Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 02, 2019 | May 01, 2019 | Aug. 03, 2018 | |
Entity Information [Line Items] | |||
Entity Registrant Name | FREDS INC | ||
Entity Central Index Key | 0000724571 | ||
Document Type | 10-K | ||
Trading Symbol | FRED | ||
Document Period End Date | Feb. 2, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --02-02 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Public Float | $ 56,477,163 | ||
Common Class A [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 35,128,881 | ||
Common Class B [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 5,353 | $ 6,573 |
Inventories | 246,517 | 263,831 |
Receivables, less allowance for doubtful accounts of $1,360 and $1,355, respectively | 22,970 | 37,720 |
Other non-trade receivables | 30,412 | 31,500 |
Current assets held for sale | 35,247 | |
Prepaid expenses and other current assets | 10,074 | 10,055 |
Total current assets | 315,327 | 384,926 |
Property and equipment, less accumulated depreciation and amortization | 66,346 | 110,539 |
Noncurrent assets held for sale | 4,839 | 67,185 |
Intangible assets, net | 21,463 | 34,347 |
Other noncurrent assets, net | 1,050 | 568 |
Total assets | 409,025 | 597,565 |
Current liabilities: | ||
Accounts payable | 97,107 | 129,213 |
Current portion of indebtedness | 58,641 | 65 |
Accrued expenses and other | 58,352 | 67,977 |
Current liabilities held for sale | 26,572 | |
Total current liabilities | 214,100 | 223,827 |
Long-term portion of indebtedness | 14,446 | 167,100 |
Noncurrent liabilities held for sale | 48 | |
Other noncurrent liabilities | 15,015 | 25,542 |
Total liabilities | 243,560 | 416,517 |
Commitments and contingencies (see Note 3-Indebtedness, Note 6-Long-Term Leases and Note 10-Other Commitments and Contingencies) | ||
Shareholders’ equity: | ||
Treasury Stock, at cost; 3,800,000 shares at February 2, 2019 and 1,242,000 shares at February 3, 2018. | (10,823) | (4,975) |
Retained earnings | 48,547 | 61,514 |
Accumulated other comprehensive income | 559 | 559 |
Total shareholders’ equity | 165,465 | 181,048 |
Total liabilities and shareholders’ equity | 409,025 | 597,565 |
Nonvoting Preferred Stock [Member] | ||
Shareholders’ equity: | ||
Preferred stock | ||
Nonvoting Series A Junior Preferred Stock [Member] | ||
Shareholders’ equity: | ||
Preferred stock | ||
Voting Series B Junior Preferred Stock [Member] | ||
Shareholders’ equity: | ||
Preferred stock | ||
Common Class A [Member] | ||
Shareholders’ equity: | ||
Common stock | $ 127,182 | $ 123,950 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Allowance for doubtful accounts | $ 1,360 | $ 1,355 |
Treasury Stock, shares | 3,800,000 | 1,242,000 |
Nonvoting Preferred Stock [Member] | ||
Preferred stock, no par value (in dollars per share) | ||
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Nonvoting Series A Junior Preferred Stock [Member] | ||
Preferred stock, no par value (in dollars per share) | ||
Preferred stock, authorized | 224,594 | 224,594 |
Preferred stock, shares outstanding | 0 | 0 |
Voting Series B Junior Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Preferred stock, authorized | 50,000 | 50,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, issued | 0 | 0 |
Common Class A [Member] | ||
Common stock, no par value (in dollars per share) | ||
Common stock, authorized | 60,000,000 | 60,000,000 |
Common stock, issued | 38,788,689 | 38,366,517 |
Common stock, outstanding | 38,788,689 | 38,366,517 |
Common Class B [Member] | ||
Common stock, no par value (in dollars per share) | ||
Common stock, authorized | 11,500,000 | 11,500,000 |
Common stock, outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 1,271,746 | $ 1,395,845 |
Cost of goods sold | 948,777 | 1,032,058 |
Gross profit | 322,969 | 363,787 |
Depreciation and amortization | 31,273 | 35,301 |
Impairment expense | 33,243 | 2,489 |
Selling, general and administrative expenses | 388,003 | 462,998 |
Operating loss | (129,550) | (137,001) |
Interest expense | 7,581 | 6,297 |
Loss before income taxes | (137,131) | (143,298) |
Provision for income taxes | 52 | 1,241 |
Loss from continuing operations | (137,183) | (144,539) |
Income (loss) from discontinued operations, net of tax | 124,216 | (5,646) |
Net loss | $ (12,967) | $ (150,185) |
Net (loss) income per share - basic | ||
Continuing operations | $ (3.76) | $ (3.87) |
Discontinued operations | 3.40 | (0.15) |
Total loss per common share - basic | (0.36) | (4.02) |
Net (loss) income per share - diluted | ||
Continuing operations | (3.76) | (3.87) |
Discontinued operations | 3.40 | (0.15) |
Total loss per common share - diluted | $ (0.36) | $ (4.02) |
Weighted average common shares outstanding | ||
Basic | 36,510 | 37,392 |
Diluted | 36,510 | 37,392 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Comprehensive loss: | ||
Net loss | $ (12,967) | $ (150,185) |
Other comprehensive income (expense), net of tax postretirement plan adjustment | 93 | |
Comprehensive loss | $ (12,967) | $ (150,092) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] |
Balance at beginning at Jan. 28, 2017 | $ 337,196 | $ 118,090 | $ 218,640 | $ 466 | |
Balance at beginning (in shares) at Jan. 28, 2017 | 37,940,040 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cash dividends paid ($.18 per share) | (6,847) | (6,847) | |||
Restricted stock grants and cancellations (in shares) | 392,202 | ||||
Issuance of shares under employee stock purchase plan | 551 | $ 551 | |||
Issuance of shares under employee stock purchase plan (in shares) | 90,225 | ||||
Repurchased and cancelled shares | (590) | $ (590) | |||
Repurchased and cancelled shares (in shares) | (55,950) | ||||
Stock-based compensation | 5,899 | $ 5,899 | |||
Adjustment for postretirement benefits (net of tax) | (1) | (94) | 93 | ||
Purchase of Treasury Stock | (4,975) | $ (4,975) | |||
Purchase of Treasury Stock (in shares) | (1,242,000) | ||||
Net loss | (150,185) | (150,185) | |||
Balance at ending at Feb. 03, 2018 | 181,048 | $ 123,950 | $ (4,975) | 61,514 | 559 |
Balance at ending (in shares) at Feb. 03, 2018 | 38,366,517 | (1,242,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Restricted stock grants and cancellations (in shares) | 509,367 | ||||
Retired shares under employee stock ownership plan | (149) | $ (149) | |||
Retired shares under employee stock ownership plan (in shares) | (87,195) | ||||
Repurchased and cancelled shares | (5,848) | $ (5,848) | |||
Repurchased and cancelled shares (in shares) | (2,558,000) | ||||
Stock-based compensation | 3,381 | $ 3,381 | |||
Net loss | (12,967) | (12,967) | |||
Balance at ending at Feb. 02, 2019 | $ 165,465 | $ 127,182 | $ (10,823) | $ 48,547 | $ 559 |
Balance at ending (in shares) at Feb. 02, 2019 | 38,788,689 | (3,800,000) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) | 12 Months Ended |
Feb. 03, 2018$ / shares | |
Statement Of Stockholders Equity [Abstract] | |
Cash dividends paid (in dollars per share) | $ 0.18 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (137,183) | $ (144,539) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 31,273 | 35,301 |
Net gain on asset disposition | (3,624) | (275) |
Provision for store closures | 286 | 7,690 |
Asset impairments | 33,243 | 2,489 |
Stock-based compensation | 3,279 | 4,619 |
(Recovery) for uncollectible receivables | (25) | (241) |
LIFO reserve increase | 1,446 | |
Deferred income tax benefit | 100 | (2,083) |
Amortization of debt issuance costs | 594 | 273 |
Benefit for postretirement medical | (1) | (1) |
(Increase) decrease in operating assets: | ||
Trade and non-trade receivables | 14,618 | 3,650 |
Insurance receivables | 276 | |
Inventories | 17,514 | 28,723 |
Other assets | (592) | 6,983 |
Increase (decrease) in operating liabilities: | ||
