PROPERTY AND EQUIPMENT

6 Months Ended

Aug. 03, 2013

Property, Plant and Equipment [Abstract]

Property and equipment consist of the following (in thousands):



	Asset Life	August 3, 2013			February 2, 2013			July 28, 2012
Property and equipment:
Land and land improvements	—	$	3,403		$	3,403		$	3,403
Building and improvements	20-25 yrs	35,548			35,548			35,548
Material handling equipment	10-15 yrs	48,345			48,346			52,082
Leasehold improvements	Lease life	372,771			391,311			397,849
Store fixtures and equipment	3-10 yrs	242,498			265,030			268,244
Capitalized software	5-10 yrs	71,913			65,885			78,737
Construction in progress	—	24,628			34,433			25,832
		799,106			843,956			861,695
Accumulated depreciation and amortization		(487,239		)	(513,855		)	(530,857		)
Property and equipment, net		$	311,867		$	330,101		$	330,838

During the Second Quarter 2013, the Company conducted a review of its store portfolio using business hurdles management designed to enhance profitability and improve overall operating results. Based on this review, the Company compiled a list of underperforming stores targeted for closure (the “Disposition List”). The Company plans to close approximately 100 underperforming stores through fiscal 2016, including approximately 45 stores in fiscal 2013. The Company also identified approximately 70 additional underperforming stores for which the Company will review its options for improving their financial performance, including but not limited to negotiating occupancy relief, in order to achieve the business hurdles. If these stores are unable to do so, then the Company will move them to the Disposition List.

At August 3, 2013, the Company performed impairment testing on 1,050 stores with a total net book value of approximately $160.2 million, and recorded store asset impairment charges of $12.7 million for 75 stores, of which 48 were fully impaired and 27 partially impaired. At August 3, 2013, the aggregate net book value of the stores that were partially impaired was approximately $3.5 million, which the Company determined to be recoverable based on an estimate of discounted future cash flows. Consistent with its impairment policy, the Company concluded that changes in circumstances affecting the carrying value of stores included on the Disposition List required the Company to review all stores included on the Disposition List regardless of whether the store had been open for at least two years. Impairment charges for all stores was recorded as a result of revenue and/or gross margins not meeting targeted levels and accelerated store lease termination dates.

Company management continues to believe that making progress on its systems implementations will be one of the key drivers to improve our operations and strengthen our financial performance. During the Second Quarter 2013 the Company established a strategic long term systems plan. As part of this plan, the Company concluded that certain development costs previously incurred were no longer relevant and deemed certain systems to be obsolete and needed to be replaced by enhanced capabilities in order to incorporate industry best practices as well as service our international franchisees and wholesale business partners. Accordingly, the Company recorded asset impairment charges of $9.1 million and incurred $1.2 million of selling, general and administrative expenses related to the write-down of some previously capitalized development costs and obsolete systems.

At July 28, 2012, the Company performed impairment testing on 976 stores with a total net book value of approximately $163.6 million. During the Second Quarter 2012, the Company recorded $0.3 million of impairment charges primarily related to two underperforming stores, which were both partially impaired. During Year-To-Date 2012, the Company recorded a $1.5 million impairment charge primarily related to three underperforming stores, of which two were partially impaired and one was fully impaired.

As of August 3, 2013, February 2, 2013 and July 28, 2012, the Company had approximately $3.5 million, $4.3 million and $7.4 million, respectively, in property and equipment for which payment had not yet been made. These amounts are included in accounts payable and accrued expenses and other current liabilities.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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