Lanier Apparel Exit	9 Months Ended
Oct. 30, 2021
Lanier Apparel Exit
Lanier Apparel Exit	7. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we decided to exit our Lanier Apparel business, a business which had been focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased macroeconomic challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic. In connection with the exit of the Lanier Apparel business, which was effectively complete as of October 30, 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the Second Half of Fiscal 2020. These charges consisted of (1) $6 million of inventory markdowns, the substantial majority of which were reversed in Corporate and Other as part of LIFO accounting as the inventory had not been sold as of January 30, 2021, (2) $3 million of employee charges, including severance and employee retention costs, (3) $3 million of operating lease asset impairment charges for leased office space, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in Fiscal 2020. The inventory markdowns and manufacturing facility charges are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments are included in SG&A in Lanier Apparel. During the First Nine Months of Fiscal 2021, we recognized in the Lanier Apparel operating group an additional $1 million of net charges related to the Lanier Apparel exit primarily consisting of $2 million of severance and employee retention costs, $2 million of termination charges related to certain license agreements and $1 million of additional charges related to the Merida manufacturing facility. These charges were partially offset by $4 million of reductions in inventory markdowns previously recognized, of which the substantial majority of this amount was reversed in Corporate and Other as part of LIFO accounting. We do not expect to incur any additional Lanier Apparel exit charges subsequent to October 30, 2021. Substantially all of the cumulative accrued employee charges, termination charges related to contractual commitments and charges related to the Merida manufacturing facility have been paid. As of October 30, 2021, future lease amounts totaling $3 million related to the existing Lanier Apparel office leases that were impaired and vacated are expected to be paid through 2024 over the remaining terms of the respective leases, with no other anticipated significant future cash requirements related to the Lanier Apparel business.

Lanier Apparel Exit

9 Months Ended

Oct. 30, 2021

7. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we decided to exit our Lanier Apparel business, a business which had been focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased macroeconomic challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic.

In connection with the exit of the Lanier Apparel business, which was effectively complete as of October 30, 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the Second Half of Fiscal 2020. These charges consisted of (1) $6 million of inventory markdowns, the substantial majority of which were

reversed in Corporate and Other as part of LIFO accounting as the inventory had not been sold as of January 30, 2021, (2) $3 million of employee charges, including severance and employee retention costs, (3) $3 million of operating lease asset impairment charges for leased office space, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in Fiscal 2020. The inventory markdowns and manufacturing facility charges are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments are included in SG&A in Lanier Apparel.

During the First Nine Months of Fiscal 2021, we recognized in the Lanier Apparel operating group an additional $1 million of net charges related to the Lanier Apparel exit primarily consisting of $2 million of severance and employee retention costs, $2 million of termination charges related to certain license agreements and $1 million of additional charges related to the Merida manufacturing facility. These charges were partially offset by $4 million of reductions in inventory markdowns previously recognized, of which the substantial majority of this amount was reversed in Corporate and Other as part of LIFO accounting. We do not expect to incur any additional Lanier Apparel exit charges subsequent to October 30, 2021.

Substantially all of the cumulative accrued employee charges, termination charges related to contractual commitments and charges related to the Merida manufacturing facility have been paid. As of October 30, 2021, future lease amounts totaling $3 million related to the existing Lanier Apparel office leases that were impaired and vacated are expected to be paid through 2024 over the remaining terms of the respective leases, with no other anticipated significant future cash requirements related to the Lanier Apparel business.