Accounts payable and accrued expenses | (41,732) | 5,083 |
Income taxes receivable | 1,255 | (5) |
Other noncurrent liabilities | (10,527) | 5,907 |
Net cash used in operating activities of continuing operations | (91,523) | (44,703) |
Cash flows from investing activities of continuing operations: | ||
Capital expenditures | (9,005) | (15,753) |
Proceeds from asset dispositions | 2,203 | 2,206 |
Net proceeds from discontinued operations | 215,469 | |
Insurance recoveries for replacement assets | 119 | |
Asset acquisitions, net (primarily intangibles) | (1,718) | |
Net cash provided by (used in) investing activities of continuing operations | 208,667 | (15,146) |
Cash flows from financing activities of continuing operations: | ||
Payments of indebtedness and capital lease obligations | (64) | (59) |
Proceeds from revolving line of credit | 741,210 | 910,181 |
Payments on revolving line of credit | (835,402) | (871,081) |
Debt issuance costs | (416) | (597) |
Proceeds (payments) from exercise of stock options and employee stock purchase plan | (149) | (39) |
Transfer (to) from discontinued operations | (17,695) | 21,464 |
Repurchase of shares | (5,848) | (4,975) |
Cash dividends paid | (6,847) | |
Net cash (used in ) provided by financing activities of continuing operations | (118,364) | 48,047 |
Decrease in cash and cash equivalents | (1,220) | (11,802) |
Cash flow from discontinued operations | ||
Cash flows from operating activities of discontinued operations, net | (17,695) | 26,282 |
Cash flows from investing activities of discontinued operations, net | 0 | 0 |
Cash flows from financing activities of discontinued operations, net | 17,695 | (13,737) |
Net increase (decrease) in cash and cash equivalents | (1,220) | 743 |
Cash and cash equivalents, beginning of year | 6,573 | 5,830 |
Net increase (decrease) in cash and cash equivalents | (1,220) | 743 |
Cash and cash equivalents, end of year | 5,353 | 6,573 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 7,747 | 6,297 |
Income taxes refunded | $ (1,648) | $ (1,721) |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Feb. 02, 2019 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of business. The primary business of Fred's, Inc. and its subsidiaries ("Fred's", “We”, “Our”, “Us” or “Company”) is the sale of general merchandise through its retail discount stores and full-service pharmacies. In addition, the Company sells general merchandise to its 11 franchisees. As of February 2, 2019, the Company had 557 retail stores, 169 of which had pharmacies and 11 franchised stores located in 15 states mainly in the Southeastern United States. We are licensed to dispense pharmaceuticals in 14 states. Basis of Presentation. The Consolidated Financial Statements include the accounts of Fred's, Inc. and its subsidiaries. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles. All significant intercompany accounts and transactions are eliminated. Amounts are in thousands unless otherwise noted. During the second quarter of 2018, the Company completed the sale of its specialty pharmacy business for a cash purchase price of $40.0 million (plus an additional $5.5 million for inventory). During the fourth quarter of 2018, the Company completed its sale of certain prescription files and the related data and records, retail pharmaceutical inventory and certain other assets from 179 of the Company’s retail pharmacy stores for an aggregate cash consideration of approximately $176.7 million. The results of operations for both businesses have been presented as discontinued operations in accordance with Accounting Standards Codification (“ASC” Topic 205-20) Results of Operations – Discontinued operations . In addition, during the fourth quarter of 2018, the Company’s Board of Directors (the “Board”) approved a plan to actively market its headquarters building located in Memphis, TN. The building has been reflected as assets held for sale on the consolidated balance sheets in accordance with ASC 360 – Property Plant & Equipment . Excluding the Assets Held for Sale and Discontinued Operations Refer to Note 2 for additional information on discontinued operations. Subsequent Events. The Company has evaluated subsequent events through the financial statement issue date. See Note 15: Subsequent Events for additional discussion of the subsequent events through financial statement issuance date. See Note 4. Indebtedness Going Concern The Company has experienced significant net losses and negative cash flows from operating activities in recent years, and cannot offer assurance that such losses and negative cash flows will not continue for the foreseeable future. For the fiscal years ended February 2, 2019 and February 3, 2018, we incurred net losses of $136.2 million and $144.5 million, respectively, and our net cash flows used in operating activities were $91.7 million and $44.7 million, respectively. Furthermore, the Company has limited availability under its Revolving Credit Agreement, which along with cash from operations has traditionally been the Company’s primary source of working capital. As of April 30, 2019, the Company had outstanding borrowings of $78.4 million under our Revolving Credit Agreement and excess availability of $37.1 million. Under our Revolving Credit Agreement, we have a financial covenant to maintain at all times excess availability of at least the greater of $21,000,000 and 10% of the commitments, and if excess availability falls below such threshold, it would constitute an event of default under the Revolving Credit Agreement. The Company’s failure to comply with the financial covenants and other obligations under the Revolving Credit Agreement would result in an event of default, which if not cured or waived, may permit acceleration of our indebtedness and other remedies. If our indebtedness is accelerated, whether due to the Revolver EODs described in Note 4 or otherwise, the Company cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all, which could have a material adverse effect on the Company’s business, results of operations and financial condition and could impact our ability to continue as a going concern. Furthermore, our Revolving Credit Agreement has a maturity date of April 9, 2020, and we can provide no assurance that we will be able to renew or refinance such facility on terms acceptable to us or at all. The foregoing conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has evaluated its plans to alleviate this doubt, including engaging PJ Solomon in April 2019 to assist the Company in evaluating its strategic alternatives. In addition, while we analyze these strategic alternatives, the Company is also assessing potential alternative financing arrangements and undertaking a number of operational measures that we believe will enhance our cash position and improve our profitability, including, among other things: • Closing 159 stores by approximately the end of May 2019 and liquidating the inventory located at those stores, along with sale events at our other stores; • Attempting to renegotiate leases with our landlords to more favorable terms; • Reducing general and administrative expenses by eliminating corporate positions and expenses; and • Reducing capital expenditures associated with certain information technology and real estate projects. The Company can provide no assurance, however, regarding the outcome of its evaluation of strategic alternatives, that alternative financing will be on terms acceptable to us or at all, or that the operational measures being undertaken by the Company will be successful in improving the Company’s financial performance, in which case the Company may be unable to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. Fiscal