Cover Page
Cover Page - shares | 9 Months Ended | |
May 02, 2020 | Jul. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | May 2, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-39300 | |
Entity Registrant Name | ASCENA RETAIL GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 30-0641353 | |
Entity Address, Address Line One | 933 MacArthur Boulevard | |
Entity Address, City or Town | Mahwah, | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07430 | |
City Area Code | 551 | |
Local Phone Number | 777-6700 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,087,408 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001498301 | |
Current Fiscal Year End Date | --08-01 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 02, 2020 | Aug. 03, 2019 | |
Current assets: | |||
Cash and cash equivalents | $ 438.7 | $ 323.8 | |
Inventories | 449.7 | 490.7 | |
Prepaid expenses and other current assets | 158.5 | 242.3 | |
Current assets held for sale | 25.8 | 0 | |
Current assets related to discontinued operations | 6.1 | 98.2 | |
Total current assets | 1,078.8 | 1,155 | |
Property and equipment, net | 517.2 | 835.5 | |
Operating lease right-of-use asset | 637.6 | 0 | |
Goodwill | 164.6 | 313.5 | |
Other intangible assets, net | 176 | 276.6 | |
Equity method investment | 53.1 | 42.1 | |
Other assets | 55 | 65.6 | |
Non-current assets related to discontinued operations | 0 | 11.5 | |
Total assets | 2,682.3 | 2,699.8 | |
Current liabilities: | |||
Accounts payable | 415.7 | 316.1 | |
Accrued expenses and other current liabilities | 191.8 | 273.3 | |
Deferred income | 127.8 | 114.1 | |
Current portion of lease liabilities | 167.7 | [1],[2] | 0 |
Current portion of long-term debt | 1,498.3 | 0 | |
Current liabilities related to discontinued operations | 35.8 | 94.7 | |
Total current liabilities | 2,437.1 | 798.2 | |
Long-term debt | 0 | 1,338.6 | |
Lease-related liabilities | 0 | 204.6 | |
Deferred income taxes | 7.1 | 0.5 | |
Long-term lease liabilities | 669.3 | [1],[2] | 0 |
Other non-current liabilities | 134.1 | 171.4 | |
Non-current liabilities related to discontinued operations | 5.5 | 35.5 | |
Total liabilities | 3,253.1 | 2,548.8 | |
Commitments and contingencies (Note 18) | |||
Shareholders’ (Deficit) Equity: | |||
Common stock, par value $0.01 per share; 10,046 and 9,925 shares issued and outstanding as of May 2, 2020 and August 3, 2019, respectively | 0.1 | 0.1 | |
Additional paid-in capital | 1,105.8 | 1,102.5 | |
Accumulated deficit | (1,656.6) | (935.9) | |
Accumulated other comprehensive loss | (20.1) | (15.7) | |
Total shareholders (deficit) equity | (570.8) | 151 | |
Total liabilities and shareholders’ (deficit) equity | $ 2,682.3 | $ 2,699.8 | |
[1] | Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. | ||
[2] | Net of sublease income, which is not expected to be significant in any period. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 02, 2020 | Aug. 03, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 10,046,000 | 9,925,000 |
Common stock, outstanding (in shares) | 10,046,000 | 9,925,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | ||||
Income Statement [Abstract] | |||||||
Net sales | $ 601.2 | $ 1,088.4 | $ 2,937.7 | $ 3,507.2 | |||
Cost of goods sold | (415.4) | (461.1) | (1,452.6) | (1,528.1) | |||
Gross margin | 185.8 | 627.3 | 1,485.1 | 1,979.1 | |||
Other operating expenses: | |||||||
Buying, distribution and occupancy expenses | (190.4) | (235.7) | (634.8) | (715.9) | |||
Selling, general and administrative expenses | (412.4) | (407.7) | (1,147.9) | (1,178.5) | |||
Restructuring and other related charges | [1] | 1.2 | [2] | (6.6) | [2] | (2.1) | (28) |
Impairment of goodwill | [1] | (85.5) | (115.1) | (148.9) | (115.1) | ||
Impairment of intangible assets (excluding goodwill) | [1] | (41.3) | (25) | (88.2) | (25) | ||
Depreciation and amortization expense | (57.8) | (67.4) | (189.4) | (209.4) | |||
Total other operating expenses | (786.2) | (857.5) | (2,211.3) | (2,271.9) | |||
Operating loss | [1] | (600.4) | (230.2) | (726.2) | (292.8) | ||
Interest expense | (24.9) | (27.2) | (76.6) | (80.1) | |||
Interest income and other income, net | 0.6 | 0.1 | 3.9 | 1.9 | |||
Gain on extinguishment of debt | 0 | 0 | 28.5 | 0 | |||
Loss from continuing operations before (provision) benefit for income taxes and income from equity method investment | (624.7) | (257.3) | (770.4) | (371) | |||
(Provision) benefit for income taxes from continuing operations | (5.7) | 38.9 | (9.2) | 48.2 | |||
(Loss) income from equity method investment | (12.3) | 0 | 11 | 0 | |||
Loss from continuing operations | (642.7) | (218.4) | (768.6) | (322.8) | |||
(Loss) income from discontinued operations, net of taxes | [3] | (0.8) | (19.5) | 59.4 | 19.3 | ||
Net loss | $ (643.5) | $ (237.9) | $ (709.2) | $ (303.5) | |||
Net (loss) income per common share - basic: | |||||||
Continuing operations (in dollars per share) | $ (64.25) | $ (22.10) | $ (77.08) | $ (32.73) | |||
Discontinued operations (in dollars per share) | (0.08) | (1.97) | 5.96 | 1.96 | |||
Total net loss per basic common share (in dollars per share) | (64.33) | (24.07) | (71.12) | (30.77) | |||
Net (loss) income per common share - diluted: | |||||||
Continuing operations (in dollars per share) | (64.25) | (22.10) | (77.08) | (32.73) | |||
Discontinued operations (in dollars per share) | (0.08) | (1.97) | 5.96 | 1.96 | |||
Total net loss per diluted common share (in dollars per share) | $ (64.33) | $ (24.07) | $ (71.12) | $ (30.77) | |||
Weighted average common shares outstanding: | |||||||
Basic (in shares) | 10,003,000 | 9,882,000 | 9,972,000 | 9,864,000 | |||
Diluted (in shares) | 10,003,000 | 9,882,000 | 9,972,000 | 9,864,000 | |||
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. | ||||||
[2] | Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) | ||||||
[3] | Income from discontinued operations is presented net of income tax expense of $32.9 million and $44.1 million for the three and nine months ended May 4, 2019, respectively. No taxes related to discontinued operations were recorded during the three and nine months ended May 2, 2020 . |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (643.5) | $ (237.9) | $ (709.2) | $ (303.5) |
Other comprehensive loss, net of tax: | ||||
Foreign currency translation adjustment | (2.9) | (0.7) | (2.3) | (1.1) |
Reclassification of interest rate hedge deferred loss into earnings | 1.7 | 0 | 2.6 | 0 |
Deferred loss related to interest rate hedge | (3.5) | 0 | (4.7) | 0 |
Total other comprehensive loss, net of tax | (4.7) | (0.7) | (4.4) | (1.1) |
Total comprehensive loss | $ (648.2) | $ (238.6) | $ (713.6) | $ (304.6) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | ||
Cash flows from operating activities: | |||
Net loss | $ (709.2) | $ (303.5) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization expense | 200.3 | 243.4 | |
Deferred income tax provision (benefit) | 14.9 | (13.7) | |
Deferred rent and other costs recognized under prior lease accounting standard | 0 | (30.1) | |
Stock-based compensation expense | 3.2 | 10.5 | |
Impairment of goodwill | 148.9 | 115.1 | |
Impairment of intangible assets (excluding goodwill) | [1] | 88.2 | 25 |
Impairment of tangible assets | 170.1 | 37.4 | |
Income from equity method investments | (11) | 0 | |
Non-cash interest expense | 7.6 | 7.4 | |
Gain on extinguishment of debt | (28.5) | 0 | |
Gain on sale of property and equipment | 0 | (0.3) | |
Gain on sale of intangible assets | (5) | 0 | |
Other non-cash income, net | (12.9) | (4) | |
Changes in operating assets and liabilities: | |||
Inventories | 98 | (118.2) | |
Accounts payable, accrued liabilities and income tax liabilities | (51.5) | (81.1) | |
Deferred income | 15.8 | 33 | |
Lease-related liabilities | 0 | 8.3 | |
Operating lease right-of-use assets and lease liabilities | (8) | 0 | |
Other balance sheet changes, net | 60.9 | 42.1 | |
Cash flows provided by operating activities | (18.2) | (28.7) | |
Cash flows from investing activities: | |||
Capital expenditures | (56.8) | (103.8) | |
Proceeds from the sale of assets | 0 | 1 | |
Proceeds from sale of intangible assets | 5 | 0 | |
Cash flows used in investing activities | (51.8) | (102.8) | |
Cash flows from financing activities: | |||
Redemptions of term loan debt | (49.4) | 0 | |
Proceeds from revolver borrowings | 230 | 28.1 | |
Repayments of revolver borrowings | 0 | (28.1) | |
Tax payments related to share-based awards | 0 | (0.6) | |
Proceeds from stock options exercised and employee stock purchases | 0.1 | 0.6 | |
Cash flows provided by financing activities | 180.7 | 0 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 110.7 | (131.5) | |
Cash, cash equivalents and restricted cash at beginning of period | 329.2 | 240.1 | |
Cash, cash equivalents and restricted cash at end of period | $ 439.9 | $ 108.6 | |
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY - USD ($) $ in Millions | Total | Cumulative Effect, Period Of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated DeficitCumulative Effect, Period Of Adoption, Adjustment | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Aug. 04, 2018 | 9,817,000 | ||||||
Beginning balance at Aug. 04, 2018 | $ 798.5 | $ 0.1 | $ 1,090.1 | $ (278.8) | $ (12.9) | ||
Beginning balance (Accounting Standards Update 2014-09) at Aug. 04, 2018 | $ 4.9 | $ 4.9 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 5.9 | 5.9 | |||||
Total other comprehensive income | (0.4) | (0.4) | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 54,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | 4.3 | 4.8 | (0.5) | ||||
Ending balance (in shares) at Nov. 03, 2018 | 9,871,000 | ||||||
Ending balance at Nov. 03, 2018 | 813.2 | $ 0.1 | 1,094.9 | (268.5) | (13.3) | ||
Beginning balance (in shares) at Aug. 04, 2018 | 9,817,000 | ||||||
Beginning balance at Aug. 04, 2018 | 798.5 | $ 0.1 | 1,090.1 | (278.8) | (12.9) | ||
Beginning balance (Accounting Standards Update 2014-09) at Aug. 04, 2018 | 4.9 | 4.9 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (303.5) | ||||||
Total other comprehensive income | (1.1) | ||||||
Ending balance (in shares) at May. 04, 2019 | 9,890,000 | ||||||
Ending balance at May. 04, 2019 | 509.3 | $ 0.1 | 1,101.2 | (578) | (14) | ||
Beginning balance (in shares) at Nov. 03, 2018 | 9,871,000 | ||||||
Beginning balance at Nov. 03, 2018 | 813.2 | $ 0.1 | 1,094.9 | (268.5) | (13.3) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (71.5) | (71.5) | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 7,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | 3.7 | 3.8 | (0.1) | ||||
Ending balance (in shares) at Feb. 02, 2019 | 9,878,000 | ||||||
Ending balance at Feb. 02, 2019 | 745.4 | $ 0.1 | 1,098.7 | (340.1) | (13.3) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (237.9) | (237.9) | |||||
Total other comprehensive income | (0.7) | (0.7) | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 12,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | 2.5 | 2.5 | |||||
Ending balance (in shares) at May. 04, 2019 | 9,890,000 | ||||||
Ending balance at May. 04, 2019 | 509.3 | $ 0.1 | 1,101.2 | (578) | (14) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Accumulated deficit | (935.9) | ||||||
Accumulated deficit | Accounting Standards Update 2016-02 | $ (947.4) | ||||||
Beginning balance (in shares) at Aug. 03, 2019 | 9,925,000 | 9,925,000 | |||||
Beginning balance at Aug. 03, 2019 | $ 151 | $ 0.1 | 1,102.5 | (935.9) | (15.7) | ||
Beginning balance (Accounting Standards Update 2016-02) at Aug. 03, 2019 | (11.5) | (11.5) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 31.7 | 31.7 | |||||
Total other comprehensive income | 0.2 | 0.2 | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 47,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | 1.6 | 1.6 | |||||
Ending balance (in shares) at Nov. 02, 2019 | 9,972,000 | ||||||
Ending balance at Nov. 02, 2019 | $ 173 | $ 0.1 | 1,104.1 | (915.7) | (15.5) | ||
Beginning balance (in shares) at Aug. 03, 2019 | 9,925,000 | 9,925,000 | |||||
Beginning balance at Aug. 03, 2019 | $ 151 | $ 0.1 | 1,102.5 | (935.9) | (15.7) | ||
Beginning balance (Accounting Standards Update 2016-02) at Aug. 03, 2019 | $ (11.5) | $ (11.5) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (709.2) | ||||||
Total other comprehensive income | $ (4.4) | ||||||
Ending balance (in shares) at May. 02, 2020 | 10,046,000 | 10,046,000 | |||||
Ending balance at May. 02, 2020 | $ (570.8) | $ 0.1 | 1,105.8 | (1,656.6) | (20.1) | ||
Beginning balance (in shares) at Nov. 02, 2019 | 9,972,000 | ||||||
Beginning balance at Nov. 02, 2019 | 173 | $ 0.1 | 1,104.1 | (915.7) | (15.5) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (97.4) | (97.4) | |||||
Total other comprehensive income | 0.1 | 0.1 | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 14,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | 0.9 | 0.9 | |||||
Ending balance (in shares) at Feb. 01, 2020 | 9,986,000 | ||||||
Ending balance at Feb. 01, 2020 | 76.6 | $ 0.1 | 1,105 | (1,013.1) | (15.4) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (643.5) | (643.5) | |||||
Total other comprehensive income | (4.7) | (4.7) | |||||
Shares issued and equity grants made pursuant to stock-based compensation plans (in shares) | 60,000 | ||||||
Shares issued and equity grants made pursuant to stock-based compensation plans | $ 0.8 | 0.8 | |||||
Ending balance (in shares) at May. 02, 2020 | 10,046,000 | 10,046,000 | |||||
Ending balance at May. 02, 2020 | $ (570.8) | $ 0.1 | $ 1,105.8 | $ (1,656.6) | $ (20.1) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Accumulated deficit | (1,656.6) | ||||||
Accumulated deficit | Accounting Standards Update 2016-02 | $ (11.5) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | |
Income Statement [Abstract] | ||||
Income tax expense | $ 0 | $ 32.9 | $ 0 | $ 44.1 |
Description of Business
Description of Business | 9 Months Ended |
May 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Overview Ascena Retail Group, Inc., a Delaware corporation, is a national specialty retailer of apparel for women and tween girls. The Company’s continuing operations consist of its direct channel operations and approximately 2,700 stores throughout the United States, Canada and Puerto Rico. The Company had annual revenues from continuing operations for the fiscal year ended August 3, 2019 of approximately $4.7 billion. The Company and its subsidiaries are collectively referred to herein as the “Company,” “ascena,” “we,” “us,” “our” and “ourselves,” unless the context indicates otherwise. The Company operates its business in three reportable segments: Premium Fashion , Plus Fashion and Kids Fashion . All of our segments sell fashion merchandise to the women’s and girls’ apparel market across a wide range of ages, sizes and demographics. Our segments consist of specialty retail, outlet and direct channel as well as licensed franchises in international territories at our Kids Fashion segment. Our Premium Fashion segment consists of our Ann Taylor and LOFT brands; our Plus Fashion segment consists of our Lane Bryant and Catherines brands and our Kids Fashion segment consists of our Justice brand. As further discussed in Note 2, during the second quarter of the fiscal year ending August 1, 2020 (“Fiscal 2020”), the previously-announced wind down of Dressbarn was completed and in Fiscal 2019, the Company completed the sale of its maurices brand, both of which were formerly included in the Value Fashion segment. For a more detailed description of each brand’s products and markets in which they serve, see Part I, Item 1 “Business” in our Annual Report on Form 10-K for the fiscal year ended August 3, 2019 (the “Fiscal 2019 10-K”). The Company’s brands had the following store counts as of May 2, 2020: Justice Lane Bryant LOFT Catherines Ann Taylor Total 813 680 662 286 292 2,733 Liquidity The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. As discussed in Note 11, the Company has significant indebtedness, primarily consisting of its Term Loan, borrowings under the Amended Revolving Credit Agreement (both of which are defined in Note 11), as well as obligations related to its retail store leases. As a result of the Company’s significant indebtedness, and the negative impacts sustained due to the worldwide COVID-19 pandemic, defined and discussed below, on July 23, 2020, the Company and certain of the Company’s direct and indirect subsidiaries commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). For more information, refer to Note 21. As discussed in Note 21, the filing of the Chapter 11 Cases constitutes an event of default under the Company’s Term Loan and Amended Revolving Credit Agreement, resulting in the automatic and immediate acceleration of the outstanding obligations thereunder. The Company projects that it will not have sufficient cash on hand or available liquidity to repay such debt. These conditions and events raise substantial doubt as to the Company’s ability to continue as a going concern. While operating as a debtor-in-possession pursuant to the Bankruptcy Code, we may sell, or otherwise dispose of or liquidate, assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business, for amounts other than those reflected in the accompanying condensed consolidated financial statements. Further, a Chapter 11 plan of reorganization is likely to materially change the amounts and classifications of assets and liabilities reported in our unaudited Condensed Consolidated Balance Sheet as of May 2, 2020. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of the Chapter 11 Cases, which are subject to a high degree of uncertainty and are dependent upon factors that are outside of the Company’s control, including actions of the Bankruptcy Court and the Company’s creditors. There can be no assurance that the Company will confirm and consummate a plan of reorganization with respect to the Chapter 11 Cases. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. COVID-19 In March 2020, the World Health Organization declared the coronavirus disease ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in restrictions and shutdowns implemented by national, state, and local authorities. In response to COVID-19, the Company took a number of steps, some of which included a temporary shutdown of our retail stores and numerous actions in an effort to enhance liquidity and financial flexibility. COVID-19 has had a number of significant impacts on our financial statements, which are discussed in more detail in the Notes to these condensed consolidated financial statements as follows: • The shutdown of our retail stores resulted in a significant reduction in Net sales in the third quarter of Fiscal 2020. As a result of the Net sales reduction and lower cash flows, the Company was required to revisit long-term cash flow assumptions and recorded impairments of goodwill, tangible and intangible assets in the third quarter of Fiscal 2020. Such impairments are further described in Notes 6 and 7; • Steps to enhance liquidity and financial flexibility included the draw-down of $230 million on our revolving credit facility, which is further discussed in Note 11; • On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the United States. The CARES Act is discussed in Note 14; • Beginning in April 2020, we suspended rent payments under the leases for our temporarily closed retail stores. The impact of recent guidance issued by the Financial Accounting Standards Board's ("FASB") is discussed in Note 4; and • The store closures resulted in unsold seasonal inventory which required the company to record significant inventory reserves, which are discussed in Note 9. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
May 02, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Consolidation These unaudited interim condensed consolidated financial statements present all the assets, liabilities, revenues, expenses and cash flows of entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Period Fiscal 2020 will end on August 1, 2020 and will be a 52-week period. Fiscal year 2019 ended on August 3, 2019 and was a 52-week period. The three and nine months ended May 2, 2020 and May 4, 2019 were 13 and 39-week periods, respectively. Interim Financial Statements These interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and are unaudited. In the opinion of management, such condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the condensed consolidated financial condition, results of operations, comprehensive income, cash flows and equity of the Company for the interim periods presented. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report as permitted by the SEC’s rules and regulations. However, the Company believes that the disclosures herein are adequate to ensure that the information is fairly presented. The condensed consolidated balance sheet data as of August 3, 2019 is derived from the audited consolidated financial statements included in the Company’s Fiscal 2019 10-K, which should be read in conjunction with these interim financial statements. Reference is made to the Fiscal 2019 10-K for a complete set of financial statements. Common Stock Split On December 19, 2019, the Company announced that the Board of Directors (the “Board”) has approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20. Refer to Note 15 for additional information. As a result, the applicable equity and shares information related to prior periods has been restated to reflect this reverse stock split. Discontinued Operations Dressbarn Wind Down In May 2019, the Company announced the wind down of its Dressbarn brand, which was completed in the second quarter of Fiscal 2020. All Dressbarn store locations were closed as of December 31, 2019. Activities during the first and second quarter of Fiscal 2020 include additional employee related accruals, the closure of stores and the negotiation of lease terminations. In addition, during the first quarter of Fiscal 2020, the Company sold the direct channel rights to Dressbarn intellectual property to a third-party for approximately $5 million, which was treated as a reduction of the wind down costs. In connection with the Dressbarn wind down, we have incurred cumulative costs of approximately $62 million of which $9 million was incurred during the nine months ending May 2, 2020 and have been included in the results disclosed below. No material amounts were incurred during the three months ending May 2, 2020 and May 4, 2019, respectively. The following table summarizes the results of Dressbarn reclassified as discontinued operations: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions, unaudited) Net sales $ — $ 177.3 $ 326.6 $ 532.0 Depreciation and amortization expense — (4.1) (10.9) (12.9) Operating (loss) income (0.8) (18.8) 59.4 (34.9) Pretax (loss) income from discontinued operations (0.8) (18.8) 59.4 (34.9) Income tax provision — (7.0) — (4.5) (Loss) income from discontinued operations, net of tax $ (0.8) $ (25.8) $ 59.4 $ (39.4) The major components of Dressbarn assets and liabilities related to discontinued operations are summarized below: May 2, August 3, (millions, unaudited) Cash and cash equivalents $ — $ 4.2 Inventories — 57.0 Prepaid expenses and other current assets 6.1 37.0 Property and equipment, net — 11.5 Total assets related to discontinued operations $ 6.1 $ 109.7 Accounts payable and other current liabilities $ 35.8 $ 94.7 Lease-related liabilities — 29.6 Other liabilities 5.5 5.9 Total liabilities related to discontinued operations $ 41.3 $ 130.2 Sale of maurices In the fourth quarter of Fiscal 2019, the Company and Maurices Incorporated, a Delaware corporation (“ maurices ”) and wholly owned subsidiary of ascena, completed the transaction contemplated by the previously-announced Stock Purchase Agreement with Viking Brand Upper Holdings, L.P., a Cayman Islands exempted limited partnership (“Viking”) and an affiliate of OpCapita LLP (“OpCapita”), providing for, among other things, the sale by ascena of maurices to Viking (the “Transaction”). Effective upon the closing of the Transaction, ascena received cash proceeds of approximately $210 million and a 49.6% ownership interest in the operations of maurices through its investment in Viking, consisting of interests in Viking preferred and common stock. Reference is made to Note 10 for more information about the Company’s investment in Viking. As the sale of maurices represented a major strategic shift, as well as the Company's determination that it did not have a significant continuing involvement in the business, the Company's maurices business was classified as a discontinued operations within the condensed consolidated financial statements. The following table summarizes the results of maurices reclassified as discontinued operations: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions, unaudited) Net sales $ — $ 238.3 $ — $ 749.4 Depreciation and amortization expense — (6.6) — (21.1) Operating income — 32.0 — 97.8 Pretax income from discontinued operations — 32.2 — 98.3 Income tax provision — (25.9) — (39.6) Income from discontinued operations, net of tax $ — $ 6.3 $ — $ 58.7 Cash Flow Information Related to Discontinued Operations The major components of cash flows related to discontinued operations are summarized below: Nine Months Ended May 2, May 4, (millions, unaudited) Cash provided by operations of discontinued operations $ 57.0 $ 38.0 Cash provided by (used by) investing activities of discontinued operations 4.9 (5.0) Condensed Consolidated Statements of Cash Flows Reconciliation A reconciliation of cash, cash equivalents and restricted cash in the condensed consolidated balance sheets to the amounts shown on the condensed consolidated statements of cash flows is shown below: Reconciliation of cash, cash equivalents and restricted cash: May 2, August 3, May 4, August 4, Cash and cash equivalents $ 438.7 $ 323.8 $ 97.9 $ 230.2 Restricted cash included in other current assets 1.2 1.2 1.2 1.2 Cash included in discontinued operations — 4.2 9.5 8.7 Total cash, cash equivalents and restricted cash $ 439.9 $ 329.2 $ 108.6 $ 240.1 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
