Annual report [Section 13 and 15(d), not S-K Item 405]

Segment reporting

v3.25.1
Segment reporting
 12 Months Ended
Feb. 01, 2025
Segment Reporting [Abstract]  
Segment reporting

18. Segment reporting

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The Company operates specialty beauty retail stores in the United States selling cosmetics, fragrance, skincare products, haircare products, wellness products, and services. Nearly every store features a full-service salon. The Company has one operating segment and one reportable segment, both of which include retail stores, salon services, and e-commerce.

The Company’s President and Chief Executive Officer operates as the chief operating decision maker (“CODM”) and evaluates performance based on net income that is reported on the consolidated statements of income. The measure of segment assets is reported on the consolidated balance sheets as total assets. The Company’s net sales are generated within the United States and its long-lived assets are located primarily in the United States.

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The CODM considers both budget-to-actual and forecast-to-actual variances on a monthly basis for profit measures when assessing performance and making decisions about allocating capital and resources. The CODM also uses net income in competitive analysis by benchmarking to competitors. The competitive analysis along with the monitoring of the financial results are used in assessing performance of the reportable segment and in establishing compensation.

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Within the reportable segment, there are significant expense categories regularly provided to the CODM and included in the measure of the segment’s net income as shown below:

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Fiscal year ended

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February 1,

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February 3,

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January 28,

(In thousands, except per share data)

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2025

    

2024

    

2023

Net sales

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$

11,295,654

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$

11,207,303

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$

10,208,580

Less:

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Cost of sales (1)

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6,908,401

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6,826,203

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6,164,070

Associate expenses (2)

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1,459,231

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1,391,175

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1,264,139

Advertising expense, net (3)

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431,455

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422,779

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374,730

Pre-opening expenses

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13,689

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8,510

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10,601

Other segment expenses (1) (4)

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917,906

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880,607

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756,430

Interest income, net

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(15,094)

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(17,622)

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(4,934)

Income tax expense

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378,948

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404,646

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401,136

Net income

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$

1,201,118

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$

1,291,005

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$

1,242,408

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(1) Included within cost of sales and other segment expenses is depreciation and amortization expense of $267,042, $243,840, and $241,372 is fiscal years 2024, 2023, and 2022, respectively, as described in Note 2, “Summary of significant accounting policies.”

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(2) Associate expenses include salaries, wages, bonus, and other forms of compensation related to associates as described in Note 2, “Summary of significant accounting policies.”

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(3) Advertising expense, net consists of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs as described in Note 2, “Summary of significant accounting policies.”

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(4) Other segment expenses include other corporate overhead and store operating expenses within SG&A expenses as described in Note 2, “Summary of significant accounting policies.”