year. The Company utilizes a 52-53-week accounting period which ends on the Saturday closest to January 31. Fiscal years 2018 and 2017, as used herein, refer to the years ended February 2, 2019 and February 3, 2018, respectively. Fiscal year 2018 had 52 weeks and fiscal year 2017 had 53 weeks. Use of estimates. The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates and such differences could be material to the financial statements. Cash and cash equivalents. Cash on hand and in banks, together with other highly liquid investments which are subject to market fluctuations and having original maturities of three months or less, are classified as cash and cash equivalents. Allowance for doubtful accounts . The Company is reimbursed for drugs sold by its pharmacies by many different payors including insurance companies, Medicare and various state Medicaid programs. The Company estimates the allowance for doubtful accounts based on the aging of receivables and additionally uses payor-specific information to assess collection risk, given its interpretation of the contract terms or applicable regulations. However, the reimbursement rates are often subject to interpretations that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract negotiations occur frequently, necessitating the Company’s continual review and assessment of the estimation process. Senior management reviews account receivable on a quarterly basis to determine if any receivables are potentially uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance account. Inventories. Merchandise inventories are stated at the lower of cost or net realizable value (NRV) using the retail first-in, first-out method for goods in our stores and the cost first-in, first-out method for goods in our distribution centers. The retail inventory method is a reverse mark-up, averaging method which has been widely used in the retail industry for many years. This method calculates a cost-to-retail ratio that is applied to the retail value of inventory to determine the cost value of inventory and the resulting cost of goods sold and gross margin. The assumption that the retail inventory method provides for valuation at lower of cost or NRV and the inherent uncertainties therein are discussed in the following paragraphs. In order to assure valuation at the lower of cost or NRV, the retail value of our inventory is adjusted on a consistent basis to reflect current market conditions. These adjustments include increases to the retail value of inventory for initial markups to set the selling price of goods or additional markups to adjust pricing for inflation and decreases to the retail value of inventory for markdowns associated with promotional, seasonal or other declines in the market value. Because these adjustments are made on a consistent basis and are based on current prevailing market conditions, they approximate the carrying value of the inventory at NRV. Therefore, after applying the cost to retail ratio, the cost value of our inventory is stated at the lower of cost or NRV as is prescribed by U.S. GAAP. Because the approximation of net realizable value under the retail inventory method is based on estimates such as markups, markdowns and inventory losses (shrink), there exists an inherent uncertainty in the final determination of inventory cost and gross margin. In order to mitigate that uncertainty, the Company has a formal review by product class which considers such variables as current market trends, seasonality, weather patterns and age of merchandise to ensure that markdowns are taken currently, or a markdown reserve is established to cover future anticipated markdowns. This review also considers current pricing trends and inflation to ensure that markups are taken if necessary. The estimation of inventory losses (shrink) is a significant element in approximating the carrying value of inventory at net realizable value, and as such, the following paragraph describes our estimation method as well as the steps we take to mitigate the risk of this estimate in the determination of the cost value of inventory. The Company calculates inventory losses (shrink) based on actual inventory losses occurring as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between yearly physical inventory counts. The estimate for shrink occurring in the interim period between physical counts is calculated on a store-specific basis and is based on history, as well as performance on the most recent physical count. It is calculated by multiplying each store’s shrink rate, which is based on the previously mentioned factors, by the interim period’s sales for each store. Additionally, the overall estimate for shrink is adjusted at the corporate level to a three-year historical average to ensure that the overall shrink estimate is the most accurate approximation of shrink based on the Company’s overall history of shrink. The three-year historical estimate is calculated by dividing the “book to physical” inventory adjustments for the trailing 36 months by the related sales for the same period. In order to reduce the uncertainty inherent in the shrink calculation, the Company first performs the calculation at the lowest practical level (by store) using the most current performance indicators. This ensures a more reliable number, as opposed to using a higher-level aggregation or percentage method. The second portion of the calculation ensures that the extreme negative or positive performance of any particular store or group of stores does not skew the overall estimation of shrink. This portion of the calculation removes additional uncertainty by eliminating short-term peaks and valleys that could otherwise cause the underlying carrying cost of inventory to fluctuate unnecessarily. The methodology that we have applied in estimating shrink has resulted in variability that is not material to our financial statements. Management believes that the Company’s retail inventory method provides an inventory valuation which reasonably approximates cost and results in valuing inventory at the lower of cost or NRV. For pharmacy department inventories, which were approximately $13.2 million, and $11.5 million at February 2, 2019 and February 3, 2018, respectively, cost was determined using the retail LIFO ("last-in, first-out") method in which inventory cost is maintained using the retail inventory method, then adjusted by application of the highly inflationary Producer Price Index published by the U.S. Department of Labor for the cumulative annual periods. The current cost of inventories was less than the LIFO cost by approximately $28.8 million at February 2, 2019 and $28.8 million at February 3, 2018 respectively. The LIFO reserve remained flat The Company has historically included an estimate of inbound freight and certain general and administrative costs in merchandise inventory as prescribed by U.S. GAAP. These costs include activities surrounding the procurement and storage of merchandise inventory such as merchandise planning and buying, warehousing, accounting, information technology and human resources, as well as inbound freight. The total amount of procurement and storage costs and inbound freight included in merchandise inventory at February 2, 2019 is $21.3 million compared to $17.3 million at February 3, 2018. T he Company records inventory charges for the clearance of products that management identifies as low-productive and those that do not fit the Company’s go-forward model. In accordance with ASC 330, Inventory , during fiscal year 2017, the Company recorded a below-cost inventory adjustment of approximately $16.4 million (including $2.1 million for the accelerated recognition of freight capitalization