Gilly Hicks Restructuring

3 Months Ended

May 03, 2014

Restructuring and Related Activities [Abstract]

As previously announced, on November 1, 2013, A&F’s Board of Directors approved the closure of the Company’s 24 stand-alone Gilly Hicks stores. The Company substantially completed the store closures as planned by the end of the first quarter of Fiscal 2014. The Company continues to offer Gilly Hicks products through Hollister stores and direct-to-consumer channels.

As a result of exiting the Gilly Hicks branded stores, the Company currently estimates that it will incur aggregate pre-tax charges of approximately $89 million, of which $5.6 million of charges, primarily related to lease terminations, was recognized during the first quarter of Fiscal 2014.

Below is a summary of the aggregate pre-tax charges incurred from the announcement on November 1, 2013 through May 3, 2014 related to the closure of the Gilly Hicks branded stores (in thousands):



Lease Terminations and Store Closure Costs	$	47,895
Asset Impairment	37,940
Other	1,297
Total Charges ⁽¹⁾	$	87,132

⁽¹⁾ As of May 3, 2014, the Company incurred aggregate pre-tax charges related to restructuring plans for the Gilly Hicks brand of $49.6 million for the U.S. Stores segment and $37.5 million for the International Stores segment.

The remaining charges, primarily lease-related, including the net present value of payments related to lease terminations, potential sub-lease losses and other lease-related costs of approximately $1.9 million, are expected to be recognized over the remaining lease terms. These estimates are based on a number of significant assumptions and could change materially.

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 May 3, 2014, related to the closure of the Gilly Hicks stores (in thousands):



Accrued Liability as of February 1, 2014	$	42,507
Costs Incurred, Excluding Non-Cash Charges	10,757
Cash Payments	(39,142		)
Accrued Liability as of May 3, 2014	$	14,122

- 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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