Impairment & Restructuring Charges

12 Months Ended

Feb. 02, 2019

Restructuring And Related Activities [Abstract]

15. Impairment & Restructuring Charges

In Fiscal 2018, the Company recorded pre-tax restructuring charges of $1.6 million, which consisted primarily of charges for corporate severance costs. The Company may incur additional charges for corporate and international restructuring in Fiscal 2019. The magnitude is dependent on a number of factors, including negotiating third-party agreements, adherence to notification and local laws.

In Fiscal 2017, the Company recorded pre-tax restructuring charges of $30.2 million. This amount consisted of costs related to the planned exit of a joint business venture; charges for home office restructuring; and the previously announced initiative to explore the closure or conversion of Company-owned and operated stores in Hong Kong, China, and the United Kingdom to licensed partnerships.

In Fiscal 2016, impairment and restructuring charges were $21.2 million. This amount consisted of impairment of all Company-owned retail stores in the United Kingdom, Hong Kong and China. Additionally, impairment and restructuring charges were incurred for goodwill ($2.5 million) and non-store corporate assets ($11.5 million) that support the international retail stores and e-commerce operations. In Fiscal 2016, the Company undertook an initiative to convert these markets to license partnerships. Assets for these markets currently have no ability to generate sufficient cash flow to cover their carrying value.

The closure of the Company owned and operated United Kingdom stores was completed in Fiscal 2017. The Company may incur additional charges for international restructuring in Fiscal 2018. The magnitude is dependent on a number of factors, including negotiating third-party agreements, adherence to notification requirements and local laws.

	For the years ended
	February 2,		February 3,		January 28,
(In thousands)	2019		2018		2017
Severance and related employee costs	$	1,568	$	10,660	$	295
Lease termination and store closure costs		—	$	9,951	$	295
Total cash restructuring charges ⁽¹⁾	$	1,568		20,611		590

Joint business venture charges ⁽²⁾		—		7,964		—
Inventory charges ⁽³⁾		—		1,669		—
Asset impairment charges ⁽⁴⁾		—		—		20,576
Total impairment and restructuring charges	$	1,568	$	30,244	$	21,166

(1)	Cash charges of $1.6 million, $20.6 million and $0.6 million for Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively, for lease termination, store closures and severance were recorded within Impairment and Restructuring Charges on the Consolidated Statements of Operations

(2)	$8.0 million ($3.5 million cash and $4.5 million non-cash) of net charges for Fiscal 2017 related to the planned exit of a joint business venture were recorded within Other (Expense) Income, Net on the Consolidated Statements of Operations

(3)	Non-cash inventory charges of $1.7 million for Fiscal 2017 related to restructuring activities for our United Kingdom and Asia markets recorded as a reduction in Gross Profit on the Consolidated Statements of Operations.

(4)

Non-cash impairment charges of $20.6 million for Fiscal 2016 consisted of $7.2 million for the impairment of all Company-owned retail stores in the United Kingdom, Hong Kong and China, as well as $10.8 million of impairment and restructuring charges related to non-store corporate assets that support the international retail stores and e-commerce operations and $2.5 million of goodwill impairment for the China and Hong Kong retail operations.

A rollforward of the liabilities recognized in the Consolidated Balance Sheet is as follows:

	February 2,
(In thousands)	2019
Accrued liability as of February 3, 2018	$	7,650
Add: Costs incurred, excluding non-cash charges		1,568
Less: Cash payments and adjustments		(2,589	)
Accrued liability as of February 2, 2019	$	6,629

The accrued liability as of February 3, 2018 relates to previous restructuring activities disclosed in the Company’s Fiscal 2017 Form 10-K, which remained unpaid at the beginning of Fiscal 2018.