expense), leaving $4.3 million in the reserve related to 2017 strategic initiatives. The inventory adjustment was recorded in cost of goods sold to value inventory at the lower of cost or net realizable value on inventory identified as low-productive. As of February 2, 2019, the Company had utilized the remaining $6.1 million (including $1.1 million for the accelerated recognition of freight capitalization expense) of the 2016 and 2017 strategic initiatives. During the fiscal year of 2018, $0.4 million was recorded as inventory charges for inventory clearance of products that management identified as low-productive and did not fit the go-forward model, however, the $0.4 million was utilized during 2018. No additional charges were recorded during 2018 related to the low productive products. The following table illustrates the inventory charges related to the inventory clearance initiatives discussed in the previous paragraph (in millions): Balance at February 3, 2018 Additions Utilization Ending Balance February 2, 2019 Inventory markdown on low-productive inventory (2016 initiatives) $ 1.7 $ 0.4 $ (2.1 ) $ — Inventory provision for freight capitalization expense (2016 initiatives) 0.1 — (0.1 ) — Inventory markdown on low-productive inventory (2017 initiatives) 3.3 — (3.3 ) — Inventory provision for freight capitalization expense (2017 initiatives) 1.0 (1.0 ) — Total $ 6.1 $ 0.4 $ (6.5 ) $ — Property and equipment. Property and equipment are carried at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets and presented in depreciation and amortization. Improvements to leased premises are amortized using the straight-line method over the shorter of the initial term of the lease or the useful life of the improvement. Leasehold improvements added late in the lease term are amortized over the lesser of the remaining term of the lease (including the upcoming renewal option, if the renewal is reasonably assured) or the estimated useful life of the improvement. Gains or losses on the sale of assets are recorded at disposal. The following average estimated useful lives are generally applied: Building and building improvements 8-31.5 years Furniture, fixtures and equipment 3-10 years Leasehold improvements 3-10 years or term of lease, if shorter Auto mobiles and vehicles 3-10 years or term of lease, if shorter Airplane 9 years Assets under capital lease are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term (regardless of renewal options), if shorter, and the charge to earnings is included in depreciation expense in the Consolidated Financial Statements. There was no amortization expense on assets under capital lease for 2018. Leases. Certain operating leases include rent increases during the initial lease term. For these leases, the Company recognizes the related rental expense on a straight-line basis over the term of the lease (which includes the pre-opening period of construction, renovation, fixturing and merchandise placement) and records the difference between the amounts charged to operations and amounts paid as a rent liability. Rent expense is recognized on a straight-line basis over the lease term, which includes any rent holiday period. The Company recognizes contingent rental expense when the achievement of specified sales targets are considered probable in accordance with ASC 840, Leases The Company occasionally receives reimbursements from landlords to be used towards construction of the store the Company intends to lease. The reimbursement is primarily for the purpose of performing work required to divide a much larger location into smaller segments, one of which the Company will use for its store. This work could include the addition or demolition of walls, separation of plumbing, utilities, electrical work, entrances (front and back) and other work as required. Leasehold improvements are recorded at their gross costs including items reimbursed by landlords. The reimbursements are initially recorded as a deferred credit and then amortized as a reduction of rent expense over the initial lease term. Based upon an overall analysis of store performance and expected trends, we periodically evaluate the need to close underperforming stores. When we determine that an underperforming store should be closed, and a lease obligation still exists, we record the estimated future liability associated with the rental obligation on the date the store is closed in accordance with ASC 420, Exit or Disposal Cost Obligations Impairment of long-lived assets. The Company’s policy is to review the carrying value of all property and equipment as well as purchased intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets , we review for impairment all stores open at least 3 years or remodeled more than 2 years ago. Impairment results when the carrying value of the assets exceeds the undiscounted future cash flows over the life of the lease, or 10 years for owned stores. Our estimate of undiscounted future cash flows over the lease term is based upon historical operations of the stores and estimates of future store profitability which encompasses many factors that are subject to management’s judgment and are difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The fair value is based on estimated market values for similar assets or other reasonable estimates of fair market value based upon using a discounted cash flow model During the fiscal year 2018, the Company continued to incur significant operating losses which further yielded net losses within the consolidated statement of operations. During 2017, current economic conditions indicated strength in the retail market, however; during the fiscal year 2018, the Company continued to incur declines in sales and gross profits, as consumer demand continued to shrink, indicating softness in the retail market. The Company witnessed other companies within the market filing for bankruptcy and/or shutting down operations. Given the outlook on the retail market, and the change of in the Company’s management, the decision was made to re-evaluate the standing forecast for operating results and cash flows for the upcoming year and for multiple subsequent years and adjusted the forecast to align with the demands of the market and thus providing for a triggering event, which caused the Company to reassess the carrying value of its current long-lived assets, including intangibles. The Company determined that the long-lived assets failed Step 1 of the two step process and determined an impairment expense may be necessary for the difference between the carrying value and fair value of the assets. The Company compared the fair value to carrying value or net book value of the long-lived assets, including intangibles, for both open and closed stores to determine if the carrying value of the asset exceeded the calculated fair value. The impairment test yielded a difference between carrying value and the fair value and an impairment charge of $27.8 million was recorded as the carrying value of the assets were deemed not to be recoverable. Additionally, during fiscal year 2018, the Company recorded an impairment charge of $4.0 million related to fixed assets in accordance with ASC 360 Impairment or Disposal of Long-Lived Assets. The assets impaired were not included as a part of the Walgreens sale, however; During fiscal year 2017, in association with planned closure of underperforming stores and pharmacies and based on the review of the carrying value of assets and the undiscounted future cash flows for these stores, the Company recorded impairment charges in the amount of $2.5 million. The impairment charge was recorded within impairment expense on the consolidated statement of operations. Impairment of goodwill and