Restructuring and Strategic Charges

During the fourth quarter of fiscal 2014, we initiated a restructuring program, including the acceleration of domestic store closures and an organizational realignment, to ensure that resources align with long-term growth initiatives, including omni-channel. In connection with this effort, in the fourth quarter of fiscal 2014, we recorded pre-tax restructuring and other charges of approximately $16.7 million primarily related to severance, store closures and other impairment charges.

During the second quarter of fiscal 2015, in connection with the restructuring program, we completed an evaluation of the Boston Proper brand and initiated a plan (the "Plan") to sell the direct-to-consumer ("DTC") business and close its stores, allowing us to focus our efforts on our core omni-channel brands. During the third quarter of fiscal 2015 we signed a non-binding letter of intent to sell the Boston Proper DTC business. Subject to finalization of an asset purchase agreement and a transition services agreement, we expect to complete the sale in the fourth quarter of 2015. As of October 31, 2015, all assets and liabilities of the Boston Proper DTC business have been recorded as held for sale in the accompanying condensed consolidated balance sheets at fair value less costs to sell. While we currently expect to sell the Boston Proper DTC business, the sale is dependent on various factors. There can be no assurance that we will realize our expected proceeds or that the sale, if any, will be complete within a reasonable time. We assessed the disposal group and determined that the sale of the Boston Proper DTC business will not have a major effect on our consolidated results of operations, financial position or cash flows. Accordingly, the disposal group is not presented in the consolidated financial statements as a discontinued operation. Pretax losses in the third quarter of fiscal 2015 and 2014 for the Boston Proper DTC business were $4.1 million and $2.3 million, respectively. Pretax losses in the year-to-date period of fiscal 2015 and 2014 were $8.4 million and $4.0 million, respectively.

A summary of the restructuring and strategic charges is presented in the table below:



	Thirty-Nine Weeks Ended				Thirteen Weeks Ended
	October 31, 2015		November 1, 2014		October 31, 2015			November 1, 2014

	(in thousands)
Impairment charges	$	21,259	$	—	$	329		$	—
Continuing employee-related costs	5,639		—		—			—
Severance charges	1,808		—		(12		)	—
Lease termination charges	4,903		—		2,146			—
Other	569		—		674			—
Total restructuring and strategic charges, pre-tax	$	34,178	$	—	$	3,137		$	—

During the third quarter of fiscal 2015, we recorded pre-tax restructuring and strategic charges in the accompanying condensed consolidated statements of operations of $3.1 million, primarily consisting of $2.1 million in lease termination charges. During the year-to-date period of fiscal 2015, we recorded pre-tax restructuring and strategic charges of $34.2 million, primarily related to $21.3 million in property and equipment impairment charges, $5.6 million in continuing employee-related costs, $1.8 million in severance charges and $4.9 million in lease termination charges.

In connection with the restructuring and strategic activities, in the third quarter of fiscal 2015 we continued our evaluation of our domestic store portfolio and increased the number of under-performing stores identified for closure to 170-175, including the Boston Proper stores. Through the third quarter of 2015, 33 stores across our brands have been closed. We plan to close an additional 40 stores, including 20 Boston Proper stores, in fiscal 2015, with the remainder to be closed in fiscal 2016 and 2017. As a result, we expect to incur additional cash charges related to lease termination expenses of approximately $10.0 million.

As of October 31, 2015, a reserve of $5.7 million related to restructuring and strategic activities was included in other current and deferred liabilities in the accompanying condensed consolidated balance sheets. A roll-forward of the reserve is presented as follows:



	Severance Charges			Lease Termination Charges			Other			Total

	(in thousands)
Beginning Balance, January 31, 2015	$	7,577		$	—		$	486		$	8,063
Charges	1,808			4,903			1,269			7,980
Payments	(7,488		)	(1,707		)	(1,184		)	(10,379		)
Ending Balance, October 31, 2015	$	1,897		$	3,196		$	571		$	5,664