Segment and Geographic Information

12 Months Ended

Jan. 31, 2019

NOTE 17 – SEGMENT AND GEOGRAPHIC INFORMATION

The Company follows accounting guidance related to disclosures about segments of an enterprise and related information. This guidance requires disclosure of segment data based on how management makes decisions about allocating resources to segments and measuring their performance.

The Company conducts its business in two operating segments: Watch and Accessory Brands and Company Stores. The Company’s Watch and Accessory Brands segment includes the designing, manufacturing and distribution of watches of quality owned brands and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Company Stores segment includes the Company’s retail outlet locations.

The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 31.6%, 8.8%, 7.7% and 6.5%, respectively, of the Company’s total net sales for fiscal 2019. For fiscal 2018, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 32.1%, 9.2%, 7.7% and 5.1%, respectively, of the Company’s total net sales. For fiscal 2017, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 23.1%, 8.9%, 8.1% and 6.3%, respectively, of the Company’s total net sales. Substantially all of the Company’s tangible International assets are owned by the Company’s Swiss and Hong Kong subsidiaries.

Operating Segment Data as of and for the Fiscal Year Ended January 31, (in thousands):

	Net Sales
	2019		2018		2017
Watch and Accessory Brands:
Owned brands category	$	263,904	$	204,897	$	205,396
Licensed brands category		320,911		277,323		265,137
After-sales service and all other		11,061		9,862		13,911
Total Watch and Accessory Brands		595,876		492,082		484,444
Company Stores		83,691		75,871		68,308
Consolidated total	$	679,567	$	567,953	$	552,752

	Operating Income (1) (2) (3) (4) (5)
	2019		2018		2017
Watch and Accessory Brands	$	45,194	$	28,296	$	41,773
Company Stores		17,003		14,904		12,208
Consolidated total	$	62,197	$	43,200	$	53,981

	Total Assets				Capital Expenditures
	2019		2018		2019		2018		2017
Watch and Accessory Brands	$	735,244	$	621,965	$	6,508	$	3,133	$	5,666
Company Stores		24,457		23,415		4,127		2,677		254
Consolidated total	$	759,701	$	645,380	$	10,635	$	5,810	$	5,920

	Depreciation and Amortization
	2019		2018		2017
Watch and Accessory Brands	$	12,446	$	11,765	$	9,875
Company Stores		1,719		1,692		1,632
Consolidated total	$	14,165	$	13,457	$	11,507

Geographic Location Data as of and for the Fiscal Year Ended January 31, (in thousands):

	Net Sales (6)						Operating (Loss) / Income (1) (2) (3) (4) (5) (6) (7) (8)
	2019		2018		2017		2019			2018			2017
United States	$	308,420	$	260,606	$	296,311	$	(3,856	)	$	(629	)	$	16,917
International		371,147		307,347		256,441		66,053			43,829			37,064
Consolidated total	$	679,567	$	567,953	$	552,752	$	62,197		$	43,200		$	53,981

	Total Assets				Property, Plant and Equipment, Net
	2019		2018		2019		2018
United States	$	328,014	$	188,346	$	17,030	$	16,570
International		431,687		457,034		9,037		8,101
Consolidated total	$	759,701	$	645,380	$	26,067	$	24,671

(1)

Fiscal 2019 Watch and Accessory Brands and United States and International operating (loss) / income included a charge of $2.9 million related to the amortization of intangible assets associated with the Olivia Burton brand. Fiscal 2018 Watch and Accessory Brands and United States and International operating (loss) / income included a charge of $6.8 million related to transaction charges and the amortization of acquisition accounting adjustments associated with the purchase of the Olivia Burton brand.

(2)	Fiscal 2019 Watch and Accessory Brands and United States and International operating (loss) / income included a charge of $14.3 million related to transaction charges and the amortization of acquisition accounting adjustments associated with the purchase of the MVMT brand.

(3)

Fiscal 2019 Watch and Accessory Brands and United States and International operating (loss) / income included a charge of $0.3 million as part of the Company’s cost savings initiatives. The United States and International locations of the Watch and Accessory Brands segment include a pre-tax charge of $3.9 million and $9.7 million, respectively, for the fiscal year ended January 31, 2018 as part of the Company’s cost savings initiatives. In fiscal 2018, the Company took actions to better align its global infrastructure with the current business environment by consolidating certain operations and streamlining functions to reduce costs and improve profitability. Also, in light of the changing retail landscape and the growing importance of digital marketing and online sales, the Company decided to cease its participation in the Baselworld Watch and Jewelry Show.

(4)

Fiscal 2017 Watch and Accessory Brands and United States operating income included a pre-tax charge of $1.8 million, as a result of the immediate vesting of stock awards and certain other compensation related to the announcement of the retirement of the Company’s former Vice Chairman and Chief Operating Officer, in fiscal 2018.

(5)	Fiscal 2017 Watch and Accessory Brands and United States and International operating income included a $4.0 million charge as a result of actions taken by the Company in fiscal 2017 to achieve greater operating efficiencies and streamline its operations.

(6)	The United States and International net sales are net of intercompany sales of $319.5 million, $268.1 million and $289.2 million for the fiscal years ended January 31, 2019, 2018 and 2017, respectively.

(7)	The United States operating income included $43.5 million, $25.2 million and $26.3 million of unallocated corporate expenses for the fiscal years ended January 31, 2019, 2018 and 2017, respectively.

(8)	The International operating income included $53.8 million, $41.5 million and $40.0 million of certain intercompany profits related to the Company’s supply chain operations for the fiscal years ended January 31, 2019, 2018 and 2017, respectively.