other intangibles. Goodwill and intangibles with indefinite lives must be tested for impairment annually or more frequently if events or changes in circumstances indicate that the related asset might be impaired in accordance with ASC 350, Intangibles – Goodwill and Other . An impairment of an investment in an unconsolidated affiliate is recognized when circumstances indicate that a decline in the investment value is other than temporary. An impairment loss should be recognized only if the carrying amount of the asset/goodwill is not recoverable and exceeds its fair value. Estimated fair values could change if, for example, there are changes in the business climate, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows or market capitalization. While we believe we have made reasonable assumptions to calculate the fair value, if future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. The analysis was broken down into two reporting units: the continuing operations and the discontinued specialty pharmacy (refer to Note 2 for more discussion surrounding discontinued operations). As of November 1, 2017, the estimated fair value of the business enterprise of the continuing operations was below the carrying value. As a result of the analysis, management recorded an impairment to goodwill of $87 thousand in the fourth quarter of 2017, the entire balance of goodwill for the continuing operations. The estimated fair value of the business enterprise for the discontinued specialty pharmacy exceeded the carrying value by approximately 10 percent and as a result did not have any impairment to goodwill. On February 3, 2018, the Company assessed the discontinued specialty pharmacy’s goodwill for impairment as a result of the plan to actively market it for sale and the deterioration in the price of our common stock and the resulting reduced market capitalization. As a result of the interim impairment test, the Company recognized a goodwill impairment charge of $10.8 million to its discontinued specialty pharmacy business. The Company determined the fair value of the reporting units using a weighted combination of the discounted cash flow method and the guideline company method. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating margins, weighted average costs of capital and future market conditions, among others. The Company believes the estimates and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in a materially different calculations of fair value and determinations of whether or not an impairment is indicated. Under the discounted cash flow method, the Company determined fair value based on estimated future cash flows of each reporting unit including estimates for capital expenditures, discounted to present value using the risk-adjusted rate, which reflect the overall level of inherent risk of the reporting unit. Cash flow projections are derived from one-year budgeted amounts and five-year operating forecasts plus an estimate of later period cash flows, all of which are evaluated by management. Subsequent period cash flows are developed for each reporting unit using growth rates that management believes are reasonably likely to occur. Under the guideline company method, the Company determined the estimated fair value of each of our reporting units by applying valuation multiples of comparable publicly-traded companies to each reporting unit’s projected revenue and EBITDA to determine the preliminary enterprise value. From that preliminary enterprise value, it is further adjusted by adding cash and cash equivalents and subtracting interest-bearing debt to determine the cash-adjusted equity value. In addition, the Company estimated a reasonable control premium representing the incremental value that accrues to the majority owner from the opportunity to dictate the strategic and operational actions of the business. One key assumption for the measurement of an impairment is management’s estimate of future cash flows and EBITDA. These estimates are based on the annual budget for the upcoming year and forecasted amounts for multiple subsequent years. The annual budget process is typically completed near the annual goodwill impairment testing date, and management uses the most recent information for the annual impairment tests. The forecast is also subjected to a comprehensive update annually in conjunction with the annual budget process and is revised periodically to reflect new information and/or revised expectations. The estimates of future cash flows and EBITDA are subjective in nature and are subject to impacts from the business risks described in “Item 1A. Risk Factors.” Therefore, the actual results could differ significantly from the amounts used for goodwill impairment testing, and significant changes in fair value estimates could occur in a given period. Such changes in fair value estimates could result in additional impairments in future periods. Therefore, the actual results could differ significantly from the amounts used for goodwill impairment testing, and significant changes in fair value estimates could occur in a given period, resulting in additional impairments. As of February 2, 2019, there was no goodwill presented within the consolidated balance sheet. During 2017, the Company recorded $1.1 million for the accelerated recognition of amortization of intangible assets associated with the closing pharmacies. Assets held for sale and Discontinued Operations During the fourth quarter of 2018, the Company recorded an impairment charge of $1.5 million related to the non-compete agreements associated with the Retail Pharmacy sale. The non-compete agreements were all associated with the related Retail Pharmacy sale. Intangible assets. Other identifiable intangible assets primarily represent customer lists associated with acquired pharmacies and are being amortized on a straight-line basis over seven years. Based on the Company's historical experience, seven years approximates the actual lives of these assets. (in thousands) February 2, 2019 February 3, 2018 Estimated Useful Lives (years) Customer prescription files $ 18,743 $ 27,828 7 Non-compete agreements 2,334 5,356 3 - 15 Software 386 1,048 3 Other — 115 — $ 21,463 $ 34,347 Amortization expense for 2018 and 2017, was $9.8 million and $10.6 million, respectively. Estimated amortization expense for the assets recognized as of February 2, 2019, in millions for each of the next 7 years is as follows: (in millions) 2019 2020 2021 2022 2023 Thereafter Estimated amortization expense $ 7.4 $ 6.2 $ 4.7 $ 2.3 $ 0.8 $ 0.1 Goodwill . The Company records goodwill when the purchase price exceeds the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill and intangibles under ASC 350, Intangibles – Goodwill and Other , which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate that impairment may exist. On a continuing basis, the company no longer has goodwill. Revenue recognition. The Company markets goods and services through 557 Company-owned stores and 11 franchised stores. Net sales include sales of merchandise from Company-owned stores, net of returns and exclusive of sales taxes. Sales to franchised stores are recorded when the merchandise is shipped from the Company’s warehouse. The vast majority of Fred’s contracts with customers are made at the point of sale (POS) in the retail stores, and the performance obligation is the transfer of merchandise which is satisfied at POS when customer pays for merchandise and title transfers to them. 340B Revenues We evaluated principal versus agent considerations with regards to the 340B Direct program under ASC 606, Revenue from Contracts with Customers Revenue from sales of pharmaceutical products is recognized at the time the prescription