Impairment and Other Charges

12 Months Ended

Jan. 28, 2023

Impairment and Other Charges [Abstract]

Impairment and Other Charges

5. Impairment and Other

($ in millions)	2022		2021		2020
Impairment of long-lived assets and right-of-use assets	$	58	$	92	$	77
Transformation consulting		42		—		—
Reorganization costs		22		4		7
Litigation costs		9		—		—
Other intangible asset impairments		8		2		—
Acquisition and integration costs		4		24		—
Change in fair value of contingent consideration		(31)		—		—
Impairment of investments		—		42		4
Lease termination costs		—		15		—
(Insurance recovery)/ losses related to social unrest		—		(7)		8
Runners Point shut down		—		—		19
Pension litigation related charges		—		—		2
Total impairment and other	$	112	$	172	$	117

During the fourth quarter of 2022, we conducted an impairment review for approximately 142 underperforming stores, which included 70 Sidestep stores. The Company has made the strategic decision to shut down this banner during 2023. We evaluated the long-lived assets, including the right-of-use assets and recorded non-cash charges of $53 million to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 110 of these stores, which included $17 million for Sidestep stores. During the first and second quarters of 2022 we recorded impairment charges of $5 million related to long-lived assets and right-of-use assets, as well as accelerated tenancy charges.

Impairment of long-lived assets and right of use assets recorded during 2021 related primarily to the decision to shut down our Footaction banner. The amounts in 2020 primarily represented impairment related to our stores operating in Europe, which had a triggering event caused by the COVID-19 pandemic. All periods reflect charges associated with our annual fourth quarter impairment review of underperforming stores.

During 2022, we incurred $42 million of transformation consulting expense. Additionally, we incurred $22 million of reorganization costs, primarily severance, due to the reduction of support functions as we streamlined the organization for operational efficiency and included $4 million of other costs related to the wind down of the Sidestep banner. Associated with the decision to shut down the Sidestep banner, we recorded an $8 million intangible asset impairment on the Sidestep tradename.

During the fourth quarter of 2022, we recorded a $9 million charge for litigation, representing a pending settlement of a wage/hour matter.

In connection with the acquisition of atmos in the prior year, the purchase included contingent consideration based on the achievement of certain sales and EBITDA metrics. The fair value was initially measured as part of the purchase price as $35 million. As required, the adjustment of its fair value was recorded through earnings and represents a benefit of $31 million recorded in the fourth quarter of 2022.

During 2022 and 2021 we recorded acquisition and integration costs of $4 million and $24 million, respectively, which primarily represented investment banking and integration consulting fees related to the WSS and atmos acquisitions.

Over the last several years we have made several minority investments in early-stage companies. In connection with these investments, we recorded non-cash charges of $42 million and $4 million, in 2021 and 2020 respectively, related to the write-down of certain minority investments due to their underperformance.