11.

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 corporately-managed locations and other retail delivery operations in the U.S., Canada, China, Denmark, Ireland and the United Kingdom (“U.K.”), including the Company’s e-commerce sites and temporary stores. 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 international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in Europe (outside of the U.K., Ireland and Denmark), Asia, Australia, the Middle East, Africa and Mexico. 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 August 3, 2019
Net sales to external customers	$	75,214		$	3,193	$	807		$	79,214
Income (loss) before income taxes		(1,900	)		1,520		(362	)		(742	)
Capital expenditures		2,505			-		-			2,505
Depreciation and amortization		3,283			-		2			3,285
Thirteen weeks ended August 4, 2018
Net sales to external customers	$	81,037		$	1,055	$	1,086		$	83,178
Income (loss) before income taxes		(3,148	)		289		314			(2,545	)
Capital expenditures		4,081			-		-			4,081
Depreciation and amortization		4,021			-		2			4,023

Twenty-six weeks ended August 3, 2019
Net sales to external customers	$	156,262		$	5,947	$	1,367		$	163,576
Income (loss) before income taxes		(806	)		2,735		(261	)		1,668
Capital expenditures		4,945			-		-			4,945
Depreciation and amortization		6,793			-		4			6,797
Twenty-six weeks ended August 4, 2018
Net sales to external customers	$	162,462		$	2,074	$	1,826		$	166,362
Income (loss) before income taxes		(3,171	)		651		621			(1,899	)
Capital expenditures		7,111			-		-			7,111
Depreciation and amortization		8,137			1		-			8,138
Total Assets as of:
August 3, 2019 (1)		285,196			7,796		6,202			$ 299,194
August 4, 2018		163,907			5,847		5,055			174,809

For purposes of this table only:

(

) The increase in total assets when comparing

August 3, 2019

August 4, 2018

is the result of the adoption of Topic

842

on leases effective

February 3, 2019.

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. Revenues are recognized in the 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 August 3, 2019
Net sales to external customers	$	68,456	$	10,195	$	563	$	79,214
Thirteen weeks ended August 4, 2018
Net sales to external customers	$	71,964	$	10,604	$	610	$	83,178

Twenty-six weeks ended August 3, 2019
Net sales to external customers	$	141,397	$	21,082	$	1,097	$	163,576
Property and equipment, net		59,008		5,170		13		64,191
Twenty-six weeks ended August 4, 2018
Net sales to external customers	$	141,932	$	23,430	$	1,000	$	166,362
Property and equipment, net		66,606		9,530		21		76,157

For purposes of this table only:

(

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

(

) Europe includes corporately managed locations in the U.K., Ireland, Denmark and franchise businesses in Europe

(

) Other includes franchise businesses outside of North America and Europe and a corporately-managed location in China