is filled. This approximates when a customer picks up the prescription or when the prescription has been delivered and is recorded net of an allowance for prescriptions that were filled but not picked up by the customer. For all periods presented, there is no material difference between the revenue recognized at the time the prescription is filled and that which would be recognized when the customer picks up the prescription. Prescriptions are generally not returnable. Gift Card and Breakage When customers purchase gift cards, the sale is not recognized until the card is redeemed. The gift cards are not always fully redeemed and as such, the Company recognizes breakage. The Company will recognize aged liabilities as revenue when the likelihood of the gift card being redeemed is remote. The Company records a gift card liability on the date the gift card is issued to the customer. Revenue is recognized, and the gift card liability is reduced as the customer redeems the gift card. During 2018, we recognized no gift card breakage revenue. During 2017 we recognized $0.3 million of gift breakage revenue, or less than $0.01 per share. Layaway Plans Store layaways are agreements with our customers to provide o |
Assets Held-For-Sale and Discon
Assets Held-For-Sale and Discontinued Operations | 12 Months Ended |
Feb. 02, 2019 | |
Assets Held For Sale And Discontinued Operations [Abstract] | |
ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS | NOTE 2 – ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS As discussed in Note 1, during the fourth quarter of 2017, Fred’s Board of Directors approved a plan to actively market its specialty pharmacy business. Accordingly, the specialty pharmacy business met the criteria for “Assets Held for Sale” in accordance with ASC 360 as of February 3, 2018. T he results of operations for the specialty pharmacy business have been presented as discontinued operations in accordance with ASC 205-20 for all periods presented. The results of the specialty pharmacy business were previously allocated to the Pharmacy segment within the sales mix. The specialty pharmacy recorded a loss from discontinued operations, net of the tax line item, of $11.5 million for 2017. In addition, during the fourth quarter of 2017 a charge of $0.6 million was recorded as an impairment of the trade name and $10.8 million was recorded as an impairment of the goodwill related to the specialty pharmacy. The Specialty Buyer paid Fred’s $40.0 million for the purchased assets (plus up to an additional $5.5 million for inventory). The Company recorded a loss on the sale of $0.4 million. On June 1, 2018, the sale of the specialty pharmacy assets was completed, as such, t he Specialty Pharmacy assets and liabilities are no longer reflected as “held for sale” on the consolidated balance sheets as of February 2, 2019. On September 7, 2018 the Company entered into an Asset Purchase Agreement with Walgreen Co., an Illinois corporation. On October 23, 2018, the Company entered into an amendment to the Asset Purchase Agreement (the “Amendment”). Under such Asset Purchase Agreement, as amended by the Amendment (the “Amended WBA Asset Purchase Agreement”), the Company agreed to sell certain prescription files and related data and records, retail pharmaceutical inventory, and certain other assets from 179 of the Company’s 346 retail pharmacy stores (such assets from such 179 retail pharmacy stores collectively referred to as “Retail Pharmacy”) for a cash purchase price of approximately $157 million plus an amount equal to the value of the inventory included in the Retail Pharmacy assets up to an approximately $35 million cap, in each case subject to certain adjustments. During the third quarter of 2018, the assets therefore met the criteria for Assets held for sale Results of Operations – Discontinued Operations As of January 17, 2019, the Company had closed the transactions contemplated by the Amended WBA Asset Purchase Agreement, and the Company had received cash proceeds of approximately $156.1 million, plus approximately $20.6 million for the inventory sold in the transaction, in each case after adjustment as described in the Amended Asset Purchase Agreement. The Company recorded a gain of $145.7 million related to the Retail Pharmacy sale. The Company used the proceeds received in the transaction to pay down the Company’s existing indebtedness or for general corporate purposes. During the fourth quarter of 2018, the Board approved a plan to actively market its headquarters building located in Memphis, TN. As a result, the Company has reclassified the headquarters building to assets held for sale in accordance with ASC 360 – Assets held for sale The Company has assessed the fair value of the building base on the selling price of other assets within the surrounding area. The market price is reasonable in relation to the current selling price of similar assets on the market. See Note 2: Assets Held for Sale and Discontinued Operations for additional information. Summarized Discontinued Operations and Assets Held for Sale Financial Information The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities held for sale in the accompanying consolidated balance sheet for each of the periods presented: Specialty Pharmacy Retail Pharmacy Headquarters Building Total Assets Held for Sale February 2, February 3, February 2, February 3, February 2, February 3, February 2, February 3, 2019 2018 2019 2018 2019 2018 2019 2018 (in thousands) Current assets: Receivables, less allowance for doubtful accounts $ — $ 15,983 $ — $ — $ — $ — $ — $ 15,983 Inventories — 3,756 — 15,344 — — — 19,100 Other non-trade receivables — 152 — — — — — 152 Prepaid expenses and other current assets — 12 — — — — — 12 Total current assets held for sale $ — $ 19,903 $ — $ 15,344 $ — $ — $ — $ 35,247 Property and equipment, less accumulated depreciation and amortization — 1,036 — — 4,839 4,927 4,839 5,963 Goodwill — 30,609 — — — — — 30,609 Intangible assets, net — 9,533 — 20,541 — — — 30,074 Other noncurrent assets, net — 539 — — — — — 539 Total noncurrent assets held for sale $ — $ 41,717 $ — $ 20,541 $ 4,839 $ 4,927 $ 4,839 $ 67,185 Current liabilities: Accounts payable — 22,045 — — — — — 22,045 Accrued expenses and other — 4,527 — — — — — 4,527 Total current liabilities held for sale $ — $ 26,572 $ — $ — $ — $ — $ — $ 26,572 Deferred income taxes — — — — — — — — Other noncurrent liabilities — 48 — — — — — 48 Total noncurrent liabilities held For sale $ — $ 48 $ — $ — $ — $ — $ — $ 48 The following table summarizes the results of discontinued operations for the years ended February 2, 2019 and February 3, 2018, respectively. Discontinued Operations – Specialty Pharmacy (in thousands) 2018 2017 Revenues $ 90,112 $ 275,952 Cost of Goods Sold 88,454 264,153 Gross Margin 1,658 11,799 Depreciation and amortization 796 2,630 Impairment expense — 11,422 Selling, general and administrative expenses 11,952 11,778 Loss from discontinued operations before income taxes (11,090 ) (14,031 ) Loss on sale of assets (446 ) — Income tax expense — (3,113 ) Loss from discontinued operations, net of tax $ (11,536 ) $ (10,918 ) The Specialty Buyer paid Fred’s $40.0 million for the purchased assets (plus up to an additional $5.5 million for inventory). The Company recorded a loss on the sale of $0.4 million. On June 1, 2018, the sale of the specialty pharmacy assets was completed, as such, t he Specialty Pharmacy assets and liabilities are no longer reflected as “held for sale” on the consolidated balance sheets as of February 2, 2019. Discontinued Operations – Retail Pharmacy (in thousands) 2018 2017 Revenues $ 329,326 $ 409,560 Cost of Goods Sold 264,712 314,216 Gross Margin 64,614 95,344 Depreciation and