Impairment and Other Charges

12 Months Ended

Jan. 29, 2022

Impairment and Other Charges [Abstract]

Impairment and Other Charges

4. Impairment and Other Charges

($ in millions)	2021		2020		2019
Impairment of long-lived assets and right-of-use assets	$	92	$	77	$	37
Impairment of investments		42		4		11
Acquisition and integration costs		24		—		—
Lease termination costs		15		—		13
Reorganization costs		4		7		—
Other intangible asset impairments		2		—		—
(Insurance recovery)/ losses related to social unrest		(7)		8		—
Runners Point shut down		—		19		—
Pension litigation related charges		—		2		4
Total impairment and other charges	$	172	$	117	$	65

During the second quarter of 2021, we conducted an impairment review of Footaction stores as a result of our decision to convert part of the stores to other existing banner concepts and close the remaining stores. We evaluated the long-lived assets, including the right-of-use assets and recorded non-cash charges to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 60 locations, and accelerated tenancy charges for leases we expect to terminate prior to the end of the lease term. In connection with this, we recorded charges totaling $66 million. During the fourth quarter of 2021, we conducted an impairment review for approximately 100 underperforming stores. We evaluated the long-lived assets, including the right-of-use assets and recorded non-cash charges of $26 million to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 55 of these stores.

During 2021, 2020 and 2019, we recorded non-cash charges of $42 million, $4 million and $11 million, respectively, related to the write-down of certain minority investments. In 2021, due to continued losses and updated estimates of value, we recorded full write downs on three of the Company’s minority investments. Additionally, one of our investments experienced a deterioration in their future outlook and due to the underperformance of this investee, we wrote down our investment in 2020 and 2019. In 2019, we recorded a full write down of our investment in a children’s athletics startup which filed for bankruptcy.

In connection with the acquisitions, we recorded acquisition and integration costs of $24 million, which primarily represented investment banking and integration consulting fees related to the WSS and atmos acquisitions.

In 2021, we recorded $15 million of lease termination costs related to the closure of certain stores. We also recorded $4 million of reorganization expense related to Footaction and certain support functions, as well as $2 million of intangible asset impairment on the Footaction tradename, due to the store and website closures.

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.

During the fourth quarter of 2020, we recorded a partial insurance recovery of $10 million representing an advance on our claim. In 2021, we reached a final insurance settlement for an additional $13 million, of which $7 million is classified in impairment and other charges, as it relates to the book value of property losses recorded in 2020.

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 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 recorded non-cash charges of $62 million to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 60 underperforming stores. 

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 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 and 2019, related to the pension matter and related plan reformation totaling $2 million and $4 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.