Flagship Store Exit Charges (Notes)

9 Months Ended

Nov. 02, 2019

Flagship Store Exit Charges [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

FLAGSHIP STORE EXIT CHARGES

Global Store Network Optimization

Reflecting a continued focus on one of the Company’s key transformation initiatives ‘Global Store Network Optimization,’ the Company continues to pivot away from its large format flagship stores and strives to open smaller, more productive omnichannel focused brand experiences. As a result, the Company has closed certain of its flagship stores and may have additional closures as it executes against this strategy.

The Company recognizes charges related to the exit of its flagship stores in flagship store exit charges on the Consolidated Statements of Operations and Comprehensive Income (Loss). Details of the charges incurred during the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018 related to this initiative were as follows:



	Thirteen Weeks Ended				Thirty-nine Weeks Ended
(in thousands)	November 2, 2019		November 3, 2018		November 2, 2019			November 3, 2018
Single lease cost ⁽¹⁾	$	—	$	—	$	23,269		$	—
Variable lease cost ⁽²⁾	—		—		20,218			—
Operating lease right-of-use asset impairment	—		—		3,229			—
Operating lease cost	—		—		46,716			—
Lease termination fees ⁽³⁾	—		—		—			3,688
Asset disposals and other store-closure costs ⁽⁴⁾	—		—		(1,687		)	—
Employee severance and other employee transition costs	285		—		1,994			120
Total flagship store exit charges	$	285	$	—	$	47,023		$	3,808


⁽¹⁾	Amounts represent accelerated amortization associated with the operating lease right-of-use assets and the impact from remeasurement of operating lease liabilities.


⁽²⁾	Amounts represent the remeasurement of the lease liability to reflect variable lease costs that became fixed upon decision to close flagship stores.


⁽³⁾	Under the new lease accounting standard, which the Company adopted on February 3, 2019, similar charges would be incorporated into the above table as a component of operating lease cost.


⁽⁴⁾	Amounts represent costs incurred in returning the store to its original condition, including updates to previous accruals for asset retirement obligations and costs to remove inventory and store assets.

Future fixed lease payments associated with closed flagship stores are reflected within short-term and long-term operating lease liabilities on the Condensed Consolidated Balance Sheet. These payments are scheduled to be paid through the fiscal year ending January 30, 2029 (“Fiscal 2028”) and are not expected to exceed $15 million in aggregate in any fiscal year. Refer to Note 7, “LEASES,” for a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows.

As the Company continues its ‘Global Store Network Optimization’ efforts, it may incur incremental charges or future cash expenditures not currently contemplated due to events that may occur as a result of, or that are associated with, previously announced flagship store closures and flagship store closures that have not yet been finalized. At this time, the Company is not able to quantify the amount of charges or future cash expenditures that may take place in future periods resulting from any potential flagship store closures given the unpredictable nature of lease exit negotiations and ultimate lease renewal decisions.