XML 40 R23.htm IDEA: XBRL DOCUMENT v3.22.1
RETIREMENT AND BENEFIT PLANS
 12 Months Ended
Jan. 30, 2022
Retirement Benefits [Abstract]  
RETIREMENT AND BENEFIT PLANS RETIREMENT AND BENEFIT PLANS
The Company, as of January 30, 2022, has two noncontributory qualified defined benefit pension plans covering substantially all employees resident in the United States hired prior to January 1, 2022, who meet certain age and service requirements. The Company had five noncontributory qualified defined benefit pension plans until the merger of three of its plans into another of the plans effective December 31, 2020. The merger did not have any impact on plan benefits. The plans provide monthly benefits upon retirement generally based on career average compensation and years of credited service. The plans also provide participants with the option to receive their benefits in the form of lump sum payments. Vesting in plan benefits generally occurs after five years of service. The Company refers to these two plans as its “Pension Plans.”

The Company also has three noncontributory unfunded non-qualified supplemental defined benefit pension plans, including:

–A plan for certain former members of Tommy Hilfiger’s domestic senior management. The plan is frozen and, as a result, participants do not accrue additional benefits.
–A capital accumulation program for certain former senior executives. Under the individual participants’ agreements, the participants in the program will receive a predetermined amount during the ten years following the attainment of age 65, provided that prior to the termination of employment with the Company, the participant has been in the plan for at least ten years and has attained age 55.
–A plan for certain employees resident in the United States hired prior to January 1, 2022, who meet certain age and service requirements that provides benefits for compensation in excess of Internal Revenue Service earnings limits and requires payments to vested employees upon, or shortly after, employment termination or retirement.

The Company refers to these three plans as its “SERP Plans.”

The Company also provides certain postretirement health care and life insurance benefits to certain retirees resident in the United States. As a result of the Company’s acquisition of The Warnaco Group, Inc. (“Warnaco”), the Company also provides certain postretirement health care and life insurance benefits to certain Warnaco retirees resident in the United States. Retirees contribute to the cost of the applicable plan, both of which are unfunded and frozen. The Company refers to these two plans as its “Postretirement Plans.”
    
Reconciliations of the changes in the projected benefit obligation (Pension Plans and SERP Plans) and the accumulated benefit obligation (Postretirement Plans) were as follows:
 Pension PlansSERP PlansPostretirement Plans
(In millions)202120202021202020212020
Balance at beginning of year$840.5 $830.1 $121.7 $124.5 $6.3 $8.2 
Service cost, net of plan expenses38.1 42.9 4.7 5.7 — — 
Interest cost24.8 25.5 3.3 3.5 0.1 0.2 
Benefit payments(48.7)(64.0)(24.5)(9.6)— — 
Benefit payments, net of retiree contributions— — — — (0.7)(1.3)
Special termination benefits0.5 1.1 1.8 1.9 — — 
Heritage Brands transaction gain(1.5)— (0.3)— — — 
Speedo deconsolidation gain— (2.2)— (0.6)— — 
Actuarial (gain) loss(68.5)7.1 (13.4)(3.7)(0.1)(0.8)
Balance at end of year$785.2 $840.5 $93.3 $121.7 $5.6 $6.3 

Service cost on the Pension Plans decreased in 2021 as compared to 2020 primarily due to a reduction in plan participants resulting from the Company’s North America office workforce reduction as discussed below.

In 2021, benefit payments from the SERP Plans include lump sum payments of accrued benefits to certain vested senior executives who retired or terminated their employment in 2021.

The actuarial gains included in the projected benefit obligation (Pension Plans and SERP Plans) in 2021 were due principally to an increase in the discount rate and an update to plan assumptions, mostly related to termination rates, based on recent trends and management’s future expectations. The net actuarial loss included in the projected benefit obligation (Pension Plans and SERP Plans) in 2020 was due principally to a decrease in the discount rate, partially offset by (i) a reduction in plan participants due to the Company’s North America office workforce reduction and (ii) updated mortality assumptions.

