segments have had similar historical economic characteristics and are expected to have similar long-term financial performance in the future.

These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management’s best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group.

We use operating income to evaluate segment profitability. Operating income is defined as earnings (loss) before net interest income or expense and income taxes. Unallocated costs before interest and income taxes include corporate employee-related costs, occupancy expenses (including depreciation expense), administrative costs and third party service costs, primarily in our corporate administrative and systems departments. Unallocated assets include corporate cash and cash equivalents, deferred income taxes, the net book value of corporate facilities and related information systems, and other corporate long-lived assets.

Income tax information by reportable segment has not been included as income taxes are calculated at a company-wide level and are not allocated to each reportable segment.

 

Segment Information

 

Dollars in thousands   

Direct-to-

Customer

      Retail      Unallocated     Total  

2013 (52 Weeks)

           

Net revenues1

    $ 2,115,022       $ 2,272,867       $ 0      $ 4,387,889   

Depreciation and amortization expense

      25,588         78,423         45,784        149,795   

Operating income

      502,143         248,894         (298,939 )      452,098   

Assets2

      517,086         975,994         843,654        2,336,734   

Capital expenditures

      38,195         89,331         66,427        193,953   

2012 (53 Weeks)

           

Net revenues1

    $ 1,869,386       $ 2,173,484       $ 0      $ 4,042,870   

Depreciation and amortization expense

      23,164         72,994         38,295        134,453   

Operating income

      418,836         262,899         (272,572 )      409,163   

Assets2

      397,285         939,672         850,722        2,187,679   

Capital expenditures

      30,585         86,776         88,043        205,404   

2011 (52 Weeks)

           

Net revenues1

    $ 1,632,811       $ 2,088,084       $ 0      $ 3,720,895   

Depreciation and amortization expense

      19,626         76,914         34,013        130,553   

Operating income

      359,596         263,776         (241,640 )      381,732   

Assets2

      340,573         859,879         860,386        2,060,838   

Capital expenditures

      27,451         51,546         51,356        130,353   

 

1 

Includes net revenues of approximately $215.5 million, $166.6 million and $140.1 million in fiscal 2013, fiscal 2012 and fiscal 2011, respectively, related to our foreign operations.
2 

Includes long-term assets of approximately $61.4 million, $42.6 million and $24.1 million in fiscal 2013, fiscal 2012 and fiscal 2011, respectively, related to our foreign operations.