Annual report pursuant to Section 13 and 15(d)

Impairment, restructuring and other costs

v3.23.1
Impairment, restructuring and other costs
12 Months Ended
Jan. 28, 2023
Impairment, restructuring and other costs  
Impairment, restructuring and other costs

4. Impairment, restructuring and other costs

The following table provides a summary of the impairment, restructuring and other costs during fiscal 2020:

(In thousands)

    

Impairment of long-lived tangible and right-of-use assets (1)

$

41,948

Store closures

Impairment of long-lived tangible and right-of-use assets (1)

19,569

Lease termination costs

7,443

Severance

489

Total store closures

27,501

Suspension of Canadian expansion

Impairment of long-lived tangible and right-of-use assets (1)

11,016

Lease termination costs

17,388

Severance

717

Total suspension of Canadian expansion

29,121

Other severance

15,752

Total (2)

$

114,322

(1) Amount is included in the $72,533 non-cash long-lived asset impairment charge on the consolidated statements of cash flows for the fiscal year ended January 30, 2021.

(2) There were no impairment, restructuring and other costs recognized during fiscal 2022 or fiscal 2021.

Impairment of long-lived tangible and right-of-use assets. As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain retail stores during fiscal 2020. The Company’s analysis indicated that the carrying values of certain long-lived tangible and right-of-use assets exceeded their respective fair values. As a result, the Company recognized impairment charges related to certain retail stores in fiscal 2020. These impairment charges were primarily driven by lower than projected revenues, lower market rate assessments, and the effect of temporary store closures as a result of the COVID-19 pandemic. The Company also recorded long-lived tangible and right-of-use asset impairment charges related to store closures and suspension of the Canadian expansion during fiscal 2020 as described below.

Store closures. The Company permanently closed 19 stores in the third quarter of fiscal 2020. The impairment charges recognized in fiscal 2020 reduced the carrying value of the long-lived tangible and right-of-use assets to their fair value.

Suspension of Canadian expansion. In fiscal 2019, the Company announced plans to expand internationally with an initial launch into Canada. The Company continues to believe international markets provide a long-term growth opportunity. However, as a result of the COVID-19 pandemic, in September 2020 the Company decided to prioritize growth of its U.S. operations and suspended its planned expansion to Canada. Investments to support the expansion into Canada were limited to early-stage infrastructure buildout and lease obligations for a small number of stores. Impairment, restructuring and other costs related to suspension of the Canada expansion were recognized in fiscal 2020.

Other severance. As part of the efforts to optimize its cost structure, the Company eliminated certain field and corporate roles. As a result, severance expense was recognized during fiscal 2020.