May 02, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Recently adopted standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (“ASC 842”). The guidance requires the lessee to recognize the assets and liabilities for the rights and obligations created by leases with terms of 12 months or more. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The guidance may be applied retrospectively to each period presented or with the cumulative effect recognized as of the initial date of application. The Company adopted this ASU as of the beginning of Fiscal 2020 with the cumulative effect recognized at adoption. As a result of this standard, the Company has recognized approximately $637.6 million of right-of-use assets and approximately $837.0 million of lease liabilities (current and long-term combined) on its condensed consolidated balance sheet as of May 2, 2020. The right-of-use lease liability for operating leases is based on the net present value of future minimum lease payments. The right-of-use asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts such as favorable leases, straight-line rent liability, purchased lease rights and landlord allowances and a cumulative effect adjustment that decreased opening Accumulated deficit by approximately $11.5 million for transition impairments related to previously impaired leased locations. As a result, prior periods have not been restated. The Company determines if an arrangement is a lease at inception and on the lease commencement date, the Company recognizes an asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on a third-party analysis, which is updated periodically. That analysis concluded that the Company’s incremental borrowing rate upon adoption ranged from 24-30%, depending on the term. For leases existing before the adoption of the new lease accounting standard, the Company used its incremental borrowing rate as of the date of adoption, determined using the remaining lease term as of the date of adoption. For leases commencing on or after the adoption of the new lease accounting standard, the incremental borrowing rate is determined using the remaining lease term as of the lease commencement date. The Company elected the package of practical expedients included in this guidance, which allows us (i) to not reassess whether any expired or existing contracts contain leases; (ii) to not reassess the lease classification for any expired or existing leases; (iii) to account for a lease and non-lease component as a single component for both its real estate and non-real estate leases; and (iv) to not reassess the initial direct costs for existing leases. The measurement of lease right-of-use assets and liabilities includes amounts related to: • Lease payments made prior to the lease commencement date; • Incentives from landlords received by the Company for signing a lease, including construction allowances or deferred lease credits paid to the Company by landlords towards construction and tenant improvement costs, which are presented as a reduction to the right-of-use asset recorded; • Fixed payments related to lease components, such as rent escalation payments scheduled at the lease commencement date; and • Fixed payments related to nonlease components, such as taxes, insurance, and maintenance costs. The measurement of lease right-of-use assets and liabilities excludes amounts related to: • Variable payments related to lease components, such as contingent rent payments made by the Company based on performance, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations; • Variable payments related to nonlease components, such as taxes, insurance, and maintenance costs, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations; and • Leases with an initial term of 12 months or less, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations. Certain of the Company’s leases include options to extend the lease or to terminate the lease. The Company assesses these leases and, depending on the facts and circumstances, may or may not include these options in the measurement of the Company’s lease right-of-use assets and liabilities. Generally, the Company’s options to extend its leases are at the Company’s sole discretion and at the time of lease commencement are not reasonably certain of being exercised. There may be instances in which a lease is being renewed on a month-to-month basis and, in these instances, the Company will recognize lease expense in the period incurred in the condensed consolidated statements of operations until a new agreement has been executed. Amortization and interest expense related to lease right-of-use assets and liabilities are generally calculated on a straight-line basis over the lease term. Amortization and interest expense related to previously impaired lease right-of-use assets are calculated on a front-loaded amortization pattern resulting in higher single lease expense in earlier periods. Depending on the nature of the lease, amortization and interest expense is recorded in either Buying, distribution, and occupancy expense or in Selling, general and administrative expense in the condensed consolidated statements of operations. The Company’s lease right-of-use assets are assessed for indicators of impairment at least quarterly. The results of any such impairments are disclosed in Note 13. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, the Company does not have any finance leases, any material sublease arrangements or any material leases where the Company is considered the lessor. The following table provides the impact of adoption of ASU 2016-02 on the Company’s condensed consolidated balance sheet: August 3, 2019 (as reported under ASC 840) Impact of adoption of ASC 842 August 3, 2019 (as reported under ASC 842) (millions) Assets Prepaid expenses and other current assets $ 242.3 $ (33.6) $ 208.7 Current assets related to discontinued operations 98.2 (7.6) 90.6 Other intangible assets, net 276.6 (8.4) 268.2 Operating lease right-of-use asset — 744.4 744.4 Non-current assets related to discontinued operations 11.5 131.5 143.0 Liabilities and Shareholders’ Equity Current portion of lease liabilities — 141.3 141.3 Current liabilities related to discontinued operations 94.7 37.8 132.5 Lease-related liabilities 204.6 (204.6) — Long-term lease liabilities — 769.1 769.1 Non-current liabilities related to discontinued operations 35.5 94.2 129.7 Accumulated deficit (935.9) (11.5) (947.4) Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The new standard simplifies the accounting for income taxes by removing exceptions: • to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); • to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; • to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and • to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the standard does not require that an entity allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements, however, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. The standard does require that an entity: • recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; • evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; and • reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ASU 2019-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The Company has elected to early adopt ASU 2019-12. By early adopting, ASU 2019-12 becomes effective as of the beginning of Fiscal 2020, however, there is no cumulative effect to be recognized with the early adoption. As a result of the ASU 2019-12 adoption, the Company did not recognize income tax expense on the income from discontinued operations related to Dressbarn for the three and nine months ended May 2, 2020. Recently issued standards Intangible Assets In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods. Early adoption is permitted for annual or interim periods. This ASU requires that implementation costs incurred in a hosting arrangement that is a service contract be assessed in accordance with the existing guidance in Subtopic 350-40, “Internal-Use Software.” Accordingly, costs incurred during the preliminary project stage must be expensed as incurred, while costs incurred during the application development stage must be capitalized. Capitalized implementation costs associated with a hosting arrangement that is a service contract must be expensed over the term of the hosting arrangement. Additionally, the new guidance requires that the expense of these capitalized costs be presented in the same line item in the statement of income as the fees associated with the hosting element of the arrangement. While the Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements, the Company does not anticipate that the guidance will have a significant impact on its consolidated financial statements upon adoption of the new standard in Fiscal 2021. |
Leases
Leases | 9 Months Ended |
May 02, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has leases related to its Company-operated retail stores as well as for certain of its distribution centers, office space, information technology and equipment. A summary of the Company’s operating lease costs from continuing operations is as follows: Three Months Ended Nine Months Ended May 2, May 2, (millions) Single lease costs (a) $ 91.1 $ 281.0 Variable lease costs (b) 48.5 153.1 Total lease expenses 139.6 434.1 Less rental income (c) (0.8) (2.9) Total net rental expense (d) $ 138.8 $ 431.2 ________ (a) Includes amortization and interest expense associated with operating lease right-of-use assets and liabilities. (b) Includes variable payments related to both lease and non-lease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs, as well as month-to-month rent payments while expired store lease contracts are renegotiated. (c) Substantially reflects rental income received related to Company-owned space in Duluth, MN. (d) Total occupancy costs included in discontinued operations related to Dressbarn were not material for the three months ended May 2, 2020 and $32.1 million for the nine months ended May 2, 2020. The following table provides a summary of the Company’s operating lease costs from continuing operations for the three and nine months ended May 4, 2019, which was accounted for in accordance with Accounting Standards Codification (“ASC”) 840, “Leases” (“ASC 840”). Prior periods have not been adjusted for the adoption of ASU 2016-02. Three Months Ended Nine Months Ended May 4, May 4, (millions) Base rentals $ 99.1 $ 296.4 Percentage rentals 6.4 21.0 Other occupancy costs, primarily CAM and real estate taxes 43.4 126.3 Total (a) $ 148.9 $ 443.7 ________ (a) Total occupancy costs included in discontinued operations were $52.5 million and $163.1 million for the three and nine months ended May 4, 2019, respectively. The weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rates used to calculate the Company’s operating lease liabilities are as follows: May 2, Weighted-average remaining lease term (years) 5.3 Weighted-average discount rate 25.7% The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of May 2, 2020: Fiscal Years Minimum Operating Lease Payments (a) (b) (millions) 2020 (excluding the nine months ended May 2, 2020) $ 99.5 2021 355.1 2022 290.5 2023 213.4 2024 148.9 Thereafter 462.6 Total undiscounted operating lease liabilities 1,570.0 Less imputed interest (733.0) Present value of operating lease liabilities 837.0 Less current portion of lease liabilities (167.7) Total long-term lease liabilities $ 669.3 (a) Net of sublease income, which is not expected to be significant in any period. (b) Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. As of May 2, 2020, the Company had no minimum commitments related to additional operating lease contracts that have not yet commenced. As reported under the previous accounting standard, the following table provides a summary of total consolidated operating lease commitments, including leasehold financing obligations, under non-cancelable leases as of August 3, 2019: Fiscal Years Minimum Operating Lease Payments (a) (b) (millions) 2020 $ 462.0 2021 402.3 2022 325.4 2023 242.7 2024 172.6 Thereafter 563.3 Total future minimum rentals $ 2,168.3 (a) Net of sublease income, which is not expected to be significant in any period. (b) Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. Supplemental disclosures related to leases are as follows: Three Months Ended Nine Months Ended May 2, May 2, (millions) Cash payments arising from operating lease liabilities (included in cash flows from operating activities) $ 101.0 $ 303.7 Non-cash operating lease liabilities from obtaining right-of-use assets 3.0 4.4 Beginning in April 2020, we suspended rent payments under the leases for our temporarily closed retail stores. We considered FASB’s recent guidance regarding lease modifications as a result of the effects of COVID-19 and have elected to apply the temporary practical expedient to account for negotiated changes to our leases. Despite the suspension of the rent payments, we continued to record accruals for rent payment deferrals and accounted for deferred rental payments as though no changes to the lease contract were made. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
May 02, 2020 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition Contract liabilities The contract liabilities representing unearned revenue for our continuing operations are as follows: May 2, 2020 August 3, 2019 May 4, 2019 August 4, 2018 (a) (millions) Deferred revenue - gift card liability $ 85.7 $ 79.7 $ 82.9 $ 72.4 Deferred revenue - loyalty programs 21.3 22.1 26.0 26.3 ________ (a) After adjusting for the impact of adopting ASU 2014-09. For the three and nine months ended May 2, 2020, the Company recognized revenue of approximately $14 million and $35 million, respectively, associated with gift card redemptions and gift card breakage. Of these amounts, approximately $0 million and $6 million, respectively, were recorded within Income from discontinued operations. The reduction in income from gift cards during the three months ended May 2, 2020 compared to the prior year was due to the retail store closures discussed earlier in response to COVID-19. For the three and nine months ended May 4, 2019, the company recognized revenue of approximately $30 million and $35 million, respectively, associated with gift card redemptions and gift card breakage. Of these amounts, approximately $9 million and $10 million, respectively, were recorded within Income from discontinued operations. For the three and nine months ended May 2, 2020, the Company recognized revenue of approximately $12 million and $22 million, respectively, associated with reward redemptions and breakage related to the Company’s loyalty programs. Of these amounts, approximately $0 million and $5 million, respectively, were recorded within Income from discontinued operations. For the three and nine months ended May 4, 2019, the Company recognized revenue of approximately $19 million and $29 million, respectively, associated with reward redemptions and breakage related to the Company’s loyalty programs. Of these amounts, approximately $8 million and $9 million, respectively, were recorded within Income from discontinued operations. The Company’s revenues by major product categories as a percentage of total net sales are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, Apparel 83 % 86 % 82 % 82 % Accessories 10 % 12 % 12 % 14 % Other 7 % 2 % 6 % 4 % Total net sales 100 % 100 % 100 % 100 % |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
May 02, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other Intangible Assets Goodwill and Other Indefinite-lived Intangible Assets Impairment Assessment Fiscal 2020 Third Quarter Interim Impairment Assessment The third quarter of Fiscal 2020 reflected a significant decline in the Company’s stock price and the fair value of our Term Loan debt due to the financial market uncertainty from COVID-19 which also resulted in the closure of our retail stores and led to a substantial decrease in our retail store revenue. The Company concluded that these factors represented impairment indicators which required the Company to test its goodwill and indefinite-lived intangible assets for impairment during the third quarter of Fiscal 2020. As a result, the Company performed its second interim test of goodwill and indefinite-lived intangible assets for Fiscal 2020 (the “April Interim Test”) using a quantitative approach as of May 2, 2020, which was the last day of the third fiscal quarter. The April Interim Test was determined by the Company only using the income approach (discounted cash flow method ("DCF")) as the market approach (guideline public company method) was deemed unrepresentative due to the volatility and disruption in the global financial markets caused by COVID-19. The Company believes that the income approach (Level 3 measurement) is the most reliable indication of value as it captures forecasted revenues and earnings for the reporting units in the projection period that the market approach may not directly incorporate. Finally, the Company’s publicly traded market capitalization was reconciled to the sum of the fair value of the reporting units. The projections used in the April Interim Test reflect revised assumptions across certain key areas versus the assumptions used in the January Interim Test of Fiscal 2020 discussed below and primarily reflected revised long-range assumptions that were prepared in contemplation of the Chapter 11 Cases discussed earlier. Those assumptions include the wind down of the Catherines brand, a significant reduction in the number of Justice retail stores, an overall reductions in the number of retail stores at the Company’s other brands, and a significant reduction in the Company’s workforce commensurate with the store reductions. Changes in key assumptions and the resulting reduction in projected future cash flows included in the April Interim Test resulted in a decrease in the fair values of our Ann Taylor and LOFT reporting units such that their fair values were less than their carrying values. As a result, the Company recognized the following goodwill impairment charges: a loss of $15.0 million at the Ann Taylor reporting unit and $70.5 million at the LOFT reporting unit to write-down the carrying values of the reporting units to their fair values. In addition, the Company recognized impairment losses to write-down the carrying values of its other intangible assets to their fair values as follows: $17.7 million of our Ann Taylor trade name, $7.8 million of LOFT trade name, $7.8 million of our Justice trade name, $3.0 million of our Catherines trade name and $5.0 million of our Justice franchise rights. The fair value of the trade names was determined using an approach that values the Company’s cash savings from having a royalty-free license compared to the market rate it would pay for access to use the trade name (Level 3 measurement). These impairment losses have been disclosed separately on the face of the accompanying condensed consolidated statements of operations. Fiscal 2020 Second Quarter Interim Impairment Assessment The second quarter of Fiscal 2020 marked the continuation of the challenging market environment in which the Company competes. While the Company met its overall expectations for the second quarter, lower than expected comparable sales in the second quarter at the Justice brand, and lower than expected margins at our Ann Taylor brand, along with the expectation that such trends may continue into the second half of Fiscal 2020, led the Company to reduce its level of forecasted earnings for Fiscal 2020 and future periods. Since these brands had little or no excess of fair value over their respective book value at the beginning of Fiscal 2020, the Company concluded that these factors represented impairment indicators which required the Company to test its goodwill and indefinite-lived intangible assets for impairment during the second quarter of Fiscal 2020 (the "January Interim Test"). The Company performed its January Interim Test of goodwill and indefinite-lived intangible assets using a quantitative approach as of January 4, 2020, which was the last day in the second month of the second fiscal quarter. The January Interim Test was determined with the assistance of an independent valuation firm using two valuation approaches, including the income approach (discounted cash flow method ("DCF")) and market approach (guideline public company method). The Company believes that the income approach (Level 3 measurement) is the most reliable indication of value as it captures forecasted revenues and earnings for the reporting units in the projection period that the market approach may not directly incorporate. Under the market approach, the Company estimated a fair value based on comparable companies' market multiples of revenues and earnings before interest, taxes, depreciation and amortization, and used the market approach as a comparison of respective fair values. We generally applied a 75% weighting to the income approach and a 25% weighting to the market approach. However, in certain cases where low profit margins made the market approach impracticable, we applied a full weighting to the income approach. Finally, the Company’s publicly traded market capitalization was reconciled to the sum of the fair value of the reporting units. The projections used in the January Interim Test reflect revised assumptions across certain key areas versus prior plans as a result of the recent operating trends discussed above. Based on the results of the impairment assessment, the fair value of our LOFT reporting unit exceeded its carrying value by approximately 14%. Changes in key assumptions and the resulting reduction in projected future cash flows included in the January Interim Test resulted in a decrease in the fair values of our Ann Taylor and Justice reporting units such that their fair values were less than their carrying values. As a result, the Company recognized the following goodwill impairment charges: a loss of $54.9 million at the Ann Taylor reporting unit and $8.5 million at the Justice reporting unit to write down the carrying values of the reporting units to their fair values. In addition, the Company recognized impairment losses to write down the carrying values of its other intangible assets to their fair values as follows: $10.0 million of our Ann Taylor trade name, $35.0 million of our Justice trade name, $1.0 million of our Catherines trade name and $0.9 million of our Justice franchise rights. The fair value of the trade names was determined using an approach that values the Company’s cash savings from having a royalty-free license compared to the market rate it would pay for access to use the trade name (Level 3 measurement). These impairment losses have been disclosed separately on the face of the accompanying condensed consolidated statements of operations. The total combined goodwill impairment charges of $148.9 million resulting from the April Interim Test and the January Interim Test were treated as non-deductible for income tax purposes. Fiscal 2019 Interim Impairment Assessment The third quarter of Fiscal 2019 marked the continuation of the challenging market environment in which the Company competes. Continued declines in customer traffic across the Company's brands negatively impacted our February