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Segment Reporting
 12 Months Ended
Feb. 01, 2015
Segment Reporting

Note L: Segment Reporting

We have two reportable segments, e-commerce (formerly direct-to-customer) and retail. The e-commerce segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation and Mark and Graham, which sell our products through our e-commerce websites and direct-mail catalogs. Our e-commerce merchandising strategies are operating segments, which have been aggregated into one reportable segment, e-commerce. The retail segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Rejuvenation, which sell our products through our retail stores. Our retail merchandising strategies 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

 

In thousands E-commerce   Retail   Unallocated   Total  

2014 (52 Weeks)

Net revenues1

 $ 2,370,694    $   2,328,025    $ 0    $   4,698,719   

Depreciation and amortization expense

   32,116      80,154      50,003      162,273   

Operating income

   560,396      248,535      (306,666 )    502,265   

Assets2

   600,503      1,028,293      701,481      2,330,277   

Capital expenditures

   41,633      97,247      65,920      204,800   

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   

 

1 Includes net revenues of approximately $235.8 million, $215.5 million and $166.6 million in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, related to our foreign operations.
2 Includes long-term assets of approximately $58.3 million, $61.4 million and $42.6 million in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, related to our foreign operations.