Property and Equipment, Net

9 Months Ended

Oct. 31, 2015

Property, Plant and Equipment [Abstract]

Property and equipment, net consisted of:



(in thousands)	October 31, 2015			January 31, 2015
Property and equipment, at cost	$	2,830,013		$	2,797,250
Less: Accumulated depreciation and amortization	(1,911,087		)	(1,830,249		)
Property and equipment, net	$	918,926		$	967,001

Long-lived assets, primarily comprised of property and equipment, are tested for impairment periodically or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Factors used in the evaluation include, but are not limited to, management’s plans for future operations, recent operating results, and undiscounted projected cash flows.

Fair value of the Company's store-related assets is determined at the individual store level, primarily using a discounted cash flow model that utilizes Level 3 inputs. The estimation of future cash flows from operating activities requires significant estimates of factors that include future sales, gross margin performance and operating expenses. In instances where the discounted cash flow analysis indicates a negative value at the store level, the market exit price based on historical experience, and other comparable market data where applicable, is used to determine the fair value by asset type.

Store-related assets are considered level 3 assets in the fair value hierarchy and the fair values were determined at the individual store level, primarily using a discounted cash flow model. The estimation of future cash flows from operating activities requires significant estimates of factors that include future sales, gross margin performance and operating expenses. In instances where the discounted cash flow analysis indicated an impairment at the store level, the market exit price based on historical experience was used to determine the fair value by asset type.

In the third quarter of 2015, the Company incurred non-cash asset impairment charges of $12.1 million as it was determined that the carrying value of certain assets would not be recoverable and exceeded fair value. The asset impairment charges primarily related to the Company's Abercrombie & Fitch flagship store in Hong Kong. The Company incurred $18.2 million in asset impairment charges for the thirty-nine weeks ended October 31, 2015.

In the third quarter of Fiscal 2014, the Company incurred non-cash asset impairment charges of $16.7 million, as it was determined that the carrying value of certain store-related assets would not be recoverable and exceeded fair value. The asset impairment charges primarily related to the Company's Abercrombie & Fitch flagship store in Tokyo, Japan, as well as three other Abercrombie & Fitch stores, five Hollister stores and nine abercrombie kids stores.

In certain lease arrangements, the Company is involved in the construction of a building and is deemed to be the owner of the construction project. In those instances, the Company records an asset for the amount of the total project costs, including the portion funded by the landlord, and an amount related to the value of the pre-existing leased building in property and equipment, net, and a corresponding financing obligation in leasehold financing obligations, on the Condensed Consolidated Balance Sheets. Once construction is complete, if it is determined that the asset does not qualify for sale-leaseback accounting treatment, the amounts remain on the Company's Condensed Consolidated Balance Sheets and the Company continues to amortize the obligation over the lease term and depreciates the asset over its useful life. The Company had $38.2 million and $40.1 million of construction project assets in property and equipment, net at October 31, 2015 and January 31, 2015, respectively.