The Company completed the sale of certain of its heritage brands trademarks, as well as certain related inventories of its Heritage Brands business to ABG and other parties on the first day of the third quarter of 2021. In connection with the sale, the employment of certain U.S.-based employees engaged in the Heritage Brands business was terminated in the third quarter of 2021. However, the Company retained the liability for any deferred vested benefits earned by these employees under its retirement plans. No further benefits will be accrued under the plans for these employees and as a result, the Company recognized a gain of $1.8 million in the third quarter of 2021 with a corresponding decrease to its pension benefit obligation. For certain eligible employees affected by the transaction, the Company provided an enhanced retirement benefit and as a result recognized $1.4 million of special termination benefit costs in the third quarter of 2021 with a corresponding increase to its pension benefit obligation. These amounts were included in other (gain) loss, net in the Company’s Consolidated Statement of Operations. Please see Note 3, “Acquisitions and Divestitures,” for further discussion of the Heritage Brands transaction.

The Company provided enhanced retirement benefits to terminated employees in 2021 and as a result recognized $0.9 million of special termination benefit costs with a corresponding increase to its pension benefit obligation.

The Company announced in July 2020 plans to streamline its North American operations to better align its business with the evolving retail landscape. The Company’s actions included a reduction in its North America office workforce by approximately 450 positions, or 12%, across all three brand businesses and corporate functions. For certain eligible employees affected by the workforce reduction, the Company provided an enhanced retirement benefit and as a result recognized $3.0 million of special termination benefit costs during 2020, with a corresponding increase to its pension benefit obligation. Benefit payments from the Pension Plans had increased in 2020 as a result of these actions. Please see Note 17, “Exit Activity Costs,” for further discussion of these actions.

The Company completed the sale of its Speedo North America business to Pentland in April 2020. Upon the closing of the transaction, U.S.-based employees who were engaged primarily in the Speedo North America business terminated their employment with the Company. However, the Company retained the liability for any deferred vested benefits earned by these employees under its retirement plans. No further benefits are being accrued under the plans and as a result, the Company recognized a gain of $2.8 million during 2020 with a corresponding decrease to its pension benefit obligation. The gain was
included in other (gain) loss, net in the Company’s Consolidated Statement of Operations. Please see Note 3, “Acquisitions and Divestitures,” for further discussion of the sale of the Speedo North America business.
    
Reconciliations of the fair value of the assets held by the Pension Plans and the funded status were as follows:
(In millions)20212020
Fair value of plan assets at beginning of year$765.8 $721.2 
Actual return, net of plan expenses9.2 108.6 
Benefit payments(48.7)(64.0)
Fair value of plan assets at end of year$726.3 $765.8 
Funded status at end of year$(58.9)$(74.7)

Amounts recognized in the Company’s Consolidated Balance Sheets were as follows:
 Pension PlansSERP PlansPostretirement Plans
(In millions)202120202021202020212020
Current liabilities$— $— $(35.6)$(10.2)$(0.7)$(0.8)
Non-current liabilities(58.9)(74.7)(57.7)(111.5)(4.9)(5.5)
Net amount recognized$(58.9)$(74.7)$(93.3)$(121.7)$(5.6)$(6.3)

In 2021, SERP Plans current liabilities include the expected benefit payments to certain vested senior executives who retired or terminated their employment in 2021 or who in 2021 announced their retirement or termination of their employment in 2022.

The components of net benefit cost recognized were as follows:
 Pension PlansSERP PlansPostretirement Plans
(In millions)202120202019202120202019202120202019
Service cost$40.1 $45.0 $33.5 $4.7 $5.7 $5.8 $— $— $— 
Interest cost24.8 25.5 27.9 3.3 3.5 4.3 0.1 0.2 0.3 
Actuarial (gain) loss(35.2)(60.0)74.2 (13.4)(3.7)23.1 (0.1)(0.8)0.5 
Expected return on plan assets(44.5)(43.6)(40.3)— — — — — — 
Special termination benefits0.5 1.1 — 1.8 1.9 — — — — 
Heritage Brands transaction gain(1.5)— — (0.3)— — — — — 
Speedo deconsolidation gain— (2.2)— — (0.6)— — — — 
Total$(15.8)$(34.2)$95.3 $(3.9)$6.8 $33.2 $— $(0.6)$0.8 

The actuarial gains in net benefit cost in 2021 were due principally to (i) an increase in the discount rate and (ii) updated plan assumptions, mostly related to termination rates, based on recent trends and management’s future expectations, partially offset by (iii) the difference between the actual and expected returns on plan assets for the Pension Plans. The actuarial gains included in net benefit cost in 2020 were due principally to the (i) difference between the actual and expected returns on plan assets for the Pension Plans, (ii) the reduction in plan participants due to the North America workforce reduction, and (iii) updated mortality assumptions, which more than offset the impact of a decline in the discount rate. The actuarial losses in 2019 were due principally to decreases in the discount rate, partially offset by an actuarial gain as a result of the difference between the actual and expected returns on plan assets.

