Gilly Hicks Restructuring

12 Months Ended

Feb. 01, 2014

Restructuring and Related Activities [Abstract]

On November 1, 2013, A&F’s Board of Directors approved the closure of the Company’s stand-alone Gilly Hicks stores. The Company anticipates the closure will be substantially complete by the end of the first quarter of Fiscal 2014. Store closures in Europe are subject to applicable notice and consultation provisions.

In connection with a strategic review, the Company has decided to focus the future development of the Gilly Hicks brand through Hollister stores and direct-to-consumer channels. This decision reflects a successful pilot of selling a limited assortment of Gilly Hicks branded intimates in Hollister stores.

As a result of exiting the Gilly Hicks branded stores, the Company currently estimates that it will incur aggregate pre-tax charges of approximately $90 million, which includes non-cash charges of approximately $60 million. During Fiscal 2013, the Company recognized $81.5 million of charges. The remaining charges, primarily lease-related are expected to be substantially recognized in the first quarter of Fiscal 2014. These estimates are based on a number of significant assumptions and could change materially.

Below is a summary of pre-tax charges incurred to date related to the closure of the Gilly Hicks branded stores (in thousands):




	Fifty-Two Weeks Ended February 1, 2014
Lease Terminations and Store Closure Costs	$	42,667
Asset Impairment	$	37,940
Other	$	892
Total Charges ⁽¹⁾	$	81,499

⁽¹⁾ For the fifty-two week period ended February 1, 2014, the Company incurred charges related to restructuring plans for the Gilly Hicks brand of $50.5 million for U.S. Stores segment and $31.0 million for International Stores segment.

Costs associated with exit or disposal activities are recorded when the liability is incurred. Below is a roll forward of the liabilities recognized on the Consolidated Balance Sheet as of February 1, 2014, related to the closure of the Gilly Hicks stores (in thousands):



	February 1, 2014
Accrued Liability as of November 2, 2013	$	—
Costs Incurred, Excluding Non-Cash Charges	$	44,819
Cash Payments	$	(2,312	)
Accrued Liability as of February 1, 2014	$	42,507

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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