and March performance causing lower comparative sales than expected, along with the expectation that such trends may continue into the fourth quarter. The Company concluded that these factors, as well as the significant decline in the Company's stock price, represented impairment indicators which required the Company to test its goodwill and indefinite-lived intangible assets for impairment during the third quarter of Fiscal 2019 (the "Fiscal 2019 Interim Test"). As a result, the Company performed its Fiscal 2019 Interim Test of goodwill and indefinite-lived intangible assets using a quantitative approach as of April 6, 2019, which was the last day in the second month of the third fiscal quarter. The Fiscal 2019 Interim Test was determined with the assistance of an independent valuation firm using two valuation approaches, including the income approach (discounted cash flow method ("DCF")) and market approach (guideline public company method). The Company believes that the income approach (Level 3 measurement) is the most reliable indication of value as it captures forecasted revenues and earnings for the reporting units in the projection period that the market approach may not directly incorporate. Therefore, a greater weighting was applied to the income approach than the market approach. The weighing of the fair values by valuation approach (income approach vs. market approach) is generally consistent across all reporting units. For substantially all of the reporting units the income approach was weighted 75% and the market approach 25%. Under the market approach, the Company estimated a fair value based on comparable companies' market multiples of revenues and earnings before interest, taxes, depreciation and amortization, factored in a control premium, and used the market approach as a comparison of respective fair values. The estimated fair value determined under the market approach validated our estimate of fair value determined under the income approach. The only difference to the 75% / 25% weighting was at the C atherines reporting unit where the income approach was weighted 100% as the resulting low profit margins made the market approach impracticable. This approach at Catherines had no impact on the overall conclusion. Further, the Company's maurices reporting unit was valued utilizing the sales price inherent in the Transaction described in Note 2. Finally, the Company’s publicly traded market capitalization was reconciled to the sum of the fair value of the reporting units. The projections used in the Fiscal 2019 Interim Test reflect revised assumptions across certain key areas versus prior plans as a result of recent operating performance. In particular, sales growth assumptions were significantly lowered at certain brands to reflect the shortfall in actual results versus those previously projected, reflecting the uncertainty of future comparable sales given the sector's dynamic change. Based on the results of the impairment assessment, the fair value of our ANN , Justice and maurices reporting units substantially exceeded their carrying value. Conversely, the changes in key assumptions and the resulting reduction in projected future cash flows included in the Fiscal 2019 Interim Test resulted in a decrease in the fair values of our Lane Bryant and Catherines reporting units such that their fair values were less than their carrying values. As a result, the Company recognized impairment losses to write down the carrying values of its trade name intangible assets to their fair values as follows: $23.0 million of our Lane Bryant trade name and $2.0 million of our Catherines trade name. The fair value of the trade names was determined using an approach that values the Company’s cash savings from having a royalty-free license compared to the market rate it would pay for access to use the trade name (Level 3 measurement). In addition, the Company recognized the following goodwill impairment charges: a loss of $65.8 million at the Lane Bryant reporting unit and $49.3 million at the Catherines reporting unit to write down the carrying values of the reporting units to their fair values. These impairment losses have been disclosed separately on the face of the accompanying condensed consolidated statements of operations. As a result of these impairment charges, for the nine months ended May 4, 2019, the Company included an income tax benefit of approximately $6 million in the estimated effective tax rate for Fiscal 2019. The income tax benefit was calculated by applying a statutory rate of approximately 26% to the $25.0 million of impairment of other intangible assets. The $115.1 million impairment of goodwill was treated as non-deductible for income tax purposes and was a significant factor in reducing the Company's effective income tax rate for the three and nine months ended May 4, 2019. The following details the changes in goodwill for each reportable segment: Premium Fashion (a) Kids Fashion (b) Total (millions) Balance at August 3, 2019 $ 305.0 $ 8.5 $ 313.5 Impairment losses (140.4) (8.5) (148.9) Balance at May 2, 2020 $ 164.6 $ — $ 164.6 (a) Net of accumulated impairment losses of $569.3 million and $428.9 million for the Premium Fashion segment as of May 2, 2020 and August 3, 2019, respectively. (b) Net of accumulated impairment losses of $169.4 million and $160.9 million for the Kids Fashion segment as of May 2, 2020 and August 3, 2019, respectively. Ot her Intangible Assets As more fully described in Note 3, favorable leases have been reclassified from Other intangible assets, net to Operating lease right-of-use assets within the condensed consolidated balance sheet due to the recent adoption of ASC 842. Other intangible assets, reflecting the change, as well as the impairments discussed above, now consist of the following: May 2, 2020 August 3, 2019 Description Gross Accumulated Net Gross Accumulated Net Intangible assets not subject to amortization : (millions) Brands and trade names (a) $ 169.7 $ — $ 169.7 $ 252.0 $ — $ 252.0 Franchise rights (b) 5.0 — 5.0 10.9 — 10.9 Total intangible assets not subject to amortization 174.7 — 174.7 262.9 — 262.9 Intangible assets subject to amortization : Proprietary technology 4.8 (4.8) — 4.8 (4.8) — Customer relationships 52.0 (50.7) 1.3 52.0 (46.7) 5.3 Favorable leases — — — 38.2 (29.8) 8.4 Trade names 5.3 (5.3) — 5.3 (5.3) — Total intangible assets subject to amortization 62.1 (60.8) 1.3 100.3 (86.6) 13.7 Total other intangible assets $ 236.8 $ (60.8) $ 176.0 $ 363.2 $ (86.6) $ 276.6 (a) Net of accumulated trade name impairment losses are as follows: $252.7 million of our Ann Taylor trade name, $424.4 million of our LOFT trade name, $243.5 million of our Lane Bryant trade name, $10.0 million of our Catherines trade name, and $59.4 million of our Justice trade name. (b) Net of accumulated franchise rights impairment of $5.9 million at our Justice brand. |
Asset Impairments
Asset Impairments | 9 Months Ended |
May 02, 2020 | |
Property, Plant and Equipment [Abstract] | |
Asset Impairments | Asset Impairments Long-lived Asset Impairments The charges below reduced the net carrying value of certain long-lived assets to their estimated fair value, as determined using a combination of a third-party analysis (Level 2 measurement) and discounted expected cash flows (Level 3 measurement). These impairment charges arose from the Company’s routine assessment of under-performing retail stores and are included as a component of Selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for all periods. Beginning with the adoption of ASC 842 in Fiscal 2020, impairment charges could include write-downs of the right-of-use assets and/or write-downs of store-related fixed assets. Impairment charges for the three and nine months ended May 2, 2020 substantially consist of write-downs of store-related fixed assets, which reflect significant reductions in near-term cash flows over the remaining useful life of certain of our retail stores, as well as planned store reductions discussed more fully in Note 6 to these condensed consolidated financial statements. Impairment charges included in continuing operations by segment are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Premium Fashion $ 81.1 $ — $ 81.3 $ 0.4 Plus Fashion 23.6 16.3 24.1 17.4 Kids Fashion 55.2 0.4 56.3 0.9 Total impairment charges $ 159.9 $ 16.7 $ 161.7 $ 18.7 Additionally, a long-lived Corporate asset impairment charge of $8.4 million was recorded in the third quarter of Fiscal 2020 which reflects a write-down of the book value of the Company’s campus in Mahwah, NJ to fair market value in connection with its planned sale. The sale closed subsequent to the end of the third quarter. Refer to Note 21 for more information. |
Restructuring and Other Related
Restructuring and Other Related Charges | 9 Months Ended |
May 02, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Related Charges | Restructuring and Other Related Charges In connection with its cost reduction initiatives, during the first quarter of Fiscal 2020, the Company announced a reorganization of its sourcing operation. Restructuring and other related charges for Fiscal 2020 primarily reflect costs associated with the sourcing reorganization. Future costs related to this reorganization are not expected to be material. Charges related to the Dressbarn wind down are included in discontinued operations. Activity for the three and nine months ended May 4, 2019 reflects actions under the Change for Growth program. Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash restructuring charges: Severance and benefit costs (a) $ (1.3) $ — $ 1.6 $ (0.2) Other related charges (b) 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 _______ (a) Severance and benefit costs reflect additional severance accruals associated with previously announced initiatives, as well as adjustments to true up estimates of previously accrued severance-related costs to reflect amounts actually paid. (b) Other related charges in Fiscal 2019 consist of professional fees and other third-party costs incurred in connection with the Change for Growth program. A summary of activity for the nine months ended May 2, 2020 in the restructuring-related liabilities, which is included within Accrued expenses and other current liabilities, is as follows: Severance and benefit costs Other related charges Total (millions) Balance at August 3, 2019 $ 11.4 $ 1.0 $ 12.4 Additions charged to expense 1.6 0.5 2.1 Cash payments (10.5) (1.5) (12.0) Balance at May 2, 2020 $ 2.5 $ — $ 2.5 |
Inventories
Inventories | 9 Months Ended |
May 02, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories substantially consist of finished goods merchandise. Inventory by segment is set forth below: May 2, August 3, May 4, (millions) Premium Fashion $ 280.5 $ 226.3 $ 286.6 Plus Fashion 103.5 156.5 181.5 Kids Fashion 65.7 107.9 91.2 Total inventories $ 449.7 $ 490.7 $ 559.3 The significant reduction in inventories from May 4, 2019 to May 2, 2020 primarily reflects an increase of $135.0 million in inventory markdown reserves as of May 2, 2020 mainly at the Plus Fashion and Kids Fashion segments, which follow the retail-method of accounting for inventory. The reserve increase was a result of the retail store closures due to COVID-19. Refer to Note 3 to the audited financial statements included in the Fiscal 2019 10-K for more information on the Company’s accounting for inventory. |
Investment and Variable Interes
Investment and Variable Interest Entity | 9 Months Ended |
May 02, 2020 | |
Investment and VIE [Abstract] | |
Investment and Variable Interest Entity | Investment and Variable Interest Entity As discussed in Note 2, in the fourth quarter of Fiscal 2019, the Company completed the Transaction which provided for, among other things, the sale by ascena of maurices to Viking. Effective upon the closing of the Transaction, ascena received cash proceeds and a 49.6% ownership interest in the operations of maurices through its investment in Viking, consisting of interests in Viking preferred and common stock. Viking's operations substantially consist of its investment in maurices . At the end of Fiscal 2019, the Company’s investment in Viking was recorded at $42.1 million. The Company is accounting for its investment under the equity method of accounting. Viking, primarily through its investment in maurices , reported (loss) income of approximately $(12.3) million and $11.0 million for the three and nine months ended May 2, 2020, respectively, which primarily represents results from the operations of maurices . The results of maurices includes the preliminary impact of adjusting its assets and liabilities to fair value under the acquisition method of accounting for business combinations, which will be finalized during Fiscal 2020. The Company recognized its share of the income in the accompanying condensed consolidated statement of operations which was determined by using the hypothetical liquidation at book value ("HLBV"). HLBV is a balance sheet approach whereby a calculation is prepared at each balance sheet date to determine the amount that the Company would receive if the underlying equity investment entity were to liquidate all of its assets (as valued in accordance with GAAP) and distribute that cash to its investors based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is the Company's share of the earnings or losses from the equity investment for that period. In connection with the sale of maurices , the Company agreed to provide transition services to maurices for varying periods of time depending on the service. Service periods ranged from 3-36 months and include services such as legal, tax, logistics, sourcing and other back office functions. For the three and nine months ended May 2, 2020, recognized fees from these services are approximately $15.5 million and $48.4 million, respectively, which are primarily recorded as a reduction of Buying, distribution and occupancy expenses and Selling, general and administrative expenses. As of May 2, 2020, the Company's investment in Viking was recorded at $53.1 million and the Company had a receivable due from maurices of $45.2 million, primarily for in-transit inventory purchased on their behalf. Of the receivable balance, $12 million is classified in non-current assets. There were no amounts due to maurices as of May 2, 2020. The Company's investment balance, plus the receivable and the private label credit card revenue guarantee, which is disclosed in Note 2 to the audited consolidated financial statements included in the Fiscal 2019 10-K, represent our maximum exposure to any potential loss. The private label credit card revenue guarantee is recorded at its estimated fair value as of May 2, 2020 using Level 3 measurements and is not materially different from the amount recorded as of August 3, 2019. |
Debt
Debt | 9 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following: May 2, August 3, (millions) Revolving credit facility $ 230.0 $ — Less: unamortized debt issuance costs (a) (2.4) (3.2) 227.6 (3.2) Term loan 1,292.0 1,371.5 Less: unamortized original issue discount (b) (9.9) (13.8) unamortized debt issuance costs (b) (11.4) (15.9) 1,270.7 1,341.8 Total debt 1,498.3 1,338.6 Less: current portion (1,498.3) — Total long-term debt $ — $ 1,338.6 _______ (a) The unamortized debt issuance costs are amortized on a straight-line basis over the life of the Amended Revolving Credit Agreement. (b) The original issue discount and debt issuance costs for the Term Loan are amortized over the life of the Term Loan using the interest method based on an imputed interest rate of approximately 6.3% . Amended Revolving Credit Agreement On February 27, 2018, the Company and certain of its domestic subsidiaries entered into an amendment and restatement agreement of its revolving credit agreement dated August 21, 2015, as amended on October 31, 2016, among the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Amended Revolving Credit Agreement”). The Amended Revolving Credit Agreement provides aggregate revolving commitments up to $500 million, with an optional increase of up to $200 million. The revolving credit facility may be used for the issuance of letters of credit, to fund working capital requirements and capital expenditures, and for general corporate purposes. The revolving credit facility also includes a $200 million letter of credit sublimit, all of which can be used for standby letters of credit pursuant to an amendment to the revolving credit facility dated September 20, 2019, and a $30 million swingline loan sublimit. The interest rates, pricing and fees under the agreement fluctuate based on the average daily availability, as defined therein. The Amended Revolving Credit Agreement has a maturity date of the earlier of (i) five On March 16, 2020, the Company borrowed approximately $230 million under the Amended Revolving Credit Agreement, which represents the total amount currently outstanding. The blended interest rate for the borrowings under the Amended Revolving Credit Agreement is approximately 2.78%, which factors a base rate range of 40 basis points to 150 basis points plus a spread of 150 basis points. The Company took this action as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of the current uncertainty in the global financial markets from COVID-19. As of May 2, 2020, the Company had $167.7 million of availability under the Amended Revolving Credit Agreement. Under the Amended Revolving Credit Agreement, the Company is required to maintain a fixed charge coverage ratio, as defined in the Amended Revolving Credit Agreement, of at least 1.00 any time in which the Company is in a covenant period, as defined in the Amended Revolving Credit Agreement (the “Covenant Period”). Such Covenant Period is in effect if Availability is less than the greater of (a) 10% of the Credit Limit (the lesser of total Revolving Commitments and the Borrowing Base) and (b) $37.5 million for three thirty For a more detailed description of the Company’s Amended Revolving Credit Agreement and restrictions thereunder, refer to Note 10 to the audited consolidated financial statements included in the Fiscal 2019 10-K. Term Loan In connection with the August 2015 acquisition of ANN INC., the Company entered into a $1.8 billion variable-rate term loan (the “Term Loan”), which was issued at a 2% discount and provides for an additional term facility of $200 million. The Term Loan matures on August 21, 2022 and requires quarterly repayments of $22.5 million with a remaining balloon payment of approximately $1.1 billion required at maturity. During Fiscal 2018, the Company made repayments of $225.0 million of which $180.0 million was applied to future quarterly scheduled payments such that the Company is not required to make its next quarterly payment of $22.5 million until November of calendar 2020. The Company is also required to make mandatory prepayments in connection with certain prepayment events. As of May 2, 2020, borrowings under the Term Loan consisted entirely of Eurodollar Borrowings at a rate of approximately 6.4%. The Company entered into an interest rate swap agreement in March 2019 to mitigate some of the risk associated with the variable rate. Refer to Note 12 for additional information. During the second quarter of Fiscal 2020, the Company repurchased $79.5 million aggregate principal amount of its Term Loan debt in open market transactions for a total purchase price of $49.4 million. The repurchase was settled in the second quarter of Fiscal 2020 and the Company recorded a gain on extinguishment of debt of $28.5 million, net of transaction costs and a write-off of a portion of deferred financing fees. In the third quarter of Fiscal 2020, the Company performed an additional repurchase of $42.0 million of principal amount of debt for a total purchase price of approximately $28.6 million. However, in order to maintain maximum financial flexibility as a result of COVID-19, this additional repurchase has not yet been settled and the underlying debt remains outstanding. For a more detailed description of the Company’s Term Loan and restrictions thereunder, refer to Note 10 to the audited consolidated financial statements included in the Fiscal 2019 10-K. Maturities of Debt The Company’s outstanding debt as of May 2, 2020 matures as follows: Fiscal Year Amount (millions) 2020 $ 1,522.0 Chapter 11 Cases Subsequent to the end of the third quarter, the Company filed the Chapter 11 Cases, as discussed in Notes 1 and 21. The Chapter 11 Cases impact both the Company’s obligations under the Amended Revolving Credit Agreement and Term Loan, and following the commencement of the Chapter 11 Cases, the Company may not make borrowings under the Amended Revolving Credit Agreement. Refer to Note 21 for more information. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
May 02, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments As discussed in more detail in Note 11, the interest rate under the Company’s Term Loan is based on a variable rate. Therefore, the Company has exposure to increases in the underlying interest rate. In order to protect against our interest rate exposure, we entered into an interest rate swap agreement in March 2019. We do not hold any derivative financial instruments for speculative or trading purposes. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in the line item Accumulated other comprehensive loss on the Company’s condensed consolidated balance sheets and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in Accumulated other comprehensive loss related to the Company’s derivative contracts will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of May 2, 2020, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk: Interest Rate Derivative Number of Instruments Notional Agreement Principal Amount Interest Rate Maturity Date Interest rate swap One $600.0 Million 6.85% March 31, 2021 The interest rate swap was recorded at its estimated fair value of $8.4 million and $6.3 million as of May 2, 2020 and August 3, 2019, respectively, based on Level 2 measurements. Amounts included in the condensed consolidated balance sheet as of May 2, 2020 include $8.4 million in Accrued expenses. Amounts included in the condensed consolidated balance sheet as of August 3, 2019 include $3.1 million in Accrued expenses and other current liabilities and $3.2 million in Other non-current liabilities. The amount of unrealized losses deferred to Accumulated other comprehensive loss before the effect of taxes was $8.4 million as of May 2, 2020 and $6.3 million as of August 3, 2019. The amount of losses reclassified from Accumulated other comprehensive loss into earnings related to the Company’s derivative instrument during the three and nine months ended May 2, 2020 was $1.7 million and $2.6 million, respectively, and was classified within Interest expense in the condensed consolidated statements of operations. Based on current valuations, we |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
May 02, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In evaluating the fair value measurement techniques for recording certain financial assets and liabilities, there is a three-level valuation hierarchy under which financial assets and liabilities are designated. The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the lowest level of inputs used that are significant to the fair value measurement as of the measurement date as follows: Level 1 Quoted prices for identical instruments in active markets; Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are recently traded (not active); and Level 3 Instruments with little, if any, market activity are valued using significant unobservable inputs or valuation techniques. Fair Value Measurements of Financial Instruments As of May 2, 2020 and August 3, 2019, the Company believes that the carrying values of cash and cash equivalents approximate its fair value based on Level 1 measurements. As the Company’s revolving credit facility is variable rate, the Company believes that there is no significant difference between the fair value and the carrying value as of May 2, 2020 and August 3, 2019. The fair value of the Term Loan was determined to be $271.3 million as of May 2, 2020 and $850.3 million as of August 3, 2019 based on quoted market prices from recent transactions, which are considered Level 2 inputs within the fair value hierarchy. Fair Value Measurements of Long-lived Assets Measured on a non-Recurring Basis As more fully described in Note 7, during the nine months of Fiscal 2020, store and corporate assets of $187.6 million and operating lease right-of-use assets of $74.8 million related to 1,851 under-performing stores and one office building were written-down to their estimated fair values of $28.8 million of store and corporate assets and $63.5 million of right-of-use assets, resulting in impairment charges of $158.8 million in store and corporate assets and $11.3 million in right-of-use assets. None of these amounts related to our discontinued operations in Fiscal 2020. During the nine months of Fiscal 2019, assets of $55.7 million related to 635 under-performing stores were written-down to their estimated fair values of $18.3 million resulting in total impairment charges of $37.4 million. Of these amounts, assets of $28.7 million related to 421 under-performing stores were written-down to their estimated fair values of $10.0 million resulting in impairment charges of $18.7 million related to discontinued operations. |