The components of net benefit cost are recorded in the Company’s Consolidated Statements of Operations as follows: (i) the service cost component is recorded in SG&A expenses, (ii) the Heritage Brands transaction gain and the related special termination benefit costs, as well as the Speedo deconsolidation gain components, are recorded in other (gain) loss, net, and (iii) the other components are recorded in non-service related pension and postretirement (income) cost.
Amortization of prior service cost recognized in other comprehensive (loss) income for Pension Plans was immaterial during 2021, 2020 and 2019.

Pre-tax amounts in AOCL that had not yet been recognized as components of net benefit cost in the Pension Plans were immaterial as of January 30, 2022 and January 31, 2021.

The accumulated benefit obligations (Pension Plans and SERP Plans) were as follows:
Pension PlansSERP Plans
(In millions)2021202020212020
Accumulated benefit obligation$746.4 $754.9 $85.3 $102.6 

In 2021, both of the Company’s Pension Plans had projected benefit obligations and accumulated benefit obligations in excess of plan assets. In 2020, both of the Company’s Pension Plans had projected benefit obligations in excess of plan assets and one of the Company’s Pension Plans had accumulated benefit obligations in excess of plan assets. The balances were as follows:
(In millions, except plan count)20212020
Number of plans with projected benefit obligations in excess of plan assets2 2 
Aggregate projected benefit obligation$785.2 $840.5 
Aggregate fair value of related plan assets$726.3 $765.8 
Number of plans with accumulated benefit obligations in excess of plan assets2 1 
Aggregate accumulated benefit obligation$746.4 $4.3 
Aggregate fair value of related plan assets$726.3 $4.1 

In 2021 and 2020 all of the Company’s SERP Plans had projected benefit obligations and accumulated benefit obligations in excess of plan assets as the plans are unfunded.

Significant weighted average rate assumptions used in determining the projected and accumulated benefit obligations at the end of each year and benefit cost in the following year were as follows:
 202120202019
Discount rate (applies to Pension Plans and SERP Plans)3.31 %3.04 %3.15 %
Discount rate (applies to Postretirement Plans)
2.89 %2.29 %2.70 %
Rate of increase in compensation levels (applies to Pension Plans)4.00 %4.25 %4.23 %
Expected long-term rate of return on assets (applies to Pension Plans)6.00 %6.00 %6.25 %

To develop the expected long-term rate of return on assets assumption, the Company considered the historical level of the risk premium associated with the asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation.

The assets of the Pension Plans are invested with the objective of being able to meet current and future benefit payment needs, while managing future contributions. The investment policy aims to earn a reasonable rate of return while minimizing the risk of large losses. Assets are diversified by asset class in order to reduce volatility of overall results from year to year and to take advantage of various investment opportunities. The assets of the Pension Plans are diversified among United States equities, international equities, fixed income investments and cash. The strategic target allocation for the Pension Plans as of January 30, 2022 was approximately 40% United States equities, 20% international equities and 40% fixed income investments and cash. Equity securities primarily include investments in large-, mid- and small-cap companies located in the United States and abroad. Fixed income securities include corporate bonds of companies from diversified industries, municipal bonds, collective funds and United States Treasury bonds. Actual investment allocations may vary from the Company’s target investment allocations due to prevailing market conditions.
In accordance with the fair value hierarchy described in Note 11, “Fair Value Measurements,” the following tables show the fair value of the total assets of the Pension Plans for each major category as of January 30, 2022 and January 31, 2021:
(In millions)
Fair Value Measurements as of
January 30, 2022(1)
Asset CategoryTotalQuoted Prices
In Active
Markets for
Identical Assets
(Level 1)		Observable
Inputs
(Level 2)		Unobservable
Inputs
(Level 3)
Equity securities:    
United States equities(2)
$186.8 $186.8 $— $— 
International equities(2)
19.8 19.8 — — 
United States equity fund(3)
73.3 — 73.3 — 
International equity funds(4)
155.1 73.6 81.5 — 
Fixed income securities:    
Government securities(5)
62.5 — 62.5 — 
Corporate securities(5)
192.2 — 192.2 — 
Short-term investment funds(6)
35.0 — 35.0 — 
Subtotal$724.7 $280.2 $444.5 $— 
Other assets and liabilities(7)
1.6    
Total$726.3    

