Inventories, Net

3 Months Ended

May 02, 2015

INVENTORIES, NET

Inventories, net consisted of:



(in thousands)	May 2, 2015			January 31, 2015
Inventories	$	496,519		$	484,865
Less: lower of cost or market reserve	(40,295		)	(12,707		)
Less: shrink reserve	(15,219		)	(11,364		)
Inventories, net	$	441,005		$	460,794

Inventories are valued at the lower of cost or market on a weighted-average cost basis. The Company writes down inventory through a lower of cost or market adjustment, the impact of which is reflected in Cost of Goods Sold on the Condensed Consolidated Statements of Operations and Comprehensive Loss. This adjustment is based on management's judgment regarding future demand and market conditions and analysis of historical experience. As of May 2, 2015, the lower of cost or market reserve included a write-down of the carrying value of certain inventory to its estimated net realizable value as the Company elected to accelerate the disposition of certain aged merchandise that does not support the Company's prospective brand positioning strategy.

Additionally, as part of inventory valuation, inventory shrinkage estimates based on historical trends from actual physical inventories are made each period that reduce the inventory value for lost or stolen items. The Company performs physical inventories on a periodic basis and adjusts the shrink reserve accordingly.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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