Income Taxes
Income Taxes | 9 Months Ended |
May 02, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Coronavirus Aid, Relief, and Economic Security Act The CARES Act provides relief from certain requirements under U.S. GAAP and contains several corporate income tax provisions, including making remaining AMT credits immediately refundable; providing a 5-year carryback of net operating losses (“NOLs”) generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021; and temporarily liberalizing the interest deductibility rules under Section 163(j) of the Internal Revenue Code, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility. The CARES Act did not have a material impact to the Company’s financial condition or results of operation for the three and nine months ended May 2, 2020. The Company has requested a $1.4 million refundable AMT Credit and plans to defer the timing of payroll taxes as permitted by the CARES Act. Tax Cuts and Jobs Act During the second quarter of Fiscal 2019, adjustments were made to estimates recorded in Fiscal 2018 upon the adoption of the 2017 Tax Cuts and Jobs Act (the “2017 Act”). As previously reported, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which is also included in FASB ASU 2018-05 and provided guidance on accounting for the tax effects of the 2017 Act. SAB 118 allows for a measurement period that should not extend beyond one year from the 2017 Act enactment date of December 22, 2017 for companies to complete the accounting under Accounting Standards Codification Topic 740, “Income Taxes” ("ASC 740"). The Company completed its accounting for the impact of the 2017 Act during the second quarter of Fiscal 2019 and increased its Fiscal 2018 estimate of the one-time federal and state transition tax by $2.3 million to $26.9 million and by $0.2 million to $0.9 million, respectively. The 2017 Act subjects the Company to a new minimum tax on global intangible low-taxed income (“GILTI”) earned by foreign subsidiaries for taxable years beginning after December 31, 2017. Accordingly, the Company made an accounting policy election to treat GILTI taxes as a current period expense and made a reasonable estimate of the impact of GILTI which was included in its Fiscal 2019 effective tax rate. The Company considered the potential impact of GILTI on its U.S. federal NOL carryforward on the basis of the incremental economic benefit and determined a partial valuation allowance of $5.2 million was required to offset its NOL carryforward because it is not expected to provide incremental tax benefits. The allowance was recorded in the second quarter of Fiscal 2019. In the third quarter of Fiscal 2019, the Company reduced the partial valuation allowance by $2.0 million. Effective Tax Rate The Company’s effective tax rate is reflective of the jurisdictions where the Company has operations. The effective tax rates for the third quarter and the first nine months of Fiscal 2020 were (0.9)% and (1.2)%, respectively, which were lower than the statutory tax rate as a result of non-deductible impairments of goodwill and changes in the valuation allowance on U.S. federal and state deferred tax assets. |
Equity
Equity | 9 Months Ended |
May 02, 2020 | |
Equity [Abstract] | |
Equity | Equity Common Stock Split On December 19, 2019, the Company announced that the Board has approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20. In addition, there was a corresponding reduction in the number of Company’s authorized shares of common stock following the approval of the reverse stock split by the Company’s stockholders at the Company’s annual meeting of stockholders held on December 10, 2019. The reverse stock split became effective at the close of business on December 18, 2019. The reverse stock split reduced the number of shares of common stock issued and outstanding from approximately 199,444,436 to approximately 9,972,221. The authorized number of shares of common stock has been reduced by a corresponding ratio to 18 million. Common Stock Repurchase Program In December 2015, the Company’s Board authorized a $200 million share repurchase program (the “2016 Stock Repurchase Program”). There were no repurchases of common stock by the Company during the three and nine months ended May 2, 2020 and the remaining availability was approximately $181.4 million at May 2, 2020. Net Income per Common Share Basic net income per common share is computed by dividing the net income applicable to common shares after preferred dividend requirements, if any, by the weighted-average number of common shares outstanding during the period. Diluted net income per common share adjusts basic net income per common share for the effects of outstanding stock options, restricted stock units and any other potentially dilutive financial instruments, only in the periods in which such effect is dilutive under the treasury stock method. The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to those shares used in calculating diluted net income per common share as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (thousands) (thousands) Basic 10,003 9,882 9,972 9,864 Dilutive effect of stock options and restricted stock units (a) — — — — Diluted shares 10,003 9,882 9,972 9,864 (a) There was no dilutive effect of stock options and restricted stock units for the three and nine months ended May 2, 2020 and May 4, 2019 as the impact of these items was anti-dilutive using the treasury stock method as a result of the net loss incurred during the periods. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
May 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Omnibus Incentive Plan In November 2018, the Board approved the amendment of the Company’s 2016 Omnibus Incentive Plan, as amended and restated on December 10, 2015 (the “Omnibus Incentive Plan”). The amendment to the 2016 Omnibus Incentive Plan was approved by the Company’s shareholders and became effective on December 14, 2018 to increase the aggregate number of shares that may be issued under the plan by an additional 0.7 million shares to 4.2 million. The 2016 Omnibus Incentive Plan provides for the granting of service-based and performance-based stock awards as well as performance-based cash incentive awards. The 2016 Omnibus Incentive Plan expires in November 2025. As of May 2, 2020, there were approximately 1.1 million shares remaining under the 2016 Omnibus Incentive Plan available for future grants. The Company issues new shares of common stock when stock option awards are exercised and restricted stock units vest. Impact on Results A summary of the total compensation expense and associated income tax benefit recognized related to stock-based compensation arrangements on a consolidated basis is as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Compensation expense $ 0.8 $ 2.2 $ 3.2 $ 10.5 Income tax benefit $ — $ 0.5 $ — $ 2.2 Service-based Stock Options The Company’s weighted-average assumptions used to estimate the fair value of stock options granted during the periods presented were as follows: Nine Months Ended May 2, May 4, Expected term (years) 5.2 5.2 Expected volatility 61.7 % 47.5 % Risk-free interest rate 1.5 % 2.9 % Expected dividend yield — % — % Weighted-average grant date fair value $ 2.74 $ 35.41 A summary of the stock option activity under the service-based plans during the nine months ended May 2, 2020 is as follows: Number of Weighted- Weighted- Aggregate Intrinsic Value (a) (thousands) (years) (millions) Options outstanding – August 3, 2019 850.4 $ 156.00 4.1 $ — Granted 275.9 5.12 Exercised — — Canceled/Forfeited (430.5) 179.89 Options outstanding – May 2, 2020 695.8 $ 81.40 4.8 $ — Options vested and expected to vest at May 2, 2020 (b) 684.8 $ 82.49 4.8 $ — Options exercisable at May 2, 2020 380.0 $ 130.95 3.7 $ — _______ (a) The intrinsic value is the amount by which the market price at the end of the period of the underlying share of stock exceeds the exercise price of the stock option. (b) The number of options expected to vest takes into consideration estimated expected forfeitures. As of May 2, 2020, there was $1.6 million of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 0.8 years. There were no options exercised during the three and nine months ended May 2, 2020 and the total intrinsic value of options exercised during the three and nine months ended May 4, 2019 was de minimis. The total grant date fair value of options that vested during the nine months ended May 2, 2020 and May 4, 2019 was approximately $6.2 million and $9.5 million, respectively. Market-based Stock Options Market-based non-qualified stock options (“NQSO Awards”) entitle the holder to receive options to purchase shares of common stock of the Company during the vesting period. However, such awards are subject to the grantee’s continuing employment and the Company’s achievement of certain market-based goals over the pre-defined performance period. The NQSOs Awards’ fair value is determined using a Monte-Carlo simulation model on the grant date. A Monte-Carlo simulation model estimates the fair value of the market-based awards granted in the nine months ended May 2, 2020 based on an expected term of 7.0 years, a risk-free interest rate of 1.5%, an expected dividend yield of zero and an expected volatility measure of 62.9% for the Company. Compensation expense for NQSOs Awards is recognized over the vesting period regardless of whether the market conditions are expected to be achieved. As of May 2, 2020, there were a total of 0.2 million NQSO Awards outstanding with an average exercise price of $23.15 per share. The total unrecognized compensation at May 2, 2020 was $0.6 million to be recognized over 2.0 years. There were no vestings of the NQSOs Awards as of May 2, 2020. Service-based Restricted Equity Awards A summary of restricted equity awards activity during the nine months ended May 2, 2020 is as follows: Service-based Number of Weighted- (thousands) Nonvested at August 3, 2019 67.4 $ 91.42 Granted — — Vested (28.6) 112.47 Canceled/Forfeited (7.8) 88.68 Nonvested at May 2, 2020 31.0 $ 72.68 As of May 2, 2020, there was $0.4 million of total unrecognized compensation cost related to the service-based Restricted Equity Awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.3 years. Market-based Restricted Equity Awards Market-based Restricted Equity Awards entitle the holder to receive shares of common stock of the Company during the vesting period. However, such awards are subject to the grantee’s continuing employment and the Company’s achievement of certain market-based goals over the pre-defined performance period. The market-based Restricted Equity Awards fair value is determined using a Monte-Carlo simulation model on the grant date. Compensation expense for market-based Restricted Equity Awards is recognized over the vesting period regardless of whether the market conditions are expected to be achieved. The Company issued no grants of market-based Restricted Equity Awards during Fiscal 2020. As of May 2, 2020, there were a total of 0.1 million Restricted Equity Awards outstanding which had a weighted average grant date fair value of $9.35 per share. The total unrecognized compensation at May 2, 2020 was $0.9 million to be recognized over 2.0 years. There were no vestings of the market-based Restricted Equity Awards as of May 2, 2020. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
May 02, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Long-Term Incentive Plan The Company offers a long-term incentive program (“LTIP”) for vice presidents and above under the 2016 Omnibus Incentive Plan. The LTIP entitles the holder to either a cash payment, or a stock payment for certain officers at the Company’s option, equal to a predetermined target amount earned at the end of a performance period and is subject to (a) the grantee’s continuing employment and (b) the Company’s achievement of certain performance goals over a one three The Company recognized $(1.4) million in compensation expense for the nine months ended May 2, 2020 and $2.1 million for the nine months ended May 4, 2019, which was recorded within Selling, general and administrative expenses in the condensed consolidated financial statements. Amounts included in discontinued operations were not material in either period. As of May 2, 2020, there was $6.9 million of expected unrecognized compensation cost related to the LTIP, which is expected to be recognized over a remaining weighted-average vesting period of 1.1 years. As of May 2, 2020, the liability for LTIP Awards was $9.3 million of which $3.3 million was classified within Accrued expenses and other current liabilities and $6.0 million was classified within Other non-current liabilities in the condensed consolidated balance sheets. No amounts were paid during the nine months ended May 2, 2020 and May 4, 2019, however amounts were paid in the fourth quarter of Fiscal 2020. Refer to Note 21 for more information. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
May 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings Chapter 11 Cases On July 23, 2020, the Debtors filed the Chapter 11 Cases seeking relief under the Bankruptcy Code. Subject to certain exceptions under the Bankruptcy Code, the filing of the Chapter 11 Cases also automatically stayed, pursuant to Section 362(a) of the Bankruptcy Code, the filing or the continuation of most legal proceedings and other actions against or on behalf of the Debtors or their property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of the Debtors’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. See Note 21 for more information about the Chapter 11 Cases. Federal Securities Class Action On June 7, 2019, plaintiff James Newman commenced a federal securities class action in the United States District Court for the District of New Jersey, naming Ascena Retail Group, Inc. and certain of ascena’s current and former officers and directors as defendants. The Newman complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 related to the Company’s goodwill impairment accounting and statements regarding the success of the 2015 purchase of ANN and the overall performance and expected growth of the ANN brands. Plaintiff seeks damages on behalf of a proposed class of purchasers of ascena securities between September 16, 2015 and June 8, 2017 (the proposed “Class Period”). On July 2, 2019, a second lawsuit was filed by Michaella Corporation. The Michaella complaint is substantially similar to the Newman complaint. Both the Michaella complaint and the Newman complaint name the same defendants, allege the same proposed Class Period, and challenge the same categories of public statements under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. On August 6, 2019, two potential lead plaintiffs (Joel Patterson and Michaella Corporation) filed motions for appointment as lead plaintiff in the Newman and Michaella actions, and to consolidate both actions. On August 23, 2019, the Court consolidated the two actions as In re Ascena Retail Group, Inc. Sec. Litig. and appointed Patterson and Michaella Corporation as joint lead-plaintiffs (“Lead Plaintiffs”). The Lead Plaintiffs’ filed an amended complaint on November 21, 2019, which shortened the class period. Defendants filed a motion to dismiss the amended complaint on February 7, 2020. The motion has now been fully briefed. Defendants believe they have strong defenses to these claims. The range of loss, if any, is not reasonably estimable at this time. Derivative Action On June 19, 2020 Barkha Shah, an Ascena Retail Group, Inc. shareholder, filed a derivative action, purportedly on behalf of Ascena, in federal court in Delaware against certain of Ascena’s current and former officers and directors. The complaint alleges (1) breach of fiduciary duty by the management and the Board for failing to exercise proper oversight of Ascena, including by failing to disclose issues regarding the acquisition of ANN , the true condition of the ANN brands purchased in the acquisition, the timing of certain impairment charges to the value of ANN ’s goodwill, and by approving certain compensation terms in Mr. Jaffe’s May 1, 2019 Transition and Separation Agreement; (2) unjust enrichment against certain present and former directors for compensation received while supposedly concealing material negative information; and (3) contribution and indemnification in the event Ascena is found liable for federal securities law violations. Defendants believe they have strong defenses to these claims and will respond accordingly. Because the action is purportedly on behalf of Ascena, any recovery in the action would belong to Ascena. Other Litigation The Company is involved in routine litigation arising in the normal course of business. While no assurances can be given as to the ultimate outcome of these matters, in the opinion of management, such litigation is not expected to have a material adverse effect on the Company’s condensed consolidated financial statements. Additionally, due to issues arising from COVID-19, including the temporary closures of our retail stores, we have, among other measures, in order to preserve capital, withheld rent payments on store locations and extended vendor payment terms for orders placed in the ordinary course of business. It is possible that our landlords or other vendors may elect to pursue litigation against the Company related to these payments. If such litigation is pervasive enough, it could result in monetary losses that could be material in the aggregate. Other Contingencies On July 29, 2019, the Company received a letter from the Listing Qualifications Department staff of The Nasdaq Stock Market (“Nasdaq”), indicating that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive business days, the Company no longer meets the requirement of The Nasdaq Global Select Market to maintain a minimum bid price of $1 per share. Following the approval of the reverse stock split by the Company’s stockholders at the Company’s annual meeting of stockholders, on December 19, 2019, the Company announced that the Board approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20, in order to regain compliance. On January 6, 2020, the Company received written notice from the Listing Qualifications Department staff of Nasdaq stating that because the Company’s shares of common stock had a closing bid price at or above $1 per share for a minimum of ten consecutive business days, the Company’s stock had regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market as set forth in Nasdaq Listing Rule 5450(a)(1), and the matter is now closed. Refer to Note 15 for additional information on the reverse stock split. Subsequent to the end of the third quarter, as a result of the Chapter 11 Cases, the Company received a delisting notice from the Listing Qualifications Department staff of Nasdaq and, on August 4, 2020, trading of the Company’s common stock was suspended from Nasdaq. Refer to Note 21 for more information. |
Segment Information
Segment Information | 9 Months Ended |
May 02, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s segment reporting structure reflects an approach designed to optimize the operational coordination and resource allocation of its businesses across multiple functional areas including specialty retail, direct channel and licensing. The Company classifies its businesses into three reportable operating segments: Premium Fashion , Plus Fashion and Kids Fashion . Each segment is reviewed by the Company’s Chief Executive Officer, who functions as the chief operating decision maker (the “CODM”), and is responsible for reviewing the operating activities, financial results, forecasts and business plans of the segment. Accordingly, the Company’s CODM evaluates performance and allocates resources at the segment level. During the third quarter of Fiscal 2019, the Company made revisions to its reportable segments upon the divesting of its maurices business. As a result, the Company removed the maurices business from the Value Fashion segment and reallocated all corporate overhead to the remaining operating segments. In addition, during the second quarter of Fiscal 2020, the company completed the Dressbarn wind down, which concludes the reporting of the Value Fashion segment. The Company reallocated all corporate overhead to the remaining operating segments. The financial information presented below reflects such changes for all periods presented, including the prior year financial information. The three reportable operating segments are as follows: • Premium Fashion segment – consists primarily of the specialty retail, outlet and direct channel operations of the Ann Taylor and LOFT brands. • Plus Fashion segment – consists of the specialty retail, outlet and direct channel operations of the Lane Bryant and Catherines brands. • Kids Fashion segment – consists of the specialty retail, outlet, direct channel and licensing operations of the Justice brand. The accounting policies of the Company’s reportable operating segments are consistent with those described in the Fiscal 2019 10-K. Corporate overhead expenses are allocated to the segments based upon specific usage or other reasonable allocation methods. Certain expenses, including acquisition and integration expenses, and restructuring and other related charges, have not been allocated to the segments, which is consistent with the CODM’s evaluation of the segments. Net sales, operating loss and depreciation and amortization expense for each reportable operating segment are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Net sales: Premium Fashion $ 297.3 $ 549.5 $ 1,506.4 $ 1,784.4 Plus Fashion 197.3 311.5 795.7 902.7 Kids Fashion 106.6 227.4 635.6 820.1 Total net sales $ 601.2 $ 1,088.4 $ 2,937.7 $ 3,507.2 Operating (loss) income (a) : Premium Fashion $ (179.2) $ (15.9) $ (140.2) $ 16.1 Plus Fashion (122.8) (35.7) (138.4) (96.0) Kids Fashion (172.8) (31.9) (208.4) (44.8) Unallocated restructuring and other related charges (b) 1.2 (6.6) (2.1) (28.0) Impairment of goodwill (85.5) (115.1) (148.9) (115.1) Impairment of other intangible assets (41.3) (25.0) (88.2) (25.0) Total operating loss $ (600.4) $ (230.2) $ (726.2) $ (292.8) Depreciation and amortization expense: Premium Fashion $ 28.5 $ 32.0 $ 90.7 $ 100.6 Plus Fashion 14.1 18.1 48.2 55.5 Kids Fashion 15.2 17.3 50.5 53.3 Total depreciation and amortization expense $ 57.8 $ 67.4 $ 189.4 $ 209.4 (a) For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. (b) Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) |
Additional Financial Informatio
Additional Financial Information | 9 Months Ended |
May 02, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Additional Financial Information | Additional Financial Information Nine Months Ended Cash Interest and Taxes: May 2, May 4, (millions) Cash paid for interest $ 65.6 $ 72.7 Cash paid for income taxes (a) $ 9.1 $ 4.8 (a) Includes a net payment of $0.1 million and a net refund of $0.2 million for the nine months ended May 2, 2020 and May 4, 2019, respectively, related to the Dressbarn and maurices businesses, which are classified in discontinued operations. Non-cash Transactions |
Subsequent Events
Subsequent Events | 9 Months Ended |