(In millions)
Fair Value Measurements as of
January 31, 2021(1)
Asset CategoryTotalQuoted Prices
In Active
Markets for
Identical Assets
(Level 1)

Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Equity securities:    
United States equities(2)
$219.4 $219.4 $— $— 
International equities(2)
24.8 24.8 — — 
United States equity fund(3)
62.2 — 62.2 — 
International equity funds(4)
151.1 71.5 79.6 — 
Fixed income securities:    
Government securities(5)
59.1 — 59.1 — 
Corporate securities(5)
208.8 — 208.8 — 
Short-term investment funds(6)
38.0 — 38.0 — 
Subtotal$763.4 $315.7 $447.7 $— 
Other assets and liabilities(7)
2.4    
Total$765.8    

(1)The Company uses third party pricing services to determine the fair values of the financial instruments held by the pension plans. The Company obtains an understanding of the pricing services valuation methodologies and related inputs and validates a sample of prices by reviewing prices from other sources. The Company has not adjusted any prices received from the third party pricing services.
(2)Valued at the closing price or unadjusted quoted price in the active market in which the individual securities are traded.
(3)Valued at the net asset value of the fund, as determined by a pricing vendor or the fund family. The Company has the ability to redeem this investment at net asset value within the near term and therefore classifies this investment
within Level 2. This commingled fund invests in United States large cap equities of companies that track the Russell 1000 Index.
(4)Valued at the net asset value of the fund, either as determined by the closing price in the active market in which the individual fund is traded and classified within Level 1, or as determined by a pricing vendor or the fund family and classified within Level 2. This category includes funds that invest in equities of companies outside of the United States.
(5)Valued with bid evaluation pricing where the inputs are based on actual trades in active markets, when available, as well as observable market inputs that include actual and comparable trade data, market benchmarks, broker quotes, trading spreads and/or other applicable data.
(6)Valued at the net asset value of the funds, as determined by a pricing vendor or the fund family. The Company has the ability to redeem these investments at net asset value within the near term and therefore classifies these investments within Level 2. These funds invest in high-grade, short-term, money market instruments.
(7)This category includes other pension assets and liabilities such as pending trades and accrued income.

The Company believes that there are no significant concentrations of risk within the plan assets as of January 30, 2022.

Currently, the Company does not expect to make material contributions to the Pension Plans in 2022. The Company’s actual contributions may differ from planned contributions due to many factors, including changes in tax and other laws, as well as significant differences between expected and actual pension asset performance or interest rates. The expected benefit payments associated with the Pension Plans and SERP Plans, and expected benefit payments, net of retiree contributions, associated with the Postretirement Plans are as follows:
(In millions)  
Fiscal YearPension PlansSERP PlansPostretirement Plans
2022$52.5 $35.6 $0.7 
202352.6 7.4 0.7 
202454.7 7.5 0.6 
202554.2 7.6 0.6 
202653.7 7.1 0.5 
2027-2031261.8 29.0 1.8 

The Company has savings and retirement plans and a supplemental savings plan for the benefit of its eligible employees in the United States who elect to participate. The Company matches a portion of employee contributions to the plans. Beginning January 1, 2022, the Company will make an additional contribution to these plans for employees in the United States hired on or after that date in lieu of their participation in the Pension Plans. In addition, as of January 1, 2022, the Company has modified its supplemental savings plan such that participants can choose from a broader variety of investment options than were previously available for any contributions made subsequent to that date. Further, the Company has established a rabbi trust whereby the trust will hold investments that generally mirror the participants’ investment elections in the supplemental savings plan after January 1, 2022. As of January 30, 2022, the fair value of such investments was immaterial. The Company also has defined contribution plans for certain employees in certain international locations, whereby the Company pays a percentage of the contribution for the employee. The Company’s contributions to these plans were $36.5 million, $34.2 million and $29.9 million in 2021, 2020 and 2019, respectively.