Impairment and Other Charges

12 Months Ended

Jan. 30, 2021

Impairment and Other Charges [Abstract]

Impairment and Other Charges

3. Impairment and Other Charges

($ in millions)	2020		2019		2018
Impairment of long-lived assets	$	77	$	37	$	4
Runners Point shut down		19		—		—
Losses related to social unrest		8		—		—
Impairment of Investments		4		11		—
EMEA reorganization		4		—		—
Eastbay reorganization		3		—		—
Pension litigation related charges		2		4		18
Lease termination costs		—		13		—
Other intangible asset impairments		—		—		15
Total impairment and other charges	$	117	$	65	$	37

Due to COVID-19 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, and recorded non-cash charges of $15 million to write down store fixtures, leasehold improvements, and right-of-use assets of 70 stores. During the fourth quarter of 2020, we conducted an impairment review for approximately 90 underperforming stores. We evaluated the long-lived assets, including the right-of-use assets and recorded non-cash charges of $62 million to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 60 of these stores. 

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 and resulted in a loss of $18 million. Approximately 140 stores were damaged due to the unrest. The total charge included inventory losses of $15 million, damages to store property of $1 million, and repairs and other costs of $2 million.

Substantially all of the damaged stores reopened during the third quarter. During the fourth quarter, we recorded a partial insurance recovery of $10 million representing an advance on our claim. We are continuing to work with our insurers to determine the remaining amount of our covered losses under our property insurance policy. Additional insurance recoveries 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. In the fourth quarter of 2020, we recorded a charge of $4 million in connection with the reorganization of certain support functions and supply chain operations within our EMEA segment.  

The table below presents a rollforward of our restructuring liability, which is recorded in Accrued and other liabilities on the Consolidated Balance Sheets. The remaining restructuring liability at January 30, 2021, which primarily relates to severance payments, is expected to be substantially paid within the next twelve months.

($ in millions)	Runners Point		Eastbay		EMEA		Total
Balance as of February 1, 2020	$	—	$	—	$	—	$	—
Charges		19		3		4		26
Payments		(13)		(3)		—		(16)
Balance as of January 30, 2021	$	6	$	—	$	4	$	10

During 2020 and 2019, we recorded non-cash charges of $4 million and $11 million, respectively, related to the write-down of certain minority investments. One of our investments experienced a deterioration in their future outlook and due to the underperformance of this investee, we have partially written down our investment in 2020 and 2019. In 2019, we recorded a full write down our investment in a children’s athletics startup which filed for bankruptcy.

The Company and the Company’s 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 be reformed as directed by the court order. We recorded charges in 2020, 2019, and 2018, related to the pension matter and related plan reformation totaling $2 million, $4 million, and $18 million, respectively. These charges recorded represented certain costs of the reformation and related administrative expenses.

During 2019, we performed an impairment review on our Footaction stores, certain other underperforming stores and a vacant store that had been previously subleased. We evaluated the long-lived assets, including the right-of-use assets, of these stores and recorded non-cash charges of $37 million to write down right-of-use assets, store fixtures and leasehold improvements. We also recorded $13 million of lease termination costs related to the closure of our SIX:02 locations during 2019.

During 2018, we recorded non-cash impairment charges of $4 million to write down store fixtures and leasehold improvements. We also performed an impairment review of other intangible assets and recorded a charge of $15 million to write down the value of the trademarks/trade names associated with Runners Point.