PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:



	January 28, 2017			January 30, 2016
	(in thousands)
Property and equipment:
Land and land improvements	$	3,403		$	3,403
Building and improvements	35,548			35,548
Material handling equipment	48,345			48,345
Leasehold improvements	317,884			317,410
Store fixtures and equipment	223,873			218,566
Capitalized software	204,901			177,849
Construction in progress	7,316			8,357
	841,270			809,478
Less accumulated depreciation and amortization	(576,990		)	(518,498		)
Property and equipment, net	$	264,280		$	290,980

During fiscal 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”). As a result of this review the Company closed 34 stores in Fiscal 2016, 32 stores in Fiscal 2015, 35 stores in Fiscal 2014, and 41 stores in fiscal 2013. The Company updates this review annually and has identified additional 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 January 28, 2017, the Company performed impairment testing on 1,039 stores with a total net book value of $91.4 million. During Fiscal 2016, the Company recorded $2.7 million of impairment charges primarily related to 28 underperforming stores, of which 11 were fully impaired and 17 were partially impaired. As of January 28, 2017, the aggregate net book value of the stores that were partially impaired was approximately $1.0 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 achieved comparable sales status. Impairment charges for all stores were recorded as a result of revenue and/or gross margins not meeting targeted levels and accelerated store lease termination dates.

In addition to store impairments, the Company has established a strategic business transformation through technology plan and, as part of this plan, the Company concluded that certain development costs previously incurred were no longer relevant. As part of this plan the Company also deemed certain systems to be obsolete and in need of replacement by enhanced capabilities in order to incorporate industry best practices. Accordingly, during the second quarter of Fiscal 2016 the Company recorded asset impairment charges of $1.3 million related to the write-down of some previously capitalized development costs and obsolete systems.

At January 30, 2016, the Company performed impairment testing on 1,069 stores with a total net book value of $114.5 million. During Fiscal 2015, the Company recorded $2.4 million of impairment charges primarily related to 22 underperforming stores, of which 10 were fully impaired and 12 were partially impaired.

At January 31, 2015, the Company performed impairment testing on 1,063 stores with a total net book value of $138.9 million. During Fiscal 2014, the Company recorded $11.1 million of impairment charges primarily related to 74 underperforming stores, of which 44 were fully impaired and 30 were partially impaired.

During Fiscal 2016, the Company capitalized approximately $21.7 million of external software costs and approximately $15.9 million of internal programming and development costs, of which $1.4 million was related to stock-based compensation.

4. PROPERTY AND EQUIPMENT, NET (Continued)

During Fiscal 2015, the Company capitalized approximately $28.4 million of external software costs and approximately $13.0 million of internal programming and development costs, of which $0.7 million was related to stock-based compensation. During Fiscal 2014, the Company capitalized approximately $42.4 million of external software costs and approximately $11.6 million of internal programming and development costs, of which $0.9 million was related to stock-based compensation. Amortization expense of capitalized software was approximately $28.1 million, $20.1 million and $11.1 million in Fiscal 2016, Fiscal 2015 and Fiscal 2014, respectively.

As of January 28, 2017, the Company had approximately $9.4 million in property and equipment for which payment had not been made, which was included in accounts payable and accrued expenses and other current liabilities.