amortization 4,071 7,279 Impairment Expense — 1,123 Selling, general and administrative expenses 70,537 81,670 Income (Loss) from discontinued operations before income taxes (9,994 ) 5,272 Gain on sale of assets 145,746 — Income tax expense — — Income from discontinued operations, net of tax $ 135,752 $ 5,272 As of January 17, 2019, the Company had closed the transactions contemplated by the Amended WBA Asset Purchase Agreement, and the Company had received cash proceeds of approximately $156.1 million, plus approximately $20.6 million for the inventory sold in the transaction, in each case after adjustment as described in the Amended Asset Purchase Agreement. The Company recorded a gain of $145.7 million related to the Retail Pharmacy sale. The Company used the proceeds received in the transaction to pay down the Company’s existing indebtedness or for general corporate purposes. Total Discontinued Operations (in thousands) 2018 2017 Revenues $ 419,438 $ 685,512 Cost of Goods Sold 353,166 578,369 Gross Margin 66,272 107,143 Depreciation and amortization 4,867 9,909 Impairment Expense — 12,545 Selling, general and administrative expenses 82,489 93,448 Loss from discontinued operations before income taxes (21,084 ) (8,759 ) Gain on sale of assets 145,300 — Income tax expense — (3,113 ) Income (loss) from discontinued operations, net of tax $ 124,216 $ (5,646 ) |
Detail of Certain Balance Sheet
Detail of Certain Balance Sheet Accounts | 12 Months Ended |
Feb. 02, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | NOTE 3 – DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS Details of certain balance sheet accounts as of February 2, 2019 and February 3, 2018 are as follows: (in thousands) Property and equipment, at cost: 2018 2017 Buildings and building improvements $ 101,220 $ 114,843 Leasehold improvements 85,148 86,268 Automobiles and vehicles 3,751 4,525 Furniture, fixtures and equipment 278,793 286,962 468,911 492,598 Less: Accumulated depreciation and amortization (413,228 ) (390,633 ) 55,683 101,965 Construction in progress 2,790 590 Land 7,873 7,984 Total Property and equipment, at depreciated cost $ 66,346 $ 110,539 Depreciation expense totaled $21.4 million and $24.7 million for 2018 and 2017, respectively. During the fiscal year 2017, the Company-owned airplane was sold at a loss of approximately $2.6 million. The loss on the sale was recorded within selling, general and administrative expense on the Consolidated Statement of Operations The Company recorded an impairment charge during fiscal 2018 of approximately $4.0 million related to the impairment of certain fixed assets after assessing the carrying value of the assets exceeded the fair market value as of February 2, 2019. The impairment charge is recorded within impairment expense on the consolidated statement of operations. (in thousands) Other non-trade receivables: 2018 2017 Vendor receivables $ 19,337 $ 22,073 Income tax receivable 848 1,812 Franchise stores receivable 1,700 1,688 Insurance claims receivable 238 — Coupon receivable 364 375 Other 7,926 5,552 Total other non-trade receivable $ 30,412 $ 31,500 Prepaid expenses and other current assets: 2018 2017 Prepaid rent $ 4,115 $ 4,214 Supplies 3,247 3,061 Other 2,712 2,780 Total prepaid expenses and other current assets $ 10,074 $ 10,055 (in thousands) Accrued expenses and other: 2018 2017 Payroll and benefits $ 13,361 $ 12,579 Accrued payroll taxes and withholdings $ 2,134 $ 2,963 Insurance reserves 8,357 11,290 Legal and professional fees 3,037 7,048 Closed Store Reserve 4,548 6,484 Property, sales and use taxes payable 7,867 9,323 Project cost accrual — 2,512 Deferred / Contingent Rent 2,130 1,637 Accrued import liability 2,332 — Accrued pharmacy programs expense 5,056 4,937 Other 9,530 9,204 Total accrued expenses and other $ 58,352 $ 67,977 Other noncurrent liabilities: 2018 2017 Unearned vendor allowances (see Note 1 - Vendor Rebates and Allowances) $ 15,015 $ 25,170 Uncertain tax positions — 372 Total other noncurrent liabilities $ 15,015 $ 25,542 |
Indebtedness
Indebtedness | 12 Months Ended |
Feb. 02, 2019 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | NOTE 4 — INDEBTEDNESS Revolving Credit Agreement On April 9, 2015, the Company entered into a Revolving Loan and Credit Agreement (as amended as of October 23, 2015, December 28, 2016, January 27, 2017, July 31, 2017, August 22, 2017, April 5, 2018 and August 23, 2018, and as supplemented by the Addendum (as defined below), the “Revolving Credit Agreement”) with Regions Bank and Bank of America, N.A. The Revolving Credit Agreement provides for aggregate loan commitments of $210.0 million and matures on April 9, 2020. Draws are limited to the lesser of the commitment amount or the borrowing base, which is periodically determined by reference to the value of certain receivables, inventory and scripts, less applicable reserves. The Company may choose to borrow at a spread to either LIBOR or a Base Rate. For LIBOR loans the spread ranges from 1.75% to 2.25% and for Base Rate loans the spread ranges from 0.75% to 1.25%. The spread depends on the level of excess availability. Commitment fees on the unused portion of the credit line are 37.5 basis points. The Agreement included an up-front credit facility fee which is being amortized over the Agreement term. As of February 2, 2019, there were $58.6 million of borrowings outstanding and $80.3 million, net of borrowings and letters of credit, remaining available under the Agreement. The Revolving Credit Agreement contains restrictive covenants that, among other things, limit the Company’s ability and the ability of the Company’s subsidiaries to: (i) incur additional indebtedness or issue certain preferred shares; (ii) pay dividends, redeem stock or make other distributions; (iii) make acquisitions, investments and loans; (iv) create liens; (v) transfer or sell assets; (vi) merge, consolidate or sell, lease, transfer or otherwise dispose of all or substantially all of the Company’s assets; (vii) enter into hedging arrangement; and (viii) enter into certain transactions with the Company’s affiliates. Under the Revolving Credit Agreement, an “Account Control Event” occurs if either an event of default is continuing, or excess availability falls below the greater of $26,250,000 and 12.5% of the commitments, following which time, and for certain periods thereafter, the administrative agent may apply all amounts in the Company’s collection accounts to the repayment of the loans outstanding under the Revolving Credit Agreement. Furthermore, the Company has a financial covenant to maintain at all times excess availability of at least the greater of $21,000,000 and 10% of the commitments, and if excess availability falls below such threshold, it would constitute an event of default under the Revolving Credit Agreement. These restrictions could limit the Company’s ability to plan for or react to market conditions or meet extraordinary capital needs or could otherwise restrict our activities. These restrictions could also adversely affect the Company’s ability to finance future operations or capital needs or to engage in other business activities that would be in the Company’s interest. The Company’s failure to comply with obligations under the Revolving Credit Agreement would result in an event of default, which if not cured or waived, may permit acceleration of the Company’s indebtedness and other remedies. If our indebtedness is accelerated, the Company cannot be certain that it would have sufficient funds available to pay the accelerated indebtedness or that the Company will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all, which could impact our ability to continue as a going concern. Recent Amendments