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Segment Reporting
 12 Months Ended
Jan. 31, 2016
Segment Reporting

Note L: Segment Reporting

We have two reportable segments, e-commerce 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 products for the home. 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 (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  

Fiscal 2015

           

Net revenues1

    $   2,522,580       $   2,453,510       $ —      $   4,976,090   

Depreciation and amortization expense

      32,056         83,027         52,677        167,760   

Operating income

      562,081         239,288         (312,735 )      488,634   

Assets2

      625,951         1,049,892         741,584        2,417,427   

Capital expenditures

      22,293         102,717         77,925        202,935   

Fiscal 2014

           

Net revenues1

    $ 2,370,694       $ 2,328,025       $              —      $ 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   

Fiscal 2013

           

Net revenues1

    $ 2,115,022       $ 2,272,867       $ —      $ 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   

 

1  Includes net revenues related to our international operations (including our operations in Canada, Australia, the United Kingdom and our franchise businesses) of approximately $298.9 million, $235.8 million and $215.5 million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.
2  Includes long-term assets related to our international operations of approximately $61.7 million, $58.3 million and $61.4 million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.