Flagship Store Exit (Benefits) Charges (Notes)

9 Months Ended

Oct. 31, 2020

Flagship Store Exit Charges [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

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.

As part of this ongoing effort, the Company recently announced the early exit of four European Abercrombie & Fitch flagship locations. Three of the leases will be transferred through assignment while the fourth lease will be subleased to a new tenant. The Company no longer has lease obligations beyond Fiscal 2020 for the three transfers and is scheduled to receive payments to fully offset its lease obligations on the sublease. Refer to Note 8, “ LEASES,” for additional information on the sublease arrangement.

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 Sheets. Future fixed lease payments associated with flagship stores that were closed as of October 31, 2020, excluding the subleased flagship store, 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.

The Company recognizes impacts related to the exit of its flagship stores in flagship store exit (benefits) charges on the Consolidated Statements of Operations and Comprehensive Income (Loss). Details of the (benefits) charges incurred during the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019 related to this initiative follow:

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
(in thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Operating lease cost	(1,729)		—		(6,959)		46,716
Gain on lease assignment	(5,237)		—		(5,237)		—
Asset disposals and other store-closure costs (1)	(405)		—		(3,610)		(1,687)
Employee severance and other employee transition costs	(692)		285		3,316		1,994
Total flagship store exit (benefits) charges	$	(8,063)	$	285	$	(12,490)	$	47,023

(1)    Amounts represent costs incurred or benefits associated with returning the store to its original condition, including updated estimates to previously established accruals for asset retirement obligations and costs to remove inventory and store assets.

As the Company continues its ‘Global Store Network Optimization’ efforts, it may incur future cash expenditures or incremental charges or realize benefits 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 future impacts, including any 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.