Segment Information

The Company’s operations are conducted through

three

operating segments consisting of direct-to-consumer (DTC), commercial and international franchising. The DTC segment includes the operating activities of company-owned stores in the United States, Canada, the United Kingdom, Ireland, Denmark and China and other retail delivery operations, including the Company’s e-commerce sites and temporary stores. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in Europe (outside of the United Kingdom, Ireland and Denmark), Asia, Australia, the Middle East, Africa and Mexico. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for

third

party use and wholesale activities. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The

three

reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.

Following is a summary of the financial information for the Company’s reportable segments (in thousands):

	Direct-to-					International
	Consumer			Commercial		Franchising			Total

Thirteen weeks ended July 1, 2017
Net sales to external customers	$	74,422		$	2,126	$	678		$	77,226
Income (loss) before income taxes		(3,422	)		945		(139	)		(2,616	)
Capital expenditures		5,717			-		19			5,736
Depreciation and amortization		3,940			1		16			3,957

Thirteen weeks ended July 2, 2016
Net sales to external customers	$	73,928		$	798	$	413		$	75,139
Income (loss) before income taxes		(6,648	)		270		135			(6,243	)
Capital expenditures		5,677			-		20			5,697
Depreciation and amortization		3,785			1		22			3,808

Twenty-six weeks ended July 1, 2017
Net sales to external customers	$	163,007		$	3,733	$	1,117		$	167,857
Income before income taxes		396			1,548		35			1,979
Capital expenditures		8,008			-		19			8,027
Depreciation and amortization		7,849			1		33			7,883

Twenty-six weeks ended July 2, 2016
Net sales to external customers	$	167,984		$	1,279	$	852		$	170,115
Income (loss) before income taxes		(1,452	)		413		68			(971	)
Capital expenditures		11,857			-		25			11,882
Depreciation and amortization		7,571			1		47			7,619

Total Assets as of:
July 1, 2017	$	173,369		$	6,926	$	2,309		$	182,604
July 2, 2016	$	168,827		$	5,377	$	2,156		$	176,360

The Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment

may

operate in many geographic areas. The Company allocates revenues to geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

	North
	America (1)		Europe (2)		Other (3)		Total
Thirteen weeks ended July 1, 2017
Net sales to external customers	$	64,102	$	12,654	$	470	$	77,226
Property and equipment, net		66,088		9,545		34		75,667
Thirteen weeks ended July 2, 2016
Net sales to external customers	$	61,371	$	13,430	$	338	$	75,139
Property and equipment, net		61,263		7,548		1,061		69,872

Twenty-six weeks ended July 1, 2017
Net sales to external customers	$	140,826	$	26,094	$	937	$	167,857
Property and equipment, net		66,088		9,545		34	$	75,667
Twenty-six weeks ended July 2, 2016
Net sales to external customers	$	140,878	$	28,638	$	599	$	170,115
Property and equipment, net		61,263		7,548		1,061		69,872

For purposes of this table only:

(

) North America includes the United States, Canada, Puerto Rico and franchise business in Mexico

(

) Europe includes the United Kingdom, Ireland, Denmark and franchise businesses in Europe

(

) Other includes franchise businesses outside of North America and Europe and, beginning in

2016,

a company-owned store in China