EXIT AND DISPOSAL ACTIVITIES

6 Months Ended

Aug. 01, 2015

Restructuring and Related Activities [Abstract]

EXIT AND DISPOSAL ACTIVITIES

NOTE 6: EXIT AND DISPOSAL ACTIVITIES

Fixed Assets

The Company’s policy is to review the carrying value of all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure impairment losses of fixed assets and leasehold improvements as the amount by which the carrying amount of a long-lived asset exceeds its fair value as prescribed by FASB ASC 360, “Impairment or Disposal of Long-Lived Assets.” If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The fair value is based on estimated market values for similar assets or other reasonable estimates of fair market value based upon using a discounted cash flow model.

During fiscal 2014, in association with the planned closure of stores not meeting the Company’s operational performance targets, we recorded a charge of $2.9 million in selling, general and administrative expense for the impairment of fixed assets and leasehold improvements. Fifty-two stores closed in accordance with the Company’s reconfiguration plan, and during 2014, the Company utilized $2.5 million of the reserve associated with fixed assets and leasehold improvements for the closed stores leaving $0.4 million remaining in the reserve as of January 31, 2015. In the first six months of 2015, the Company recorded an additional charge of $0.3 million for fixed assets and leasehold improvements related to the 2014 store closures leaving $0.7 million remaining in the reserve as of August 1, 2015.

Inventory

As discussed in Note 2 - Inventories, we adjust inventory values on a consistent basis to reflect current market conditions. In accordance with FASB ASC 330, “Inventories,” we write down inventory to net realizable value in the period in which conditions giving rise to the write-downs are first recognized.

In the fourth quarter of 2013, a reserve in the amount of $1.7 million was established for the discontinuance of product categories that the Company has decided to exit in line with the strategies that are part of the Company’s reconfiguration plan. Product categories the Company has decided to exit are furniture, electronics, and footwear. During 2014, the Company reserved an additional $0.3 million for the discontinuance of product categories that the Company has decided to exit and utilized $1.6 million of the reserve associated with goods sold in 2014. During the first six months of 2015, the Company utilized $0.1 million of the reserve associated with goods sold in 2015.

Lease Termination

For lease obligations related to closed stores, we record the estimated future liability associated with the rental obligation on the cease use date (when the stores were closed). The lease obligations are established at the cease use date for the present value of any remaining operating lease obligations, net of estimated sublease income, and at the communication date for severance and other exit costs, as prescribed by FASB ASC 420, “Exit or Disposal Cost Obligations.” Key assumptions in calculating the liability include the timeframe expected to terminate lease agreements, estimates related to the sublease potential of closed locations, and estimates of other related exit costs. If actual timing and potential termination costs or realization of sublease income differ from our estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary.

A lease obligation still exists for some store closures that occurred in 2008. During the first six months of fiscal 2015, we utilized $0.1 million and added less than $0.1 million of the remaining lease liability for the fiscal 2008 store closures, leaving no reserve at August 1, 2015.

The following table illustrates the exit and disposal reserves related to the store closures and inventory strategic initiatives discussed in the previous paragraphs (in millions):

	Balance at   January 31, 2015		Additions		Utilization			Ending Balance August 1, 2015
Inventory markdowns for discontinuance of exit categories	$	0.4	$	—	$	(0.1	)	$	0.3
Inventory provision for freight capitalization expense, exit categories	$	0.1	$	—	$	—		$	0.1
Impairment charge for the disposal of fixed assets for 2014 planned closures	$	0.4	$	0.3	$	—		$	0.7
Lease contract termination liability, 2008 closures	$	0.1	$	—	$	(0.1	)	$	—
Total	$	1.0	$	0.3	$	(0.2	)	$	1.1