Impairment and Other Charges

9 Months Ended

Oct. 31, 2020

Impairment and Other Charges [Abstract]

Impairment and Other Charges

4. Impairment and Other Charges

	Thirteen weeks ended				Thirty-nine weeks ended
	October 31,		November 2,		October 31,		November 2,
($ in millions)	2020		2019		2020		2019
Losses related to social unrest	$	1	$	—	$	19	$	—
Runners Point shut down		3		—		19		—
Impairment of long-lived assets and right-of-use assets		—		—		15		—
Eastbay reorganization		—		—		3		—
Pension litigation related charges		—		1		2		3
Lease termination costs		—		—		—		13
Total impairment and other charges	$	4	$	1	$	58	$	16

Costs and losses related to social unrest represented inventory losses, damages to store property, repairs, and other costs incurred in connection with the riots that affected certain parts of the United States and Canada during the second quarter of 2020. During the third quarter, social unrest continued and resulted in an additional loss of $1 million. Approximately 140 stores were damaged due to the unrest. Substantially all of the damaged stores reopened during the third quarter. The total charge for the year-to-date period included inventory losses of $15 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 consolidated certain Eastbay operations into the Champs Sports headquarters. We recorded charges of $19 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 have been converted into other banners and approximately 40 Runners Point and Sidestep stores closed prior to their natural lease expirations.

The table below 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 October 31, 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		19		3		22
Payments		(9)		(2)		(11)
Balance as of October 31, 2020	$	10	$	1	$	11

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 and $3 million for the thirty-nine weeks ended October 31, 2020 and November 2, 2019, respectively, related to administrative expenses in connection with the reformation. For the thirty-nine weeks ended November 2, 2019, we also incurred $13 million of lease termination costs related to the closure of our SIX:02 locations.