May 02, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Chapter 11 Cases and Effect of Automatic Stay On July 23, 2020 (the “Petition Date”), the Company and certain of the Company’s direct and indirect subsidiaries (collectively with the Company, the “Debtors”) commenced the Chapter 11 Cases, which are being jointly administered under the caption In re Ascena Retail Group, Inc., et al ., Case No. 20-33113. The Debtors continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Debtors have filed with the Bankruptcy Court motions seeking, and the Bankruptcy Court has entered, a variety of “first day” motions seeking approval from the Bankruptcy Code for various forms of customary relief to allow the Company to meet necessary obligations and fulfill its duties during the restructuring process, including authority to continue payment of employee wages and benefits, honor certain customer and vendor commitments and otherwise manage its day-to-day operations in the ordinary course. In addition, the Debtors have received authority to use cash collateral of the lenders under the Amended Revolving Credit Agreement on an interim basis. The commencement of the Chapter 11 Cases on July 23, 2020 constituted an event of default that accelerated the Debtors’ obligations under the Term Loan and Amended Revolving Credit Agreement (the “Debt Instruments”), each of which provide that as a result of the Chapter 11 Cases, the principal then outstanding, together with accrued interest thereon and all fees and other obligations accrued thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Term Loan or the Amended Revolving Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect thereof are subject to the applicable provisions of the Bankruptcy Code. As a result, the Company’s obligations under the Debt Instruments have been classified as current in the condensed consolidated balance sheet as of May 2, 2020. Restructuring Support Agreement The Debtors have filed the Chapter 11 Cases to implement the terms of a Restructuring Support Agreement, dated July 23, 2020 (together with all exhibits and schedules thereto, the “RSA”), which was entered into prior to the commencement of the Chapter 11 Cases by the Company and certain of its subsidiaries (each, a “Company Party” and collectively, the “Company Parties”) and members of an ad hoc group of lenders (the “Consenting Stakeholders”) under the Term Loan. The RSA is supported by Consenting Stakeholders holding approximately 68% of the Term Loan as of the Petition Date. The RSA contemplates a restructuring process, to be implemented through voluntary cases under chapter 11 of the Bankruptcy Code, that is expected to significantly reduce the Debtors’ debt. Specifically, the RSA provides: • the substantial equitization of the Term Loan; • a fully backstopped capital injection of $150 million in new money financing pursuant to a backstop commitment letter (together with all exhibits and schedules thereto, the “Backstop Commitment Letter”) on the terms described in more detail below; • each Consenting Stakeholder will receive (i) its pro rata share (based on such party’s holdings of loans under the First Out Exit Term Facility (as defined below)) of 44.9% of the equity in reorganized Ascena and (ii) its pro rata share (based on such party’s Backstop Percentage (as defined in the RSA)) of an amount of equity in reorganized Ascena equal to $7.5 million (the “Backstop Equity Premium”), in each case subject to dilution from the Management Incentive Plan (as defined in the RSA); • all lenders under the Term Loan will receive their pro rata share of 55.1% of the equity in reorganized Ascena less the percentage of such equity distributed as the Backstop Equity Premium, subject to dilution from the Management Incentive Plan, and $88.2 million in new loans under the Last Out Exit Term Facility (as defined below); • holders of general unsecured claims will receive their pro rata share of $500,000, provided that holders of general unsecured claims vote as a class to accept the Debtors’ chapter 11 plan; and • existing common equity in the Company will be cancelled. The RSA may be terminated by the Consenting Stakeholders upon the occurrence of certain events set forth therein, including the Bankruptcy Court not having entered the DIP Financing Order (as defined in the RSA) on a final basis by the date that is 35 days after the Petition Date, the Bankruptcy Court not having confirmed the Debtors’ chapter 11 plan by the date that is 110 days after the Petition Date and the Plan Effective Date (as defined in the RSA) not having occurred by the date that is 130 days after the Petition Date. A Company Party may also terminate the RSA upon the occurrence of certain events set forth therein, including in the event the board of directors, board of managers or such similar governing body of any Company Party determines, after consulting with counsel, (i) that proceeding with any of the transactions described therein would be inconsistent with the exercise of its fiduciary duties or applicable law or (ii) in the exercise of its fiduciary duties, to pursue an Alternative Restructuring Proposal. Capitalized terms used but not otherwise defined in this paragraph have the meanings given to them in the RSA. As a condition to the Consenting Stakeholders entering into the RSA, AnnTaylor Loft GP Lux S.à r.l. and AnnTaylor Loft Borrower Lux SCS, each of which are wholly owned indirect subsidiaries of the Company (the “LuxCos”), entered into a Conditional Assignment Agreement, dated July 23, 2020 (the “Conditional Assignment Agreement”), with Alter Domus (US) LLC, in its capacity as incremental collateral agent (the “Agent”) on behalf of the Consenting Stakeholders and each of the other secured parties under the Prepetition Term Credit Agreement. Pursuant to the Conditional Assignment Agreement, upon the occurrence of a “Trigger Event,” the LuxCos have agreed to irrevocably transfer to the Agent all of their respective personal property and other assets, including intellectual property, and trademark rights, and the Agent has agreed to grant Annco, Inc., an indirect subsidiary of the Company, a license to continue to use such trademark rights. A “Trigger Event” under the Conditional Assignment Agreement includes the occurrence of any of following: (i) any Company Party or either of the LuxCos failing to perform or observe certain provisions set forth in the RSA, the Backstop Commitment Letter, the DIP Term Credit Agreement (as defined below) or the Conditional Assignment Agreement, which, in each case, is both adverse to the interests of the Consenting Stakeholders and remains uncured for ten business days after notice is provided to the Company Parties as set forth therein, (ii) a Consenting Stakeholder Termination Event (as defined in the RSA) and termination of the RSA in accordance with the terms thereof, (iii) an acceleration of the obligations arising under the DIP Term Credit Agreement in accordance with such agreement or (iv) a Change of Control (as defined in the Conditional Assignment Agreement). Although the Company Parties intend to pursue the restructuring contemplated by the RSA, there can be no assurance that the Company Parties will be successful in completing a restructuring or any other similar transaction on the terms set forth in the RSA or at all. In particular, the transactions contemplated by the RSA are subject to approval by the Bankruptcy Court, among other conditions. Backstop Commitment Letter for DIP Term Facility On July 23, 2020, prior to commencement of the Chapter 11 Cases and as contemplated by the RSA, the Company entered into the Backstop Commitment Letter with certain of the Consenting Stakeholders or their affiliates (the “Backstop Parties”) pursuant to which the Backstop Parties have committed to provide the Company with a superpriority senior secured debtor-in-possession term loan credit facility of up to $311.8 million in the aggregate (the “DIP Term Facility” and the governing credit agreement, the “DIP Term Credit Agreement”) consisting of (i) up to $150.0 million in new money term loans (the “New Money DIP Loans”) and (ii) up to $161.8 million of certain prepetition term loan obligations that will be rolled into the DIP Term Facility (the “Roll-Up DIP Loans” and, together with the New Money DIP Loans, the “DIP Term Loans”), on the terms and conditions set forth therein, including the approval of the Bankruptcy Court. The proceeds of the New Money DIP Loans may be used to pay certain costs, fees and expenses related to the Chapter 11 Cases, among other things, in all cases, subject to the terms of the DIP Term Credit Agreement. Loans under the DIP Term Facility will bear interest at a rate per annum equal to (i) in the case of a base rate loan, the base rate (which is subject to a floor of 2.00%) plus 10.75% or (ii) in the case of a Eurodollar rate loan, the adjusted London interbank offering rate (which is subject to a floor of 1.00%) plus 11.75%. Upon the occurrence and during the continuance of an event of default under the DIP Term Facility, the Company will be subject to a default rate of interest equal to 2.00% above the rate otherwise applicable. Each lender under the Term Loan, including the Backstop Parties (collectively, the “Prepetition Term Lenders”), will have the right to participate in its ratable share of 50% of the DIP Term Facility and the Exit Term Facility (as defined below). Pursuant to the Backstop Commitment Letter, the Backstop Parties will provide 50% of the DIP Term Loans and loans under the First Out Exit Term Facility and provide any DIP Term Loans and loans under the First Out Exit Term Facility not provided by other Prepetition Term Lenders (the “Backstop Commitments”). As consideration for the Backstop Commitments and other agreements of the Backstop Parties under the Backstop Commitment Letter and under the RSA, the Company will pay the Backstop Parties a cash premium equal to $7.5 million in the aggregate upon the funding of the New Money DIP Loans. If the RSA is terminated prior to the funding of the DIP Term Facility, the Company will pay the Backstop Parties a cash premium equal to $7.5 million in the aggregate on the RSA termination date. The Backstop Commitment Letter and the Backstop Commitments will terminate upon the occurrence of certain events set forth therein, including the termination of the RSA. The DIP Term Facility will convert (the “Conversion”) on a dollar-for-dollar basis into first out term loans (the “First Out Exit Term Facility”) upon the satisfaction of certain conditions set forth in the Backstop Commitment Letter, the DIP Term Credit Agreement and the exit facility term sheet attached to the Backstop Commitment Letter, including the Plan Effective Date (as defined in the RSA) having occurred. Also upon the satisfaction of such conditions, the Prepetition Term Lenders, including holders of DIP Term Loans, will receive their pro rata share of $88.2 million of last out term loans (the “Last Out Exit Term Facility” and, together with the First Out Exit Term Facility, the “Exit Term Facility”). If, after the DIP Term Facility has been funded, the Conversion does not occur, the DIP Term Loans will be repaid in cash on their stated maturity, which will be six months after the effective date of the DIP Term Credit Agreement, subject to earlier termination upon the occurrence of certain events specified in the DIP Term Credit Agreement, which includes dismissal of the Chapter 11 Cases or a sale of all, or substantially all, of the Debtors’ assets. In addition, in such case, or upon the Debtors selling all, or substantially all, of their assets, the Company will pay the DIP Term Loan lenders a cash premium equal to 11.23% of the DIP Term Loans so repaid on the date on which the DIP Term Loans are repaid in full. Also in such event, as discussed above, pursuant to the Backstop Commitment Letter, the Company will pay the Backstop Parties a cash premium equal to $7.5 million in the aggregate on the RSA termination date. Nasdaq Delisting On July 24, 2020, the Company received a letter from the Listing Qualifications Department staff of Nasdaq notifying the Company that, as a result of the Chapter 11 Cases and in accordance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, at the opening of business on August 4, 2020, trading of the Company’s common stock was suspended from Nasdaq and the Company’s common stock began trading on the OTC Pink Marketplace under the symbol “ASNAQ.” The Company has decided not to appeal Nasdaq’s determination. Termination of Interest Rate Swap Since the Chapter 11 Cases represent an event of default as defined under the terms of the Company’s interest rate swap agreement discussed in Note 11, the counterparty terminated the swap agreement on July 23, 2020. As a result of the termination, the fair value of $8.4 million as of May 2, 2020, which was recorded as a deferred loss within Accumulated other comprehensive loss, will be recognized in the Company’s consolidated statement of operations in the fourth quarter of Fiscal 2020. Tax Benefits Preservation Plan On May 26, 2020, the Company adopted a Tax Benefits Preservation Plan (the “Plan”) as a measure to protect its existing net operating loss carryforwards and other tax benefits (“Tax Attributes”). Use of any Tax Attributes will be substantially limited if the Company experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code (“Section 382”). For example, the Company’s ability to use its NOLs may become subject to limitation or may be reduced or eliminated in connection with the Chapter 11 Cases. While the Plan is in effect, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock then outstanding without approval from the Board or without meeting certain customary exceptions would be subject to significant dilution in their ownership interest in the Company. Stockholders who currently own 4.9% or more of the Company’s outstanding common stock will not trigger the Plan unless they acquire 0.5% or more additional shares of common stock. Pursuant to the Plan, one right will be distributed to the Company’s stockholders of record for each share of common stock owned at the close of business on June 5, 2020. Each Right would initially represent the right to purchase from the Company one one-thousandth of a share of our Series A Junior Participating Preferred Stock, par value $0.01 (the “Preferred Stock”) at a purchase price of $6.30 per one one-thousandth of a share. The preferred stock will entitle the holder to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of preferred stock. The Board may redeem the rights in whole, but not in part, for $0.001 per right (subject to adjustment) at any time prior to the close of business on the tenth business day after the first date of public announcement that any person or group has triggered the Plan. The rights will expire on the earliest of (i) the close of business on May 25, 2021, (ii) t he time at which the rights are redeemed or exchanged, (iii) the time at which the Board determines that the Tax Attributes are fully utilized, expired, no longer necessary or become limited under Section 382, or (iv) the beginning of the taxable year to which the Board determines no Tax Benefits may be carried forward . June LTIP Payout In June 2020, the Company announced that it was accelerating payment under its currently active LTIP plans, for which the pre-established targets have already been met. After the June 2020 payout, expense associated with those portions of the LTIP plans where the pre-established targets were not met will be reversed in the fourth quarter of Fiscal 2020. These plans are more fully discussed in Note 17. As a result of the payout, the Company expects to record a reverse of expense of approximately $4.5 million to reflect the differential between the amount accrued as of the end of the third quarter and the amount actually paid in the fourth quarter. Accordingly, the Company expects that there will be no liability outstanding as of the end of Fiscal 2020 associated with its LTIP plans. Sale of the Mahwah, NJ Campus five five |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
May 02, 2020 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation |
Fiscal Period | Fiscal Period |
Interim Financial Statements | Interim Financial Statements These interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and are unaudited. In the opinion of management, such condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the condensed consolidated financial condition, results of operations, comprehensive income, cash flows and equity of the Company for the interim periods presented. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report as permitted by the SEC’s rules and regulations. However, the Company believes that the disclosures herein are adequate to ensure that the information is fairly presented. The condensed consolidated balance sheet data as of August 3, 2019 is derived from the audited consolidated financial statements included in the Company’s Fiscal 2019 10-K, which should be read in conjunction with these interim financial statements. Reference is made to the Fiscal 2019 10-K for a complete set of financial statements. |
Common Stock Split | Common Stock Split On December 19, 2019, the Company announced that the Board of Directors (the “Board”) has approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20. Refer to Note 15 for additional information. As a result, the applicable equity and shares information related to prior periods has been restated to reflect this reverse stock split. |
New Accounting Pronouncements, Policy | Recently Issued Accounting Standards Recently adopted standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (“ASC 842”). The guidance requires the lessee to recognize the assets and liabilities for the rights and obligations created by leases with terms of 12 months or more. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The guidance may be applied retrospectively to each period presented or with the cumulative effect recognized as of the initial date of application. The Company adopted this ASU as of the beginning of Fiscal 2020 with the cumulative effect recognized at adoption. As a result of this standard, the Company has recognized approximately $637.6 million of right-of-use assets and approximately $837.0 million of lease liabilities (current and long-term combined) on its condensed consolidated balance sheet as of May 2, 2020. The right-of-use lease liability for operating leases is based on the net present value of future minimum lease payments. The right-of-use asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts such as favorable leases, straight-line rent liability, purchased lease rights and landlord allowances and a cumulative effect adjustment that decreased opening Accumulated deficit by approximately $11.5 million for transition impairments related to previously impaired leased locations. As a result, prior periods have not been restated. The Company determines if an arrangement is a lease at inception and on the lease commencement date, the Company recognizes an asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on a third-party analysis, which is updated periodically. That analysis concluded that the Company’s incremental borrowing rate upon adoption ranged from 24-30%, depending on the term. For leases existing before the adoption of the new lease accounting standard, the Company used its incremental borrowing rate as of the date of adoption, determined using the remaining lease term as of the date of adoption. For leases commencing on or after the adoption of the new lease accounting standard, the incremental borrowing rate is determined using the remaining lease term as of the lease commencement date. The Company elected the package of practical expedients included in this guidance, which allows us (i) to not reassess whether any expired or existing contracts contain leases; (ii) to not reassess the lease classification for any expired or existing leases; (iii) to account for a lease and non-lease component as a single component for both its real estate and non-real estate leases; and (iv) to not reassess the initial direct costs for existing leases. The measurement of lease right-of-use assets and liabilities includes amounts related to: • Lease payments made prior to the lease commencement date; • Incentives from landlords received by the Company for signing a lease, including construction allowances or deferred lease credits paid to the Company by landlords towards construction and tenant improvement costs, which are presented as a reduction to the right-of-use asset recorded; • Fixed payments related to lease components, such as rent escalation payments scheduled at the lease commencement date; and • Fixed payments related to nonlease components, such as taxes, insurance, and maintenance costs. The measurement of lease right-of-use assets and liabilities excludes amounts related to: • Variable payments related to lease components, such as contingent rent payments made by the Company based on performance, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations; • Variable payments related to nonlease components, such as taxes, insurance, and maintenance costs, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations; and • Leases with an initial term of 12 months or less, the expense of which is recognized in the period incurred in the condensed consolidated statements of operations. Certain of the Company’s leases include options to extend the lease or to terminate the lease. The Company assesses these leases and, depending on the facts and circumstances, may or may not include these options in the measurement of the Company’s lease right-of-use assets and liabilities. Generally, the Company’s options to extend its leases are at the Company’s sole discretion and at the time of lease commencement are not reasonably certain of being exercised. There may be instances in which a lease is being renewed on a month-to-month basis and, in these instances, the Company will recognize lease expense in the period incurred in the condensed consolidated statements of operations until a new agreement has been executed. Amortization and interest expense related to lease right-of-use assets and liabilities are generally calculated on a straight-line basis over the lease term. Amortization and interest expense related to previously impaired lease right-of-use assets are calculated on a front-loaded amortization pattern resulting in higher single lease expense in earlier periods. Depending on the nature of the lease, amortization and interest expense is recorded in either Buying, distribution, and occupancy expense or in Selling, general and administrative expense in the condensed consolidated statements of operations. The Company’s lease right-of-use assets are assessed for indicators of impairment at least quarterly. The results of any such impairments are disclosed in Note 13. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, the Company does not have any finance leases, any material sublease arrangements or any material leases where the Company is considered the lessor. The following table provides the impact of adoption of ASU 2016-02 on the Company’s condensed consolidated balance sheet: August 3, 2019 (as reported under ASC 840) Impact of adoption of ASC 842 August 3, 2019 (as reported under ASC 842) (millions) Assets Prepaid expenses and other current assets $ 242.3 $ (33.6) $ 208.7 Current assets related to discontinued operations 98.2 (7.6) 90.6 Other intangible assets, net 276.6 (8.4) 268.2 Operating lease right-of-use asset — 744.4 744.4 Non-current assets related to discontinued operations 11.5 131.5 143.0 Liabilities and Shareholders’ Equity Current portion of lease liabilities — 141.3 141.3 Current liabilities related to discontinued operations 94.7 37.8 132.5 Lease-related liabilities 204.6 (204.6) — Long-term lease liabilities — 769.1 769.1 Non-current liabilities related to discontinued operations 35.5 94.2 129.7 Accumulated deficit (935.9) (11.5) (947.4) Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The new standard simplifies the accounting for income taxes by removing exceptions: • to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); • to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; • to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and • to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the standard does not require that an entity allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements, however, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. The standard does require that an entity: • recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; • evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; and • reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ASU 2019-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The Company has elected to early adopt ASU 2019-12. By early adopting, ASU 2019-12 becomes effective as of the beginning of Fiscal 2020, however, there is no cumulative effect to be recognized with the early adoption. As a result of the ASU 2019-12 adoption, the Company did not recognize income tax expense on the income from discontinued operations related to Dressbarn for the three and nine months ended May 2, 2020. Recently issued standards Intangible Assets In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods. Early adoption is permitted for annual or interim periods. This ASU requires that implementation costs incurred in a hosting arrangement that is a service contract be assessed in accordance with the existing guidance in Subtopic 350-40, “Internal-Use Software.” Accordingly, costs incurred during the preliminary project stage must be expensed as incurred, while costs incurred during the application development stage must be capitalized. Capitalized implementation costs associated with a hosting arrangement that is a service contract must be expensed over the term of the hosting arrangement. Additionally, the new guidance requires that the expense of these capitalized costs be presented in the same line item in the statement of income as the fees associated with the hosting element of the arrangement. While the Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements, the Company does not anticipate that the guidance will have a significant impact on its consolidated financial statements upon adoption of the new standard in Fiscal 2021. |
