Impairment and Other Charges

6 Months Ended

Aug. 01, 2020

Impairment and Other Charges [Abstract]

Impairment and Other Charges

4. Impairment and Other Charges

	Thirteen weeks ended				Twenty-six weeks ended
	August 1,		August 3,		August 1,		August 3,
($ in millions)	2020		2019		2020		2019
Losses related to social unrest	$	18	$	—	$	18	$	—
Runners Point shut down		16		—		16		—
Impairment of long-lived assets and right-of-use assets		—		—		15		—
Eastbay reorganization		3		—		3		—
Pension litigation related charges		1		1		2		2
Lease termination costs		—		13		—		13
Total impairment and other charges	$	38	$	14	$	54	$	15

We recorded charges of $18 million related to social unrest in the second quarter, which resulted in physical damage and inventory loss to approximately 135 stores. This charge included inventory losses of $14 million, damages to store property of $2 million, and repairs and other costs of $2 million. We are currently working with our insurers to determine the amount of our covered losses under our property insurance policy. Insurance recovery for losses in excess of our deductible will be recorded in the period in which we conclude our settlement discussions with our insurance providers.

In May 2020, we made the strategic decision to shut down our Runners Point business and to consolidate our Sidestep support staff into our other operations in Europe. Also, as part of the next phase of the Champs Sports and Eastbay strategic initiative, we restructured positions and aligned several functions across the banners and plan to consolidate certain Eastbay operations from Wausau, Wisconsin into the Champs Sports headquarters in Bradenton, Florida. We recorded charges of $16 million related to the shutdown of the Runners Point business and $3 million related to the reorganization associated with Eastbay.

As part of the decision to close the Runners Point banner, certain Runners Point stores will convert to other banners and approximately 40 Runners Point and Sidestep stores will close prior to their natural lease expiration. The following table presents a rollforward of our restructuring liability, which is recorded in Accrued and other liabilities on the Condensed Consolidated Balance Sheets. The remaining restructuring liability at August 1, 2020, which primarily relates to severance payments, is expected to be substantially paid within the next twelve months.

($ in millions)	Runners Point		Eastbay		Total
Balance as of February 1, 2020	$	—	$	—	$	—
Charges		16		3		19
Payments		(2)		(2)		(4)
Foreign currency fluctuations		1		—		1
Balance as of August 1, 2020	$	15	$	1	$	16

Due to the COVID-19 pandemic and its effect on our actual and projected results, during the first quarter of 2020 we determined that a triggering event occurred for certain underperforming stores operating in Europe and, therefore, we conducted an impairment review. We evaluated the long-lived assets, including the right-of-use assets, of 70 stores and recorded non-cash charges of $15 million to write down store fixtures, leasehold improvements, and right-of-use assets.  

The Company and its U.S. pension plan were involved in litigation related to the conversion of the plan to a cash balance plan. The court entered its final judgment in 2018, which required the plan to be reformed as directed by the court order. We recorded charges of $2 million for both the twenty-six weeks ended August 1, 2020 and August 3, 2019 related to administrative expenses in connection with the reformation. For the twenty-six weeks ended August 3, 2019, we incurred $13 million of lease termination costs related to the closure of our SIX:02 locations.