Discontinued Operations

12 Months Ended

Jan. 28, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On July 17, 2015, we sold 100% of the equity interests of our Ben Sherman business, consisting of Ben Sherman Limited and its subsidiaries and Ben Sherman Clothing LLC, for £40.8 million before any working capital or other purchase price adjustments. The final purchase price received by us was subject to adjustment based on, among other things, the actual debt and net working capital of the Ben Sherman business on the closing date, which was finalized during February 2016. We do not anticipate significant operations or earnings related to the discontinued operations in future periods, with cash flow attributable to discontinued operations in the future primarily limited to amounts associated with certain retained lease obligations. The estimated lease liability of $5.4 million as of January 28, 2017 represents our best estimate of the future net loss anticipated with respect to certain retained lease obligations; however, the ultimate loss remains uncertain as the amount of any sub-lease income is dependent upon negotiated terms of any sub-lease agreements entered into for the space and the ability of those sub-tenants to pay the sub-lease income or, alternatively, dependent upon lease termination costs negotiated with the landlords in the future. In Fiscal 2016, we incurred an additional loss related to the retained lease obligations primarily as a result of the default and failure to pay by a sub-tenant and an updated assessment of the anticipated losses considering anticipated sub-lease income to be earned, timing of obtaining a tenant, lease incentives and market rents.

We have not classified as discontinued operations any corporate or shared service expenses historically charged to Ben Sherman which we determined may not be eliminated as a result of its disposal or offset by any transitional services income amounts. Recognizing these expenses and income as continuing operations in Corporate and Other reflected the uncertainty of whether there would be a reduction in such corporate or shared service expenses in the future as a result of the sale of Ben Sherman as well as the uncertainty regarding the term of any transitional services income. Interest expense under our prior U.K. revolving credit agreement, which was satisfied in connection with the transaction, is the only interest expense included in discontinued operations in our consolidated financial statements as this represents the interest expense directly attributable to the discontinued operations.

The following represents major classes of assets and liabilities related to the discontinued operations included in our consolidated balance sheets as of the following dates (in thousands):

	January 28, 2017			January 30, 2016
Current liabilities	$	(2,860	)	$	(2,394	)
Non-current liabilities	(2,544		)	(4,571		)
Net (liabilities) assets	$	(5,404	)	$	(6,965	)

Operating results of the discontinued operations are shown below (in thousands):

	Fiscal 2016			Fiscal 2015			Fiscal 2014
Net sales	$	—		$	28,081		$	77,481
Cost of goods sold	—			17,414			40,751
Gross profit	$	—		$	10,667		$	36,730
SG&A	2,928			20,698			50,130
Royalties and other operating income	—			1,919			4,184
Operating loss	$	(2,928	)	$	(8,112	)	$	(9,216	)
Interest expense, net	—			146			247
Loss from discontinued operations before income taxes	$	(2,928	)	$	(8,258	)	$	(9,463	)
Income taxes	(890		)	(800		)	(1,424		)
Loss from discontinued operations, net of taxes	$	(2,038	)	$	(7,458	)	$	(8,039	)
Loss on sale of discontinued operations, net of taxes	—			(20,517		)	—
Net loss from discontinued operations, net of taxes	$	(2,038	)	$	(27,975	)	$	(8,039	)

Certain information pertaining to depreciation and amortization as well as capital expenditures associated with our discontinued operations, which is included in our consolidated statements of cash flows, has been included below (in thousands):

	Fiscal 2016		Fiscal 2015		Fiscal 2014
Depreciation and amortization	$	136	$	667	$	3,082
Capital expenditures	$	—	$	660	$	4,290