Description of Business (Tables
Description of Business (Tables) | 9 Months Ended |
May 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Segment Reporting Disclosure | For a more detailed description of each brand’s products and markets in which they serve, see Part I, Item 1 “Business” in our Annual Report on Form 10-K for the fiscal year ended August 3, 2019 (the “Fiscal 2019 10-K”). The Company’s brands had the following store counts as of May 2, 2020: Justice Lane Bryant LOFT Catherines Ann Taylor Total 813 680 662 286 292 2,733 Net sales, operating loss and depreciation and amortization expense for each reportable operating segment are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Net sales: Premium Fashion $ 297.3 $ 549.5 $ 1,506.4 $ 1,784.4 Plus Fashion 197.3 311.5 795.7 902.7 Kids Fashion 106.6 227.4 635.6 820.1 Total net sales $ 601.2 $ 1,088.4 $ 2,937.7 $ 3,507.2 Operating (loss) income (a) : Premium Fashion $ (179.2) $ (15.9) $ (140.2) $ 16.1 Plus Fashion (122.8) (35.7) (138.4) (96.0) Kids Fashion (172.8) (31.9) (208.4) (44.8) Unallocated restructuring and other related charges (b) 1.2 (6.6) (2.1) (28.0) Impairment of goodwill (85.5) (115.1) (148.9) (115.1) Impairment of other intangible assets (41.3) (25.0) (88.2) (25.0) Total operating loss $ (600.4) $ (230.2) $ (726.2) $ (292.8) Depreciation and amortization expense: Premium Fashion $ 28.5 $ 32.0 $ 90.7 $ 100.6 Plus Fashion 14.1 18.1 48.2 55.5 Kids Fashion 15.2 17.3 50.5 53.3 Total depreciation and amortization expense $ 57.8 $ 67.4 $ 189.4 $ 209.4 (a) For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. (b) Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
May 02, 2020 | |
Accounting Policies [Abstract] | |
Summary of Discontinued Operations | The following table summarizes the results of Dressbarn reclassified as discontinued operations: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions, unaudited) Net sales $ — $ 177.3 $ 326.6 $ 532.0 Depreciation and amortization expense — (4.1) (10.9) (12.9) Operating (loss) income (0.8) (18.8) 59.4 (34.9) Pretax (loss) income from discontinued operations (0.8) (18.8) 59.4 (34.9) Income tax provision — (7.0) — (4.5) (Loss) income from discontinued operations, net of tax $ (0.8) $ (25.8) $ 59.4 $ (39.4) The major components of Dressbarn assets and liabilities related to discontinued operations are summarized below: May 2, August 3, (millions, unaudited) Cash and cash equivalents $ — $ 4.2 Inventories — 57.0 Prepaid expenses and other current assets 6.1 37.0 Property and equipment, net — 11.5 Total assets related to discontinued operations $ 6.1 $ 109.7 Accounts payable and other current liabilities $ 35.8 $ 94.7 Lease-related liabilities — 29.6 Other liabilities 5.5 5.9 Total liabilities related to discontinued operations $ 41.3 $ 130.2 The following table summarizes the results of maurices reclassified as discontinued operations: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions, unaudited) Net sales $ — $ 238.3 $ — $ 749.4 Depreciation and amortization expense — (6.6) — (21.1) Operating income — 32.0 — 97.8 Pretax income from discontinued operations — 32.2 — 98.3 Income tax provision — (25.9) — (39.6) Income from discontinued operations, net of tax $ — $ 6.3 $ — $ 58.7 The major components of cash flows related to discontinued operations are summarized below: Nine Months Ended May 2, May 4, (millions, unaudited) Cash provided by operations of discontinued operations $ 57.0 $ 38.0 Cash provided by (used by) investing activities of discontinued operations 4.9 (5.0) |
Condensed Cash Flow Statement | Condensed Consolidated Statements of Cash Flows Reconciliation A reconciliation of cash, cash equivalents and restricted cash in the condensed consolidated balance sheets to the amounts shown on the condensed consolidated statements of cash flows is shown below: Reconciliation of cash, cash equivalents and restricted cash: May 2, August 3, May 4, August 4, Cash and cash equivalents $ 438.7 $ 323.8 $ 97.9 $ 230.2 Restricted cash included in other current assets 1.2 1.2 1.2 1.2 Cash included in discontinued operations — 4.2 9.5 8.7 Total cash, cash equivalents and restricted cash $ 439.9 $ 329.2 $ 108.6 $ 240.1 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Tables) | 9 Months Ended |
May 02, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of Impact of ASU 2016-02 | The following table provides the impact of adoption of ASU 2016-02 on the Company’s condensed consolidated balance sheet: August 3, 2019 (as reported under ASC 840) Impact of adoption of ASC 842 August 3, 2019 (as reported under ASC 842) (millions) Assets Prepaid expenses and other current assets $ 242.3 $ (33.6) $ 208.7 Current assets related to discontinued operations 98.2 (7.6) 90.6 Other intangible assets, net 276.6 (8.4) 268.2 Operating lease right-of-use asset — 744.4 744.4 Non-current assets related to discontinued operations 11.5 131.5 143.0 Liabilities and Shareholders’ Equity Current portion of lease liabilities — 141.3 141.3 Current liabilities related to discontinued operations 94.7 37.8 132.5 Lease-related liabilities 204.6 (204.6) — Long-term lease liabilities — 769.1 769.1 Non-current liabilities related to discontinued operations 35.5 94.2 129.7 Accumulated deficit (935.9) (11.5) (947.4) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
May 02, 2020 | |
Leases [Abstract] | |
Lease, Cost | A summary of the Company’s operating lease costs from continuing operations is as follows: Three Months Ended Nine Months Ended May 2, May 2, (millions) Single lease costs (a) $ 91.1 $ 281.0 Variable lease costs (b) 48.5 153.1 Total lease expenses 139.6 434.1 Less rental income (c) (0.8) (2.9) Total net rental expense (d) $ 138.8 $ 431.2 ________ (a) Includes amortization and interest expense associated with operating lease right-of-use assets and liabilities. (b) Includes variable payments related to both lease and non-lease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs, as well as month-to-month rent payments while expired store lease contracts are renegotiated. (c) Substantially reflects rental income received related to Company-owned space in Duluth, MN. (d) Total occupancy costs included in discontinued operations related to Dressbarn were not material for the three months ended May 2, 2020 and $32.1 million for the nine months ended May 2, 2020. The following table provides a summary of the Company’s operating lease costs from continuing operations for the three and nine months ended May 4, 2019, which was accounted for in accordance with Accounting Standards Codification (“ASC”) 840, “Leases” (“ASC 840”). Prior periods have not been adjusted for the adoption of ASU 2016-02. Three Months Ended Nine Months Ended May 4, May 4, (millions) Base rentals $ 99.1 $ 296.4 Percentage rentals 6.4 21.0 Other occupancy costs, primarily CAM and real estate taxes 43.4 126.3 Total (a) $ 148.9 $ 443.7 ________ (a) Total occupancy costs included in discontinued operations were $52.5 million and $163.1 million for the three and nine months ended May 4, 2019, respectively. |
Operating leases, weighted average remaining lease terms and discount rate | The weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rates used to calculate the Company’s operating lease liabilities are as follows: May 2, Weighted-average remaining lease term (years) 5.3 Weighted-average discount rate 25.7% |
Lessee, Operating Lease, Liability, Maturity | The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of May 2, 2020: Fiscal Years Minimum Operating Lease Payments (a) (b) (millions) 2020 (excluding the nine months ended May 2, 2020) $ 99.5 2021 355.1 2022 290.5 2023 213.4 2024 148.9 Thereafter 462.6 Total undiscounted operating lease liabilities 1,570.0 Less imputed interest (733.0) Present value of operating lease liabilities 837.0 Less current portion of lease liabilities (167.7) Total long-term lease liabilities $ 669.3 (a) Net of sublease income, which is not expected to be significant in any period. (b) Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. |
Future Minimum Lease Payments Under Noncancelable Operating Leases | As reported under the previous accounting standard, the following table provides a summary of total consolidated operating lease commitments, including leasehold financing obligations, under non-cancelable leases as of August 3, 2019: Fiscal Years Minimum Operating Lease Payments (a) (b) (millions) 2020 $ 462.0 2021 402.3 2022 325.4 2023 242.7 2024 172.6 Thereafter 563.3 Total future minimum rentals $ 2,168.3 (a) Net of sublease income, which is not expected to be significant in any period. (b) Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. |
Schedule of Cash Flow, Supplemental Disclosures | Supplemental disclosures related to leases are as follows: Three Months Ended Nine Months Ended May 2, May 2, (millions) Cash payments arising from operating lease liabilities (included in cash flows from operating activities) $ 101.0 $ 303.7 Non-cash operating lease liabilities from obtaining right-of-use assets 3.0 4.4 Nine Months Ended Cash Interest and Taxes: May 2, May 4, (millions) Cash paid for interest $ 65.6 $ 72.7 Cash paid for income taxes (a) $ 9.1 $ 4.8 (a) Includes a net payment of $0.1 million and a net refund of $0.2 million for the nine months ended May 2, 2020 and May 4, 2019, respectively, related to the Dressbarn and maurices businesses, which are classified in discontinued operations. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
May 02, 2020 | |
Revenue Recognition [Abstract] | |
Contract with Customer, Asset and Liability | The contract liabilities representing unearned revenue for our continuing operations are as follows: May 2, 2020 August 3, 2019 May 4, 2019 August 4, 2018 (a) (millions) Deferred revenue - gift card liability $ 85.7 $ 79.7 $ 82.9 $ 72.4 Deferred revenue - loyalty programs 21.3 22.1 26.0 26.3 ________ (a) After adjusting for the impact of adopting ASU 2014-09. |
Schedule of Revenue by Major Product Categories | The Company’s revenues by major product categories as a percentage of total net sales are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, Apparel 83 % 86 % 82 % 82 % Accessories 10 % 12 % 12 % 14 % Other 7 % 2 % 6 % 4 % Total net sales 100 % 100 % 100 % 100 % |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
May 02, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following details the changes in goodwill for each reportable segment: Premium Fashion (a) Kids Fashion (b) Total (millions) Balance at August 3, 2019 $ 305.0 $ 8.5 $ 313.5 Impairment losses (140.4) (8.5) (148.9) Balance at May 2, 2020 $ 164.6 $ — $ 164.6 (a) Net of accumulated impairment losses of $569.3 million and $428.9 million for the Premium Fashion segment as of May 2, 2020 and August 3, 2019, respectively. (b) Net of accumulated impairment losses of $169.4 million and $160.9 million for the Kids Fashion |
Schedule of Finite-Lived Intangible Assets | Other intangible assets, reflecting the change, as well as the impairments discussed above, now consist of the following: May 2, 2020 August 3, 2019 Description Gross Accumulated Net Gross Accumulated Net Intangible assets not subject to amortization : (millions) Brands and trade names (a) $ 169.7 $ — $ 169.7 $ 252.0 $ — $ 252.0 Franchise rights (b) 5.0 — 5.0 10.9 — 10.9 Total intangible assets not subject to amortization 174.7 — 174.7 262.9 — 262.9 Intangible assets subject to amortization : Proprietary technology 4.8 (4.8) — 4.8 (4.8) — Customer relationships 52.0 (50.7) 1.3 52.0 (46.7) 5.3 Favorable leases — — — 38.2 (29.8) 8.4 Trade names 5.3 (5.3) — 5.3 (5.3) — Total intangible assets subject to amortization 62.1 (60.8) 1.3 100.3 (86.6) 13.7 Total other intangible assets $ 236.8 $ (60.8) $ 176.0 $ 363.2 $ (86.6) $ 276.6 (a) Net of accumulated trade name impairment losses are as follows: $252.7 million of our Ann Taylor trade name, $424.4 million of our LOFT trade name, $243.5 million of our Lane Bryant trade name, $10.0 million of our Catherines trade name, and $59.4 million of our Justice trade name. (b) Net of accumulated franchise rights impairment of $5.9 million at our Justice brand. |
Asset Impairments (Tables)
Asset Impairments (Tables) | 9 Months Ended |
May 02, 2020 | |
Property, Plant and Equipment [Abstract] | |
Impairment Charges Related to Long-Lived Tangible Assets by Segment | Impairment charges included in continuing operations by segment are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Premium Fashion $ 81.1 $ — $ 81.3 $ 0.4 Plus Fashion 23.6 16.3 24.1 17.4 Kids Fashion 55.2 0.4 56.3 0.9 Total impairment charges $ 159.9 $ 16.7 $ 161.7 $ 18.7 |
Restructuring and Other Relat_2
Restructuring and Other Related Charges (Tables) | 9 Months Ended |
May 02, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Related Charges | Charges related to the Dressbarn wind down are included in discontinued operations. Activity for the three and nine months ended May 4, 2019 reflects actions under the Change for Growth program. Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash restructuring charges: Severance and benefit costs (a) $ (1.3) $ — $ 1.6 $ (0.2) Other related charges (b) 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 _______ (a) Severance and benefit costs reflect additional severance accruals associated with previously announced initiatives, as well as adjustments to true up estimates of previously accrued severance-related costs to reflect amounts actually paid. (b) Other related charges in Fiscal 2019 consist of professional fees and other third-party costs incurred in connection with the Change for Growth program. Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) |
Schedule of Restructuring Related Liabilities | A summary of activity for the nine months ended May 2, 2020 in the restructuring-related liabilities, which is included within Accrued expenses and other current liabilities, is as follows: Severance and benefit costs Other related charges Total (millions) Balance at August 3, 2019 $ 11.4 $ 1.0 $ 12.4 Additions charged to expense 1.6 0.5 2.1 Cash payments (10.5) (1.5) (12.0) Balance at May 2, 2020 $ 2.5 $ — $ 2.5 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
May 02, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories by Brand | Inventory by segment is set forth below: May 2, August 3, May 4, (millions) Premium Fashion $ 280.5 $ 226.3 $ 286.6 Plus Fashion 103.5 156.5 181.5 Kids Fashion 65.7 107.9 91.2 Total inventories $ 449.7 $ 490.7 $ 559.3 The significant reduction in inventories from May 4, 2019 to May 2, 2020 primarily reflects an increase of $135.0 million in inventory markdown reserves as of May 2, 2020 mainly at the Plus Fashion and Kids Fashion segments, which follow the retail-method of accounting for inventory. The reserve increase was a result of the retail store closures due to COVID-19. Refer to Note 3 to the audited financial statements included in the Fiscal 2019 10-K for more information on the Company’s accounting for inventory. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following: May 2, August 3, (millions) Revolving credit facility $ 230.0 $ — Less: unamortized debt issuance costs (a) (2.4) (3.2) 227.6 (3.2) Term loan 1,292.0 1,371.5 Less: unamortized original issue discount (b) (9.9) (13.8) unamortized debt issuance costs (b) (11.4) (15.9) 1,270.7 1,341.8 Total debt 1,498.3 1,338.6 Less: current portion (1,498.3) — Total long-term debt $ — $ 1,338.6 _______ (a) The unamortized debt issuance costs are amortized on a straight-line basis over the life of the Amended Revolving Credit Agreement. (b) The original issue discount and debt issuance costs for the Term Loan are amortized over the life of the Term Loan using the interest method based on an imputed interest rate of approximately 6.3% |
Schedule of Maturities of Long-term Debt | The Company’s outstanding debt as of May 2, 2020 matures as follows: Fiscal Year Amount (millions) 2020 $ 1,522.0 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
May 02, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | As of May 2, 2020, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk: Interest Rate Derivative Number of Instruments Notional Agreement Principal Amount Interest Rate Maturity Date Interest rate swap One $600.0 Million 6.85% March 31, 2021 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
May 02, 2020 | |
Equity [Abstract] | |
Schedule of Weighted Average Number of Shares | The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to those shares used in calculating diluted net income per common share as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (thousands) (thousands) Basic 10,003 9,882 9,972 9,864 Dilutive effect of stock options and restricted stock units (a) — — — — Diluted shares 10,003 9,882 9,972 9,864 (a) There was no dilutive effect of stock options and restricted stock units for the three and nine months ended May 2, 2020 and May 4, 2019 as the impact of these items was anti-dilutive using the treasury stock method as a result of the net loss incurred during the periods. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
May 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Total Compensation Expense and Associated Income Tax Benefit | A summary of the total compensation expense and associated income tax benefit recognized related to stock-based compensation arrangements on a consolidated basis is as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Compensation expense $ 0.8 $ 2.2 $ 3.2 $ 10.5 Income tax benefit $ — $ 0.5 $ — $ 2.2 |
Weighted-Average Assumptions used to Estimate Fair Value of Stock Options Granted | The Company’s weighted-average assumptions used to estimate the fair value of stock options granted during the periods presented were as follows: Nine Months Ended May 2, May 4, Expected term (years) 5.2 5.2 Expected volatility 61.7 % 47.5 % Risk-free interest rate 1.5 % 2.9 % Expected dividend yield — % — % Weighted-average grant date fair value $ 2.74 $ 35.41 |
Summary of Stock Option Activity under all Plans | A summary of the stock option activity under the service-based plans during the nine months ended May 2, 2020 is as follows: Number of Weighted- Weighted- Aggregate Intrinsic Value (a) (thousands) (years) (millions) Options outstanding – August 3, 2019 850.4 $ 156.00 4.1 $ — Granted 275.9 5.12 Exercised — — Canceled/Forfeited (430.5) 179.89 Options outstanding – May 2, 2020 695.8 $ 81.40 4.8 $ — Options vested and expected to vest at May 2, 2020 (b) 684.8 $ 82.49 4.8 $ — Options exercisable at May 2, 2020 380.0 $ 130.95 3.7 $ — _______ (a) The intrinsic value is the amount by which the market price at the end of the period of the underlying share of stock exceeds the exercise price of the stock option. (b) The number of options expected to vest takes into consideration estimated expected forfeitures. |
Summary of Restricted Equity Awards Activity | A summary of restricted equity awards activity during the nine months ended May 2, 2020 is as follows: Service-based Number of Weighted- (thousands) Nonvested at August 3, 2019 67.4 $ 91.42 Granted — — Vested (28.6) 112.47 Canceled/Forfeited (7.8) 88.68 Nonvested at May 2, 2020 31.0 $ 72.68 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
May 02, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure | For a more detailed description of each brand’s products and markets in which they serve, see Part I, Item 1 “Business” in our Annual Report on Form 10-K for the fiscal year ended August 3, 2019 (the “Fiscal 2019 10-K”). The Company’s brands had the following store counts as of May 2, 2020: Justice Lane Bryant LOFT Catherines Ann Taylor Total 813 680 662 286 292 2,733 Net sales, operating loss and depreciation and amortization expense for each reportable operating segment are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Net sales: Premium Fashion $ 297.3 $ 549.5 $ 1,506.4 $ 1,784.4 Plus Fashion 197.3 311.5 795.7 902.7 Kids Fashion 106.6 227.4 635.6 820.1 Total net sales $ 601.2 $ 1,088.4 $ 2,937.7 $ 3,507.2 Operating (loss) income (a) : Premium Fashion $ (179.2) $ (15.9) $ (140.2) $ 16.1 Plus Fashion (122.8) (35.7) (138.4) (96.0) Kids Fashion (172.8) (31.9) (208.4) (44.8) Unallocated restructuring and other related charges (b) 1.2 (6.6) (2.1) (28.0) Impairment of goodwill (85.5) (115.1) (148.9) (115.1) Impairment of other intangible assets (41.3) (25.0) (88.2) (25.0) Total operating loss $ (600.4) $ (230.2) $ (726.2) $ (292.8) Depreciation and amortization expense: Premium Fashion $ 28.5 $ 32.0 $ 90.7 $ 100.6 Plus Fashion 14.1 18.1 48.2 55.5 Kids Fashion 15.2 17.3 50.5 53.3 Total depreciation and amortization expense $ 57.8 $ 67.4 $ 189.4 $ 209.4 (a) For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. (b) Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) |
Restructuring and Other Related Charges | Charges related to the Dressbarn wind down are included in discontinued operations. Activity for the three and nine months ended May 4, 2019 reflects actions under the Change for Growth program. Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash restructuring charges: Severance and benefit costs (a) $ (1.3) $ — $ 1.6 $ (0.2) Other related charges (b) 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 _______ (a) Severance and benefit costs reflect additional severance accruals associated with previously announced initiatives, as well as adjustments to true up estimates of previously accrued severance-related costs to reflect amounts actually paid. (b) Other related charges in Fiscal 2019 consist of professional fees and other third-party costs incurred in connection with the Change for Growth program. Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) |
Additional Financial Informat_2
Additional Financial Information (Tables) | 9 Months Ended |
May 02, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Cash Interest and Taxes | Supplemental disclosures related to leases are as follows: Three Months Ended Nine Months Ended May 2, May 2, (millions) Cash payments arising from operating lease liabilities (included in cash flows from operating activities) $ 101.0 $ 303.7 Non-cash operating lease liabilities from obtaining right-of-use assets 3.0 4.4 Nine Months Ended Cash Interest and Taxes: May 2, May 4, (millions) Cash paid for interest $ 65.6 $ 72.7 Cash paid for income taxes (a) $ 9.1 $ 4.8 (a) Includes a net payment of $0.1 million and a net refund of $0.2 million for the nine months ended May 2, 2020 and May 4, 2019, respectively, related to the Dressbarn and maurices businesses, which are classified in discontinued operations. |
Description of Business (Detail
Description of Business (Details) $ in Millions | Mar. 16, 2020USD ($) | May 02, 2020USD ($)Store | May 04, 2019USD ($) | May 02, 2020USD ($)Storesegment | May 04, 2019USD ($) | Aug. 03, 2019USD ($) |
Segment Reporting Information [Line Items] | ||||||
Number of stores | 2,733 | 2,733 | ||||
Net sales | $ | $ 601.2 | $ 1,088.4 | $ 2,937.7 | $ 3,507.2 | $ 4,700 | |
Number of Reportable Segments | segment | 3 | |||||
Revolving credit facility | ||||||
Segment Reporting Information [Line Items] | ||||||
Proceeds from line of credit | $ | $ 230 | |||||
Justice | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 813 | 813 | ||||
Lane Bryant | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 680 | 680 | ||||
Loft | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 662 | 662 | ||||
Catherines | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 286 | 286 | ||||
ANN | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 292 | 292 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) $ in Millions | Mar. 16, 2020USD ($) | Dec. 19, 2019 | May 02, 2020USD ($) | Aug. 03, 2019USD ($) | Aug. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Reverse stock split conversion rate (percent) | 0.05 | ||||
Revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 230 | $ 0 | |||
Remaining borrowing capacity | 167.7 | ||||
Proceeds from line of credit | $ 230 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 1,292 | $ 1,371.5 | $ 1,800 |
Basis of Presentation (Summary
Basis of Presentation (Summary of Discontinued Operations) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
May 02, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | May 04, 2019 | May 02, 2020 | May 04, 2019 | May 06, 2019 | Aug. 04, 2018 | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | |||||||||
Proceeds from sale of intangible assets | $ 5 | $ 5 | $ 0 | ||||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||||||
Income tax provision | $ 0 | $ (32.9) | 0 | (44.1) | |||||
Income from discontinued operations, net of tax | [1] | (0.8) | (19.5) | 59.4 | 19.3 | ||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||||||
Cash and cash equivalents | $ 4.2 | 9.5 | 9.5 | $ 8.7 | |||||
Current assets related to discontinued operations | 6.1 | 98.2 | 6.1 | ||||||
Current liabilities related to discontinued operations | 35.8 | 94.7 | 35.8 | ||||||
Maurices | |||||||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||||||
Ownership percentage by parent (percent) | 49.60% | ||||||||
Discontinued Operations, Disposed of by Sale | |||||||||
Discontinued Operation, Alternative Cash Flow Information [Abstract] | |||||||||
Cash provided by operations of discontinued operations | 57 | 38 | |||||||
Cash provided by (used by) investing activities of discontinued operations | 4.9 | (5) | |||||||
Dressbarn | Discontinued Operations, Disposed of by Sale | |||||||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||||||
Net sales | 0 | 177.3 | 326.6 | 532 | |||||
Depreciation and amortization expense | 0 | (4.1) | (10.9) | (12.9) | |||||
Operating income | (0.8) | (18.8) | 59.4 | (34.9) | |||||
Pretax income from discontinued operations | (0.8) | (18.8) | 59.4 | (34.9) | |||||
Income tax provision | 0 | (7) | 0 | (4.5) | |||||
Income from discontinued operations, net of tax | (0.8) | (25.8) | 59.4 | (39.4) | |||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||||||
Cash and cash equivalents | 0 | 4.2 | 0 | ||||||
Inventories | 0 | 57 | 0 | ||||||
Prepaid expenses and other current assets | 6.1 | 37 | 6.1 | ||||||
Property and equipment, net | 0 | 11.5 | 0 | ||||||
Current assets related to discontinued operations | 6.1 | 109.7 | 6.1 | ||||||
Accounts payable and other current liabilities | 35.8 | 94.7 | 35.8 | ||||||
Lease-related liabilities | 0 | 29.6 | 0 | ||||||
Other liabilities | 5.5 | 5.9 | 5.5 | ||||||
Current liabilities related to discontinued operations | 41.3 | 130.2 | 41.3 | ||||||
Maurices | Discontinued Operations, Disposed of by Sale | |||||||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||||||
Net sales | 0 | 238.3 | 0 | 749.4 | |||||
Depreciation and amortization expense | 0 | (6.6) | 0 | (21.1) | |||||
Operating income | 0 | 32 | 0 | 97.8 | |||||
Pretax income from discontinued operations | 0 | 32.2 | 0 | 98.3 | |||||
Income tax provision | 0 | (25.9) | 0 | (39.6) | |||||
Income from discontinued operations, net of tax | 0 | $ 6.3 | 0 | $ 58.7 | |||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||||||
Proceeds from divestiture | $ 210 | ||||||||
Maurices | Discontinued Operations, Disposed of by Sale | Maurices | |||||||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||||||
Ownership percentage by parent (percent) | 49.60% | ||||||||
Dressbarn wind down | |||||||||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | |||||||||
Restructuring costs, cumulative | $ 62 | 62 | |||||||
Restructuring costs | $ 9 | ||||||||
[1] | Income from discontinued operations is presented net of income tax expense of $32.9 million and $44.1 million for the three and nine months ended May 4, 2019, respectively. No taxes related to discontinued operations were recorded during the three and nine months ended May 2, 2020 . |
Basis of Presentation (Condense
Basis of Presentation (Condensed Consolidated Statements of Cash Flows reconciliation) (Details) - USD ($) $ in Millions | May 02, 2020 | Aug. 03, 2019 | May 04, 2019 | Aug. 04, 2018 |
Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 438.7 | $ 323.8 | $ 97.9 | $ 230.2 |
Restricted Cash | 1.2 | 1.2 | 1.2 | 1.2 |
Cash and cash equivalents | 4.2 | 9.5 | 8.7 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 439.9 | $ 329.2 | $ 108.6 | $ 240.1 |
Recently Issued Accounting St_3
Recently Issued Accounting Standards (Details) - USD ($) $ in Millions | May 02, 2020 | Aug. 04, 2019 | Aug. 03, 2019 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease right-of-use asset | $ 637.6 | $ 0 | |||
Present value of operating lease liabilities | [1],[2] | 837 | |||
Accumulated deficit | (1,656.6) | (935.9) | |||
Prepaid expenses and other current assets | 158.5 | 242.3 | |||
Current assets related to discontinued operations | 6.1 | 98.2 | |||
Other intangible assets, net | 176 | 276.6 | |||
Non-current assets related to discontinued operations | 0 | 11.5 | |||
Current portion of lease liabilities | 167.7 | [1],[2] | 0 | ||
Current liabilities related to discontinued operations | 35.8 | 94.7 | |||
Lease-related liabilities | 0 | 204.6 | |||
Long-term lease liabilities | 669.3 | [1],[2] | 0 | ||
Non-current liabilities related to discontinued operations | $ 5.5 | 35.5 | |||
Minimum | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Incremental borrowing rate (percent) | 24.00% | ||||
Maximum | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Incremental borrowing rate (percent) | 30.00% | ||||
Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease right-of-use asset | $ 744.4 | 744.4 | |||
Accumulated deficit | (11.5) | $ (11.5) | (947.4) | ||
Prepaid expenses and other current assets | (33.6) | 208.7 | |||
Current assets related to discontinued operations | (7.6) | 90.6 | |||
Other intangible assets, net | (8.4) | 268.2 | |||
Non-current assets related to discontinued operations | 131.5 | 143 | |||
Current portion of lease liabilities | 141.3 | 141.3 | |||
Current liabilities related to discontinued operations | 37.8 | 132.5 | |||
Lease-related liabilities | (204.6) | 0 | |||
Long-term lease liabilities | 769.1 | 769.1 | |||
Non-current liabilities related to discontinued operations | $ 94.2 | $ 129.7 | |||
[1] | Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. | ||||
[2] | Net of sublease income, which is not expected to be significant in any period. |
Leases (Lease costs) (Details)
Leases (Lease costs) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | ||
Leases [Abstract] | |||||
Single lease costs | [1] | $ 91.1 | $ 281 | ||
Variable lease costs | [2] | 48.5 | 153.1 | ||
Total lease expenses | 139.6 | 434.1 | |||
Less rental income | [3] | (0.8) | (2.9) | ||
Total net rental expense | [4] | $ 138.8 | 431.2 | ||
Occupancy costs, discontinued operations | $ 52.5 | $ 32.1 | $ 163.1 | ||
Base rentals | 99.1 | 296.4 | |||
Percentage rentals | 6.4 | 21 | |||
Other occupancy costs, primarily CAM and real estate taxes | 43.4 | 126.3 | |||
Total net rental expense | [5] | $ 148.9 | $ 443.7 | ||
[1] | (a) Includes amortization and interest expense associated with operating lease right-of-use assets and liabilities. | ||||
[2] | (b) Includes variable payments related to both lease and non-lease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs, as well as month-to-month rent payments while expired store lease contracts are renegotiated. | ||||
[3] | (c) | ||||
[4] | (d) Total occupancy costs included in discontinued operations related to Dressbarn were not material for the three months ended May 2, 2020 and $32.1 million for the nine months ended May 2, 2020. | ||||
[5] | (a) Total occupancy costs included in discontinued operations were $52.5 million and $163.1 million for the three and nine months ended May 4, 2019, respectively. |
Leases (Lease liabilities) (Det
Leases (Lease liabilities) (Details) - USD ($) $ in Millions | May 02, 2020 | Aug. 03, 2019 | ||
Leases [Abstract] | ||||
Weighted-average remaining lease term (years) | 5 years 3 months 18 days | |||
Weighted-average discount rate (percent) | 25.70% | |||
Lease Maturity, Current [Abstract] | ||||
2020 (excluding the nine months ended May 2, 2020) | [1],[2] | $ 99.5 | ||
2021 | [1],[2] | 355.1 | ||
2022 | [1],[2] | 290.5 | ||
2023 | [1],[2] | 213.4 | ||
2024 | [1],[2] | 148.9 | ||
Thereafter | [1],[2] | 462.6 | ||
Total undiscounted operating lease liabilities | [1],[2] | 1,570 | ||
Less imputed interest | [1],[2] | (733) | ||
Present value of operating lease liabilities | [1],[2] | 837 | ||
Less current portion of lease liabilities | (167.7) | [1],[2] | $ 0 | |
Long-term lease liabilities | $ 669.3 | [1],[2] | 0 | |
Lease Maturity, Prior | ||||
2020 | [3],[4] | 462 | ||
2021 | [3],[4] | 402.3 | ||
2022 | [3],[4] | 325.4 | ||
2023 | [3],[4] | 242.7 | ||
2024 | [3],[4] | 172.6 | ||
Thereafter | [3],[4] | 563.3 | ||
Total undiscounted operating lease liabilities | [3],[4] | $ 2,168.3 | ||
[1] | Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. | |||
[2] | Net of sublease income, which is not expected to be significant in any period. | |||
[3] | Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table. | |||
[4] | Net of sublease income, which is not expected to be significant in any period. |
Leases (Schedule of Cash Flow,
Leases (Schedule of Cash Flow, Supplemental Disclosure) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
May 02, 2020 | May 02, 2020 | |
Leases [Abstract] | ||
Cash payments arising from operating lease liabilities (included in cash flows from operating activities) | $ 101 | $ 303.7 |
Non-cash operating lease liabilities from obtaining right-of-use assets | $ 3 | $ 4.4 |
Revenue Recognition (Deferred R
Revenue Recognition (Deferred Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | Aug. 04, 2018 | [1] | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||||||
Contract with customer, liability, gift cards, gift certificates, merchandise credits | $ 85.7 | $ 82.9 | $ 85.7 | $ 82.9 | $ 79.7 | $ 72.4 | |
Contract with customer, liability, customer loyalty programs | 21.3 | 26 | 21.3 | 26 | $ 22.1 | $ 26.3 | |
Contract with customer, liability, revenue recognized, gift cards, gift certificates, merch credits | 14 | 30 | 35 | 35 | |||
Contract with customer, liability, revenue recognized, customer loyalty programs | 12 | 19 | 22 | 29 | |||
Discontinued Operations, Disposed of by Sale | |||||||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||||||
Contract with customer, liability, revenue recognized, gift cards, gift certificates, merch credits | 0 | 9 | 6 | 10 | |||
Contract with customer, liability, revenue recognized, customer loyalty programs | $ 0 | $ 8 | $ 5 | $ 9 | |||
[1] | After adjusting for the impact of adopting ASU 2014-09. |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Revenue by Major Product Categories) (Details) | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | |
Revenue from External Customer [Line Items] | ||||
Percentage of total net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Apparel | ||||
Revenue from External Customer [Line Items] | ||||
Percentage of total net sales | 83.00% | 86.00% | 82.00% | 82.00% |
Accessories | ||||
Revenue from External Customer [Line Items] | ||||
Percentage of total net sales | 10.00% | 12.00% | 12.00% | 14.00% |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Percentage of total net sales | 7.00% | 2.00% | 6.00% | 4.00% |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
May 02, 2020 | Feb. 01, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | ||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Income valuation approach (percent) | 75.00% | 75.00% | 75.00% | ||||||||
Market valuation approach (percent) | 25.00% | 25.00% | 25.00% | ||||||||
Impairment of goodwill | $ 148.9 | $ 115.1 | $ 115.1 | ||||||||
Impairment of intangible assets (excluding goodwill) | $ 41.3 | [1] | $ 25 | [1] | 88.2 | [1] | 25 | [1] | 25 | ||
Impairment of goodwill, nondeductible | [1] | $ 85.5 | $ 115.1 | $ 148.9 | $ 115.1 | ||||||
Income tax benefit | $ 6 | ||||||||||
Effective tax rate (percent) | (0.90%) | (1.20%) | 26.00% | ||||||||
ANN | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of goodwill | $ 15 | $ 54.9 | |||||||||
Justice | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of goodwill | 70.5 | 8.5 | |||||||||
Justice | Brand and trade names | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | 7.8 | 35 | |||||||||
Justice | Franchise rights | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | 5 | 0.9 | $ 5.9 | ||||||||
Ann Taylor | Brand and trade names | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | 17.7 | $ 10 | |||||||||
Loft | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Percentage of fair value in excess of carrying amount | 14.00% | ||||||||||
Loft | Brand and trade names | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | 7.8 | ||||||||||
Catherines | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Income valuation approach (percent) | 100.00% | 100.00% | |||||||||
Impairment of goodwill | $ 49.3 | ||||||||||
Catherines | Brand and trade names | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | $ 3 | $ 1 | $ 2 | ||||||||
Lane Bryant | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of goodwill | $ 65.8 | ||||||||||
Lane Bryant | Brand and trade names | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | $ 23 | ||||||||||
Premium Fashion | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of goodwill | [2] | 140.4 | |||||||||
Kids Fashion | |||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||
Impairment of goodwill | [3] | $ 8.5 | |||||||||
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. | ||||||||||
[2] | (a) Net of accumulated impairment losses of $569.3 million and $428.9 million for the Premium Fashion segment as of May 2, 2020 and August 3, 2019, respectively. | ||||||||||
[3] | (b) Net of accumulated impairment losses of $169.4 million and $160.9 million for the Kids Fashion segment as of May 2, 2020 and August 3, 2019, respectively. |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Goodwill Rollforward) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | ||
Goodwill [Roll Forward] | ||||
Balance at August 3, 2019 | $ 313.5 | |||
Impairment losses | (148.9) | $ (115.1) | $ (115.1) | |
Balance at May 2, 2020 | 164.6 | 313.5 | ||
Premium Fashion | ||||
Goodwill [Roll Forward] | ||||
Balance at August 3, 2019 | [1] | 305 | ||
Impairment losses | [1] | (140.4) | ||
Balance at May 2, 2020 | [1] | 164.6 | 305 | |
Goodwill, accumulated impairment loss | 569.3 | 428.9 | ||
Kids Fashion | ||||
Goodwill [Roll Forward] | ||||
Balance at August 3, 2019 | [2] | 8.5 | ||
Impairment losses | [2] | (8.5) | ||
Balance at May 2, 2020 | [2] | 0 | 8.5 | |
Goodwill, accumulated impairment loss | $ 169.4 | $ 160.9 | ||
[1] | (a) Net of accumulated impairment losses of $569.3 million and $428.9 million for the Premium Fashion segment as of May 2, 2020 and August 3, 2019, respectively. | |||
[2] | (b) Net of accumulated impairment losses of $169.4 million and $160.9 million for the Kids Fashion segment as of May 2, 2020 and August 3, 2019, respectively. |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
May 02, 2020 | Feb. 01, 2020 | May 04, 2019 | [1] | May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | ||||
Goodwill [Line Items] | ||||||||||
Intangible assets not subject to amortization | $ 174.7 | $ 174.7 | $ 262.9 | |||||||
Intangible assets subject to amortization | 62.1 | 62.1 | 100.3 | |||||||
Accumulated amortization | (60.8) | (60.8) | (86.6) | |||||||
Intangible assets subject to amortization, net | 1.3 | 1.3 | 13.7 | |||||||
Total intangible assets, gross | 236.8 | 236.8 | 363.2 | |||||||
Total intangible assets, net | 176 | 176 | 276.6 | |||||||
Impairment of intangible assets (excluding goodwill) | 41.3 | [1] | $ 25 | 88.2 | [1] | $ 25 | [1] | 25 | ||
Proprietary technology | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets subject to amortization | 4.8 | 4.8 | 4.8 | |||||||
Accumulated amortization | (4.8) | (4.8) | (4.8) | |||||||
Intangible assets subject to amortization, net | 0 | 0 | 0 | |||||||
Customer relationships | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets subject to amortization | 52 | 52 | 52 | |||||||
Accumulated amortization | (50.7) | (50.7) | (46.7) | |||||||
Intangible assets subject to amortization, net | 1.3 | 1.3 | 5.3 | |||||||
Favorable leases | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets subject to amortization | 0 | 0 | 38.2 | |||||||
Accumulated amortization | 0 | 0 | (29.8) | |||||||
Intangible assets subject to amortization, net | 0 | 0 | 8.4 | |||||||
Trade names | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets subject to amortization | 5.3 | 5.3 | 5.3 | |||||||
Accumulated amortization | (5.3) | (5.3) | (5.3) | |||||||
Intangible assets subject to amortization, net | 0 | 0 | 0 | |||||||
Brand and trade names | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets not subject to amortization | 169.7 | 169.7 | 252 | |||||||
Brand and trade names | Ann Taylor | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets, accumulated impairment loss | 252.7 | |||||||||
Impairment of intangible assets (excluding goodwill) | 17.7 | $ 10 | ||||||||
Brand and trade names | Loft | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets, accumulated impairment loss | 424.4 | |||||||||
Impairment of intangible assets (excluding goodwill) | 7.8 | |||||||||
Brand and trade names | Lane Bryant | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets, accumulated impairment loss | 243.5 | |||||||||
Impairment of intangible assets (excluding goodwill) | 23 | |||||||||
Brand and trade names | Catherines | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets, accumulated impairment loss | 10 | |||||||||
Impairment of intangible assets (excluding goodwill) | 3 | 1 | $ 2 | |||||||
Brand and trade names | Justice | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets, accumulated impairment loss | 59.4 | |||||||||
Impairment of intangible assets (excluding goodwill) | 7.8 | 35 | ||||||||
Franchise rights | ||||||||||
Goodwill [Line Items] | ||||||||||
Intangible assets not subject to amortization | 5 | 5 | $ 10.9 | |||||||
Franchise rights | Justice | ||||||||||
Goodwill [Line Items] | ||||||||||
Impairment of intangible assets (excluding goodwill) | $ 5 | $ 0.9 | $ 5.9 | |||||||
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. |
Asset Impairments (Details)
Asset Impairments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | |
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | $ 170.1 | $ 37.4 | ||
Store-Related Fixed Assets | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | $ 159.9 | $ 16.7 | 161.7 | 18.7 |
Premium Fashion | Store-Related Fixed Assets | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | 81.1 | 0 | 81.3 | 0.4 |
Plus Fashion | Store-Related Fixed Assets | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | 23.6 | 16.3 | 24.1 | 17.4 |
Kids Fashion | Store-Related Fixed Assets | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | 55.2 | $ 0.4 | $ 56.3 | $ 0.9 |
Corporate Segment | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment of tangible assets | $ 8.4 |
Restructuring and Other Relat_3
Restructuring and Other Related Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | ||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring Charges | [1] | $ (1.2) | [2] | $ 6.6 | [2] | $ 2.1 | $ 28 |
Cash-related restructuring charges | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Severance and benefit costs | [3],[4] | (1.3) | 0 | 1.6 | (0.2) | ||
Other related charges | [4],[5] | 0.1 | 6.6 | 0.5 | 28.2 | ||
Restructuring Charges | $ (1.2) | $ 6.6 | $ 2.1 | $ 28 | |||
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. | ||||||
[2] | Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) | ||||||
[3] | Severance and benefit costs reflect additional severance accruals associated with previously announced initiatives, as well as adjustments to true up estimates of previously accrued severance-related costs to reflect amounts actually paid. | ||||||
[4] | The charges incurred under the Company’s cost reduction initiatives are more fully described in Note 8. | ||||||
[5] | Other related charges in Fiscal 2019 consist of professional fees and other third-party costs incurred in connection with the Change for Growth program |
Restructuring and Other Relat_4
Restructuring and Other Related Charges (Restructuring and Other Related Liabilities) (Details) $ in Millions | 9 Months Ended |
May 02, 2020USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance at August 3, 2019 | $ 12.4 |
Additions charged to expense | 2.1 |
Cash payments | (12) |
Balance at May 2, 2020 | 2.5 |
Severance and benefit costs | |
Restructuring Reserve [Roll Forward] | |
Balance at August 3, 2019 | 11.4 |
Additions charged to expense | 1.6 |
Cash payments | (10.5) |
Balance at May 2, 2020 | 2.5 |
Other related charges | |
Restructuring Reserve [Roll Forward] | |
Balance at August 3, 2019 | 1 |
Additions charged to expense | 0.5 |
Cash payments | (1.5) |
Balance at May 2, 2020 | $ 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 9 Months Ended | ||
May 02, 2020 | Aug. 03, 2019 | May 04, 2019 | |
Inventory [Line Items] | |||
Total inventories | $ 449.7 | $ 490.7 | $ 559.3 |
Premium Fashion | |||
Inventory [Line Items] | |||
Total inventories | 280.5 | 226.3 | 286.6 |
Plus Fashion | |||
Inventory [Line Items] | |||
Total inventories | 103.5 | 156.5 | 181.5 |
Kids Fashion | |||
Inventory [Line Items] | |||
Total inventories | 65.7 | $ 107.9 | $ 91.2 |
Plus Fashion and Kids Fashion | |||
Inventory [Line Items] | |||
Inventory write-down | $ 135 |
Investment and Variable Inter_2
Investment and Variable Interest Entity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | May 06, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Equity method investment | $ 53.1 | $ 53.1 | $ 42.1 | |||
(Loss) income from equity method investment | (12.3) | $ 0 | $ 11 | $ 0 | ||
Minimum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Service agreement term (months) | 3 months | |||||
Maximum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Service agreement term (months) | 36 months | |||||
Maurices | Discontinued Operations, Disposed of by Sale | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity method investment | $ 42.1 | |||||
Disposal group, including discontinued operations, transition services, fair value | 15.5 | $ 48.4 | ||||
Receivable, equity method investment | 45.2 | 45.2 | ||||
Maurices | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage by parent (percent) | 49.60% | |||||
Maurices | Maurices | Discontinued Operations, Disposed of by Sale | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage by parent (percent) | 49.60% | |||||
Non-current assets | Maurices | Discontinued Operations, Disposed of by Sale | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Receivable, equity method investment | $ 12 | $ 12 |
Debt (Schedule of Debt) (Detail
Debt (Schedule of Debt) (Details) - USD ($) $ in Millions | May 02, 2020 | Aug. 03, 2019 | Aug. 31, 2015 | |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 1,498.3 | $ 1,338.6 | ||
Less: current portion | (1,498.3) | 0 | ||
Total long-term debt | 0 | 1,338.6 | ||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, including unamortized original issue discount and debt issuance costs | 1,292 | 1,371.5 | $ 1,800 | |
Less: unamortized debt issuance costs | [1] | (11.4) | (15.9) | |
Less: unamortized original issue discount | [1] | (9.9) | (13.8) | |
Long-term debt | $ 1,270.7 | 1,341.8 | ||
Debt effective interest rate (percent) | 6.30% | |||
Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, including unamortized original issue discount and debt issuance costs | $ 230 | 0 | ||
Less: unamortized debt issuance costs | [2] | (2.4) | (3.2) | |
Long-term debt | $ 227.6 | $ (3.2) | ||
[1] | The original issue discount and debt issuance costs for the Term Loan are amortized over the life of the Term Loan using the interest method based on an imputed interest rate of approximately 6.3%. | |||
[2] | The unamortized debt issuance costs are amortized on a straight-line basis over the life of the Amended Revolving Credit Agreement. |
Debt (Amended Revolving Credit
Debt (Amended Revolving Credit Agreement) (Details) - Revolving credit facility - USD ($) | Mar. 16, 2020 | Feb. 27, 2018 | May 02, 2020 | Sep. 20, 2019 |
Debt Instrument [Line Items] | ||||
Debt maximum borrowing capacity | $ 500,000,000 | |||
Optional additional increase in credit facility | $ 200,000,000 | |||
Line of credit facility, maturity, extension, years from closing date | 5 years | |||
Line of credit facility, maturity, extension, days prior to term loan maturity | 91 days | |||
Line of credit available, in excess of | $ 100,000,000 | |||
Line of credit, in excess of, percentage of credit limit | 20.00% | |||
Proceeds from line of credit | $ 230,000,000 | |||
Effective interest rate (percent) | 2.78% | |||
Remaining borrowing capacity | $ 167,700,000 | |||
Credit limit, percent | 10.00% | |||
Remaining borrowing capacity | $ 37,500,000 | |||
Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate spread (basis points) | 1.50% | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Stated base rate (percent) | 1.50% | |||
Days of availability | 30 days | |||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Stated base rate (percent) | 0.40% | |||
Fixed charge coverage ratio | 1 | |||
Days of availability | 3 days | |||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt maximum borrowing capacity | $ 200,000,000 | |||
Swingline Loans | ||||
Debt Instrument [Line Items] | ||||
Debt maximum borrowing capacity | $ 30,000,000 | |||
Term Loan | Maximum | ||||
Debt Instrument [Line Items] | ||||
Term loan, outstanding principal amount | $ 150,000,000 |
Debt (Term Loan) (Details)
Debt (Term Loan) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Nov. 30, 2020 | May 02, 2020 | May 04, 2019 | Nov. 03, 2018 | May 02, 2020 | May 04, 2019 | May 28, 2020 | Aug. 03, 2019 | Aug. 31, 2015 | |
Debt Instrument [Line Items] | |||||||||
Repayment of debt | $ 225,000,000 | ||||||||
Repurchase amount | $ 79,500,000 | $ 79,500,000 | |||||||
Repurchase purchase price | 49,400,000 | 49,400,000 | |||||||
Gain on extinguishment of debt | 0 | $ 0 | 28,500,000 | $ 0 | |||||
Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | 1,292,000,000 | 1,292,000,000 | $ 1,371,500,000 | $ 1,800,000,000 | |||||
Debt instrument, discount percentage | 2.00% | ||||||||
Debt instrument, additional term facility borrowing capacity | $ 200,000,000 | ||||||||
Debt instrument, periodic payment | 22,500,000 | ||||||||
Debt balloon payment to be paid | $ 1,100,000,000 | $ 1,100,000,000 | |||||||
Repayments of debt, future | $ 180,000,000 | ||||||||
Debt effective interest rate (percent) | 6.30% | 6.30% | |||||||
Scenario, Forecast | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of debt, future | $ 22,500,000 | ||||||||
Eurodollar Borrowings | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt effective interest rate (percent) | 6.40% | 6.40% | |||||||
Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Repurchase amount | $ 42,000,000 | ||||||||
Repurchase purchase price | $ 28,600,000 |
Debt (Maturities of Debt) (Deta
Debt (Maturities of Debt) (Details) $ in Millions | May 02, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 1,522 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) $ in Millions | 9 Months Ended | 12 Months Ended | |
May 02, 2020USD ($)derivative | May 02, 2021USD ($) | Aug. 03, 2019USD ($) | |
Derivative [Line Items] | |||
Unrealized gain (loss) on interest rate cash flow hedges, pretax, accumulated other comprehensive income (loss) | $ 8.4 | ||
Unrealized gain (loss) on interest rate cash flow hedges, pretax, accumulated other comprehensive income (loss) | $ 6.3 | ||
Designated as Hedging Instrument | Cash Flow Hedging | Interest rate swap | |||
Derivative [Line Items] | |||
Number of Instruments | derivative | 1 | ||
Notional Agreement Principal Amount | $ 600 | ||
Interest Rate (percent) | 6.85% | ||
Interest Expense | Scenario, Forecast | |||
Derivative [Line Items] | |||
Other comprehensive income (loss), reclassification adjustment from AOCI on derivatives, net of tax | $ 8.4 | ||
Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | Cash Flow Hedging | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative fair value, net | $ 8.4 | 6.3 | |
Fair Value, Inputs, Level 2 | Accrued Expenses and Other Current Liabilities | Designated as Hedging Instrument | Cash Flow Hedging | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative fair value, net | $ 8.4 | 3.1 | |
Fair Value, Inputs, Level 2 | Other Noncurrent Liabilities | Designated as Hedging Instrument | Cash Flow Hedging | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative fair value, net | $ 3.2 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | 9 Months Ended | |||
May 02, 2020USD ($)Storebuilding | May 04, 2019USD ($)Store | Aug. 03, 2019USD ($) | Aug. 04, 2018USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Operating lease right-of-use asset | $ 637.6 | $ 0 | ||
Fair Value, Nonrecurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-lived assets | 28.8 | $ 18.3 | 187.6 | $ 55.7 |
Operating lease right-of-use asset | $ 63.5 | 74.8 | ||
Number Of Under-Performing Stores | Store | 1,851 | 635 | ||
Number Of Buildings | building | 1 | |||
Asset Impairment Charges | $ 158.8 | $ 37.4 | ||
Operating Lease, Impairment Loss | 11.3 | |||
Fair Value, Nonrecurring | Discontinued Operations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-lived assets | $ 10 | 28.7 | ||
Number Of Under-Performing Stores | Store | 421 | |||
Asset Impairment Charges | $ 18.7 | |||
Term Loan | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt, fair value | $ 271.3 | $ 850.3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
May 02, 2020 | May 04, 2019 | May 02, 2020 | Aug. 03, 2019 | |
Income Taxes [Line Items] | ||||
Refundable AMT credit requested | $ 1.4 | $ 1.4 | ||
Valuation Allowance | $ 5.2 | |||
Reduction in valuation allowance | $ 2 | |||
Effective tax rate (percent) | (0.90%) | (1.20%) | 26.00% | |
Federal | ||||
Income Taxes [Line Items] | ||||
Increase in federal transition tax | 2.3 | |||
Transition Tax | 26.9 | |||
State | ||||
Income Taxes [Line Items] | ||||
Transition Tax | 0.9 | |||
Increase in state transition tax | $ 0.2 |
Equity (Narrative) (Details)
Equity (Narrative) (Details) | Dec. 19, 2019shares | May 02, 2020USD ($)shares | May 04, 2019shares | May 02, 2020USD ($)shares | May 04, 2019shares | Dec. 18, 2019shares | Aug. 03, 2019shares | Dec. 31, 2015USD ($) |
Class of Stock [Line Items] | ||||||||
Reverse stock split conversion rate (percent) | 0.05 | |||||||
Common stock, outstanding (in shares) | 9,972,221 | 10,046,000 | 10,046,000 | 199,444,436 | 9,925,000 | |||
Common stock, authorized (in shares) | 18,000,000 | |||||||
Antidilutive securities excluded from earnings per share (in shares) | 1,000,000 | 1,500,000 | 1,000,000 | 1,500,000 | ||||
2016 Stock Repurchase Program | ||||||||
Class of Stock [Line Items] | ||||||||
Share repurchase program authorized amount | $ | $ 200,000,000 | |||||||
Shares repurchased (in shares) | 0 | 0 | ||||||
Stock repurchase program remaining authorized repurchase amount | $ | $ 181,400,000 | $ 181,400,000 |
Equity (Net Income per Common S
Equity (Net Income per Common Share) (Details) - shares | 3 Months Ended | 9 Months Ended | |||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | ||
Earnings Per Share [Abstract] | |||||
Basic (in shares) | 10,003,000 | 9,882,000 | 9,972,000 | 9,864,000 | |
Dilutive effect of stock options and restricted stock units (in shares) | [1] | 0 | 0 | 0 | 0 |
Diluted shares (in shares) | 10,003,000 | 9,882,000 | 9,972,000 | 9,864,000 | |
[1] | There was no dilutive effect of stock options and restricted stock units for the three and nine months ended May 2, 2020 and May 4, 2019 as the impact of these items was anti-dilutive using the treasury stock method as a result of the net loss incurred during the periods. |
Stock-based Compensation (Narra
Stock-based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2018 | May 02, 2020 | May 04, 2019 | Aug. 03, 2019 | |
Service-based Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unrecognized compensation costs related to non-vested options | $ 1.6 | |||
Weighted-average years expected to be recognized | 9 months 18 days | |||
Total fair value of options vested | $ 6.2 | $ 9.5 | ||
Expected term (years) | 5 years 2 months 12 days | 5 years 2 months 12 days | ||
Risk-free interest rate | 1.50% | 2.90% | ||
Expected dividend yield | 0.00% | 0.00% | ||
Expected volatility | 61.70% | 47.50% | ||
Awards outstanding (in shares) | 695,800 | 850,400 | ||
Awards outstanding (in dollars per share) | $ 81.40 | $ 156 | ||
Market-based Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average years expected to be recognized | 2 years | |||
Expected term (years) | 7 years | |||
Risk-free interest rate | 1.50% | |||
Expected dividend yield | 0.00% | |||
Expected volatility | 62.90% | |||
Awards outstanding (in shares) | 200,000 | |||
Awards outstanding (in dollars per share) | $ 23.15 | |||
Total unrecognized compensation | $ 0.6 | |||
Service-based Restricted Equity Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average years expected to be recognized | 3 months 18 days | |||
Total unrecognized compensation | $ 0.4 | |||
Market-based Restricted Equity Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average years expected to be recognized | 2 years | |||
Awards outstanding (in shares) | 100,000 | |||
Awards outstanding (in dollars per share) | $ 9.35 | |||
Total unrecognized compensation | $ 0.9 | |||
Omnibus Incentive Plan 2016, Amended | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Additional shares authorized (in shares) | 700,000 | |||
Number of shares authorized (in shares) | 4,200,000 | |||
2016 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for future grants under Stock Incentive Plan (in shares) | 1,100,000 |
Stock-based Compensation (Summa
Stock-based Compensation (Summary of Total Compensation Expense and Associated Income Tax Benefit) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | May 02, 2020 | May 04, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Compensation expense | $ 0.8 | $ 2.2 | $ 3.2 | $ 10.5 |
Income tax benefit | $ 0 | $ 0.5 | $ 0 | $ 2.2 |
Stock based Compensation (Weigh
Stock based Compensation (Weighted-Average Assumptions used to Estimate Fair Value of Stock Options Granted) (Details) - Service-based Stock Option - $ / shares | 9 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 5 years 2 months 12 days | 5 years 2 months 12 days |
Expected volatility | 61.70% | 47.50% |
Risk-free interest rate | 1.50% | 2.90% |
Expected dividend yield | 0.00% | 0.00% |
Weighted-average grant date fair value (in dollars per share) | $ 2.74 | $ 35.41 |
Stock-based Compensation (Sum_2
Stock-based Compensation (Summary of Stock Option Activity under Service Based Plans) (Details) - Service-based Stock Option - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | May 02, 2020 | Aug. 03, 2019 | ||
Number of Shares | ||||
Options outstanding – August 3, 2019 (in shares) | 850,400 | 850,400 | ||
Granted (in shares) | 275,900 | |||
Exercised (in shares) | 0 | |||
Canceled/Forfeited (in shares) | (430,500) | |||
Options outstanding – February 1, 2020 (in shares) | 695,800 | |||
Options vested and expected to vest at February 1, 2020 (in shares) | [1] | 684,800 | ||
Options exercisable at February 1, 2020 (in shares) | 380,000 | |||
Weighted- Average Exercise Price | ||||
Options outstanding – August 3, 2019 (in dollars per share) | $ 156 | $ 156 | ||
Granted (in dollars per share) | 5.12 | |||
Exercised (in dollars per share) | 0 | |||
Canceled/Forfeited (in dollars per share) | 179.89 | |||
Options outstanding – February 1, 2020 (in dollars per share) | 81.40 | |||
Options vested and expected to vest at February 1, 2020 (in dollars per share) | [1] | 82.49 | ||
Options exercisable at February 1, 2020 (in dollars per share) | $ 130.95 | |||
Weighted- Average Remaining Contractual Terms | ||||
Options outstanding, weighted-average remaining contractual terms | 4 years 1 month 6 days | 4 years 9 months 18 days | ||
Options vested and expected to vest at February 1, 2020, weighted-average remaining contractual terms | [1] | 4 years 9 months 18 days | ||
Options exercisable at February 1, 2020, weighted-average remaining contractual terms | 3 years 8 months 12 days | |||
Aggregate Intrinsic Value | ||||
Options outstanding, aggregate intrinsic value | [2] | $ 0 | $ 0 | |
Options vested and expected to vest at February 1, 2020, aggregate intrinsic value | [1],[2] | 0 | ||
Options exercisable at February 1, 2020, aggregate intrinsic value | [2] | $ 0 | ||
[1] | The number of options expected to vest takes into consideration estimated expected forfeitures. | |||
[2] | The intrinsic value is the amount by which the market price at the end of the period of the underlying share of stock exceeds the exercise price of the stock option. |
Stock-based Compensation (Sum_3
Stock-based Compensation (Summary of Restricted Equity Awards Activity) (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
May 02, 2020USD ($)$ / sharesshares | |
Market Based Restricted Equity Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards outstanding (in shares) | shares | 100,000 |
Weighted- Average Grant Date Fair Value Per Share | |
Awards outstanding (in dollars per share) | $ / shares | $ 9.35 |
Total unrecognized compensation | $ | $ 0.9 |
Weighted-average years expected to be recognized | 2 years |
Service-based Restricted Equity Awards | |
Number of Shares | |
Nonvested at August 3, 2019 (in shares) | shares | 67,400 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | (28,600) |
Cancelled/Forfeited (in shares) | shares | (7,800) |
Nonvested at February 1, 2020 (in shares) | shares | 31,000 |
Weighted- Average Grant Date Fair Value Per Share | |
Nonvested at August 3, 2019 (in dollars per share) | $ / shares | $ 91.42 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 112.47 |
Cancelled/Forfeited (in dollars per share) | $ / shares | 88.68 |
Nonvested at February 1, 2020 (in dollars per share) | $ / shares | $ 72.68 |
Total unrecognized compensation | $ | $ 0.4 |
Weighted-average years expected to be recognized | 3 months 18 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 9 Months Ended | |
May 02, 2020 | May 04, 2019 | |
LTIP | Minimum | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Performance period | 1 year | |
LTIP | Maximum | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Performance period | 3 years | |
Cash Settled L T I P Awards | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Total unrecognized compensation | $ 6.9 | |
Weighted-average vesting period | 1 year 1 month 6 days | |
Liability for LTIP Awards | $ 9.3 | |
Deferred compensation arrangements, cash settlement | 0 | |
Cash Settled L T I P Awards | Selling, General and Administrative Expenses | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Compensation expense | (1.4) | $ 2.1 |
Accrued Expenses and Other Current Liabilities | Cash Settled L T I P Awards | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Liability for LTIP Awards | 3.3 | |
Other Noncurrent Liabilities | Cash Settled L T I P Awards | ||
Income Statement, Balance Sheet and Additional Disclosures [Line Items] | ||
Liability for LTIP Awards | $ 6 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Dec. 19, 2019 |
Commitments and Contingencies Disclosure [Abstract] | |
Reverse stock split conversion rate (percent) | 0.05 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
May 02, 2020USD ($) | May 04, 2019USD ($) | May 02, 2020USD ($)segment | May 04, 2019USD ($) | Aug. 03, 2019USD ($) | ||||||
Segment Reporting Information [Line Items] | ||||||||||
Number of operating segments | segment | 3 | |||||||||
Net sales | $ 601.2 | $ 1,088.4 | $ 2,937.7 | $ 3,507.2 | $ 4,700 | |||||
Total operating loss | [1] | (600.4) | (230.2) | (726.2) | (292.8) | |||||
Unallocated restructuring and other related charges | [1] | 1.2 | [2] | (6.6) | [2] | (2.1) | (28) | |||
Impairment of goodwill, nondeductible | [1] | 85.5 | 115.1 | 148.9 | 115.1 | |||||
Impairment of intangible assets (excluding goodwill) | 41.3 | [1] | 25 | [1] | 88.2 | [1] | 25 | [1] | $ 25 | |
Total depreciation and amortization expense | 200.3 | 243.4 | ||||||||
Depreciation and Amortization expense, Continuing Operations | 57.8 | 67.4 | 189.4 | 209.4 | ||||||
Overhead expenses | 47.8 | 18.3 | 137.2 | |||||||
Total restructuring and other related charges | (1.2) | 6.6 | 2.1 | 28 | ||||||
Operating Segments | Premium Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 297.3 | 549.5 | 1,506.4 | 1,784.4 | ||||||
Total operating loss | [1] | (179.2) | (15.9) | (140.2) | 16.1 | |||||
Total depreciation and amortization expense | 28.5 | 32 | 90.7 | 100.6 | ||||||
Operating Segments | Plus Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 197.3 | 311.5 | 795.7 | 902.7 | ||||||
Total operating loss | [1] | (122.8) | (35.7) | (138.4) | (96) | |||||
Total depreciation and amortization expense | 14.1 | 18.1 | 48.2 | 55.5 | ||||||
Operating Segments | Kids Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 106.6 | 227.4 | 635.6 | 820.1 | ||||||
Total operating loss | [1] | (172.8) | (31.9) | (208.4) | (44.8) | |||||
Total depreciation and amortization expense | 15.2 | 17.3 | 50.5 | 53.3 | ||||||
Cash-related restructuring charges | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Unallocated restructuring and other related charges | 1.2 | (6.6) | (2.1) | (28) | ||||||
Total severance and benefit costs | [3],[4] | (1.3) | 0 | 1.6 | (0.2) | |||||
Total professional fees and other related charges | [4],[5] | 0.1 | 6.6 | 0.5 | 28.2 | |||||
Cash-related restructuring charges | Operating Segments | Premium Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total severance and benefit costs | [4] | 0 | 0 | (0.4) | 0.2 | |||||
Cash-related restructuring charges | Operating Segments | Plus Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total severance and benefit costs | [4] | 0 | 0.8 | (0.5) | 0.9 | |||||
Total professional fees and other related charges | [4] | 0 | 0 | 0 | (0.1) | |||||
Cash-related restructuring charges | Operating Segments | Kids Fashion | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total severance and benefit costs | [4] | 0 | 0 | (0.1) | 0 | |||||
Cash-related restructuring charges | Corporate, Non-Segment | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total severance and benefit costs | [4] | (1.3) | (0.8) | 2.6 | (1.3) | |||||
Total professional fees and other related charges | [4] | $ 0.1 | $ 6.6 | $ 0.5 | $ 28.3 | |||||
[1] | For the three and nine months ended May 2, 2020 and May 4, 2019, respectively, the maurices and Dressbarn businesses were classified as discontinued operations within the condensed consolidated financial statements. As a result, shared expenses of $18.3 million for the nine months ended May 2, 2020, as well as $47.8 million and $137.2 million for the three and nine months ended May 4, 2019, which were previously allocated to maurices and Dressbarn have been reallocated to the remaining operating units. | |||||||||
[2] | Restructuring and other related charges are as follows: Three Months Ended Nine Months Ended May 2, May 4, May 2, May 4, (millions) (millions) Cash related charges (i) : Severance and benefit costs: Premium Fashion $ — $ — $ (0.4) $ 0.2 Plus Fashion — 0.8 (0.5) 0.9 Kids Fashion — — (0.1) — Corporate (1.3) (0.8) 2.6 (1.3) Total severance and benefit costs (1.3) — 1.6 (0.2) Professional fees and other related charges: Plus Fashion — — — (0.1) Corporate 0.1 6.6 0.5 28.3 Total professional fees and other related charges 0.1 6.6 0.5 28.2 Total restructuring and other related charges $ (1.2) $ 6.6 $ 2.1 $ 28.0 (i) | |||||||||
[3] | Severance and benefit costs reflect additional severance accruals associated with previously announced initiatives, as well as adjustments to true up estimates of previously accrued severance-related costs to reflect amounts actually paid. | |||||||||
[4] | The charges incurred under the Company’s cost reduction initiatives are more fully described in Note 8. | |||||||||
[5] | Other related charges in Fiscal 2019 consist of professional fees and other third-party costs incurred in connection with the Change for Growth program |
Additional Financial Informat_3
Additional Financial Information (Cash Interest and Taxes) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | ||
Supplemental Cash Flow Information | |||
Cash paid for interest | $ 65.6 | $ 72.7 | |
Cash paid for income taxes | [1] | 9.1 | 4.8 |
Discontinued Operations, Disposed of by Sale | |||
Supplemental Cash Flow Information | |||
Cash paid for income taxes | [1] | $ 0.1 | $ 0.2 |
[1] | Includes a net payment of $0.1 million and a net refund of $0.2 million for the nine months ended May 2, 2020 and May 4, 2019, respectively, related to the Dressbarn and maurices businesses, which are classified in discontinued operations. |
Additional Financial Informat_4
Additional Financial Information (Non-Cash Transactions) (Details) - USD ($) $ in Millions | 9 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Accrued purchases of fixed assets | $ 14.6 | $ 18 |
Subsequent Events - Chapter 11
Subsequent Events - Chapter 11 Cases (Details) - Subsequent Event | Jul. 23, 2020USD ($) |
Consenting Stakeholders | |
Subsequent Event [Line Items] | |
Ownership (percent) | 44.90% |
Consenting Stakeholders | Term Loan | |
Subsequent Event [Line Items] | |
Concentration risk (percent) | 68.00% |
Term Loan Lenders | |
Subsequent Event [Line Items] | |
Ownership (percent) | 55.10% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | Base Rate | |
Subsequent Event [Line Items] | |
Interest rate spread (percent) | 10.75% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | London Interbank Offered Rate (LIBOR) | |
Subsequent Event [Line Items] | |
Interest rate spread (percent) | 11.75% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | Applicable Rate | |
Subsequent Event [Line Items] | |
Default rate spread (percent) | 2.00% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | Minimum | Base Rate | |
Subsequent Event [Line Items] | |
Stated base rate (percent) | 2.00% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | Minimum | London Interbank Offered Rate (LIBOR) | |
Subsequent Event [Line Items] | |
Stated base rate (percent) | 1.00% |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Backstop Parties | Secured Debt | |
Subsequent Event [Line Items] | |
Premium paid for line of credit facility | $ 7,500,000 |
Debt | $ 311,800,000 |
Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Term Loan Lenders | Secured Debt | |
Subsequent Event [Line Items] | |
Cash premium (percent) | 11.23% |
New Money DIP Loans | Backstop Parties | Secured Debt | |
Subsequent Event [Line Items] | |
Debt | $ 150,000,000 |
Roll-Up DIP Loans | Backstop Parties | Secured Debt | |
Subsequent Event [Line Items] | |
Debt | 161,800,000 |
Last Out Exit Term Facility | Secured Debt | |
Subsequent Event [Line Items] | |
Funds owed on conversion | $ 88,200,000 |
Prepetition Term Lenders | Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | |
Subsequent Event [Line Items] | |
Percentage of line of credit facility to be committed (percent) | 50.00% |
Backstop Parties | Debtor-in-Possession Term Loan Credit Facility (DIP Term Facility) | Secured Debt | |
Subsequent Event [Line Items] | |
Percentage of line of credit facility to be committed (percent) | 50.00% |
Restructuring Support Agreement (RSA) | |
Subsequent Event [Line Items] | |
Capital to be contributed | $ 150,000,000 |
Amount available to holders of general unsecured claims | $ 500,000,000,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 29, 2020 | May 26, 2020 | Jun. 30, 2020 | Jun. 05, 2020 | May 02, 2020 | Aug. 03, 2019 |
Interest rate swap | Cash Flow Hedging | Fair Value, Inputs, Level 2 | Designated as Hedging Instrument | ||||||
Subsequent Event [Line Items] | ||||||
Derivative fair value, net | $ 8.4 | $ 6.3 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Tax Benefits Preservation Plan, beneficial ownership percentage to be acquired without approval from the Board or meeting customary exceptions will be subjected to dilution in ownership interest | 4.90% | |||||
Class of warrant or right, exercise price (in dollars per right) | $ 0.001 | |||||
Sale leaseback transaction term (years) | 5 years | |||||
Proceeds from sale of buildings | $ 20.6 | |||||
Escrow deposit | $ 1.3 | |||||
Subsequent Event | Scenario, Forecast | Cash Settled L T I P Awards | ||||||
Subsequent Event [Line Items] | ||||||
Compensation expense | $ 4.5 | |||||
Subsequent Event | Ascena Retail Group, Inc. | ||||||
Subsequent Event [Line Items] | ||||||
Ownership percentage of current stockholders that will not trigger the Plan unless they acquire 0.5% or more additional shares | 4.90% | |||||
Ownership percentage acquired to trigger plan (percent) | 0.50% | |||||
Subsequent Event | Series A Junior Participating Preferred Stock | ||||||
Subsequent Event [Line Items] | ||||||
Preferred stock par value (in dollars per share) | $ 0.01 | |||||
Purchase price (in dollars per share) | $ 6,300 |