Affecting Revolving Credit Agreement On August 23, 2018, the Company entered into the Seventh Amendment to Credit Agreement, Second Amendment to Amended and Restated Addendum to Credit Agreement and Second Amendment to Security Agreement (the “August 2018 Amendment”). Among other changes, the August 2018 Amendment decreased, at the Company’s request, the revolving loan commitment from $270.0 million to $210.0 million, permitted certain sale-leaseback transactions, allowed transfers of properties to non-Loan Party (as defined in the Credit Agreement) subsidiaries for financing and allowed for the assumption of debt and financing for such transactions, permitted the sale of real estate, other than distribution centers for fair market value and added repurchases and redemption to the definition of restricted payments, which are limited under the restricted payments covenant. On October 15, 2018, the Company entered into the Third Amendment to the Amended and Restated Addendum to Credit Agreement (the “October 2018 Amendment”). The October 2018 Amendment amended the Company’s existing Amended and Restated Addendum to Credit Agreement, dated as of January 27, 2017 (as amended as of July 31, 2017, August 23, 2018 and October 15, 2018, the “Addendum”). Among other things, the Third Amendment increased the frequency of certain financial reporting obligations of the Company and its subsidiaries to the lenders that applied only during the period from October 15, 2018 until November 30, 2018, reduced the excess availability requirements during such period, and increased the percentage of the projected value of customer prescription files under the borrowing base, potentially allowing for increased borrowing capability during such period. Recent Developments Relating to the Revolving Credit Agreement On April 15, 2019, Bank of America, N.A. imposed an additional reserve of $20.0 million under our Revolving Credit Agreement in connection with the Closures and related matters, which reduced our excess availability at such time to $37.9 million, and the administrative agent declared an “Account Control Event” under our Revolving Credit Agreement in connection with such Closures and exercised control over our collection accounts. As referenced above in Note 1 under the heading “–Going Concern,” the audit report prepared by our auditors with respect to the financial statements in this Annual Report on Form 10-K includes an explanatory paragraph indicating that there is substantial doubt about Fred’s ability to continue as a going concern. The receipt of this explanatory paragraph with respect to Fred’s financial statements for the year ended February 2, 2019 will result in a breach of a covenant under the Revolving Credit Agreement that requires annual financial statements accompanied by an unqualified audit report to be delivered to the lenders within 120 days of fiscal year end and a breach of this covenant will constitute an event of default under the Revolving Credit Agreement (the “Going Concern Event of Default”). In addition, Fred’s lenders under the Revolving Credit Agreement have indicated to Fred’s their belief that certain other events of default have occurred under the Revolving Credit Agreement in connection with the Closures, the inventory sales at certain stores and the timing of delivery, and content, of a borrowing base certificate due under the Revolving Credit Agreement (such purported events of default, together with the Going Concern Event of Default, are referred to herein as the “Revolver EODs”). An event of default, which is not cured or waived, would permit, among other remedies, acceleration of Fred’s indebtedness under the Revolving Credit Agreement and the addition, at the option of the Required Lenders (as defined in the Revolving Credit Agreement), of 200 basis points to the applicable interest rate with respect to all loans under the Revolving Credit Agreement (the “Default Rate”). As a result, t he Company has classified the outstanding borrowings under the credit agreement as short-term, even though the maturity date is beyond twelve months from our balance sheet date. See Item 1. “Recent Developments Relating to the Revolving Credit Agreement” for more information Financing Arrangements in Connection with Rite Aid Transaction On December 19, 2016, the Company entered into a commitment letter with respect to a senior secured asset-based loan facility (the “ABL Commitment Letter”), and a commitment letter with respect to a term loan facility (the “Term Loan Commitment Letter”); and on January 18, 2017, the Company entered into an amended and restated ABL Commitment Letter (the “Amended and Restated ABL Commitment Letter”). The Amended and Restated ABL Commitment Letter and the Term Loan Commitment Letter were entered into with lenders who agreed to provide $1.65 billion of debt financing to be used by the Company to fund its proposed acquisition of 865 stores, certain intellectual property and certain other tangible assets of Rite Aid Corporation. On June 9, 2017, the Company amended and restated the Amended and Restated ABL Commitment (the “Second Amended and Restated ABL Commitment Letter”), and the Term Loan Commitment Letter (the “Amended and Restated Term Loan Commitment Letter”) for the purpose of increasing the aggregate committed debt financing available thereunder to $2.2 billion. Upon termination of the Rite Aid Asset Purchase Agreement, as discussed in Note 1 above, the Company terminated the Second Amended and Restated ABL Commitment Letter and the Amended and Restated Term Loan Commitment Letter. In connection with such termination, the Company incurred applicable termination fees contemplated by the Second Amended and Restated ABL Commitment Letter and Amended and Restated Term Loan Commitment Letter, which were paid in the third quarter of 2017. In connection with the aforementioned commitment letters, the Company incurred approximately $30 million of debt issuance costs. These costs are reflected in SG&A in the Statement of Operations. The $25 million termination fee paid by Walgreens, on June 30, 2017, discussed in Note 1: Basis of Presentation Assumed Mortgage Debt During the second and third quarter of fiscal 2007, the Company acquired the land and buildings, occupied by seven Fred’s stores which we had previously leased. In consideration for the seven properties, the Company assumed debt that has fixed interest rates from 6.31% to 7.40%. Mortgages remain on two locations with a combined balance of $1.5 million outstanding at February 2, 2019. The weighted average interest rate on mortgages outstanding at February 2, 2019 was 7.40%. The debt is collateralized by the land and buildings. The table below shows the notes payable, along with the long-term debt related to the mortgages discussed above, due for the next five years as of February 2, 2019, which are both related to continuing operations. (in thousands) 2019 2020 2021 2022 2023 Thereafter Total Notes payable $ — $ 62,908 $ 4,333 $ 4,333 $ — $ — $ 71,575 Mortgage loans on land & buildings 68 75 1,369 — $ — — 1,512 Total $ 68 $ 62,983 $ 5,703 $ 4,333 $ — $ — $ 73,087 Dublin Bonds The Company financed the construction of its Dublin, Georgia distribution center with taxable industrial development revenue bonds issued by the City of Dublin and County of Laurens Development Authority. The Company purchased 100% of the issued bonds and intends to hold them to maturity, effectively financing the construction with internal cash flow. Because a legal right of offset exists, the Company has offset the investment in the bonds of $34.6 million against the related liability and neither is reflected on the consolidated balance sheet. Related Party Debt On April 10, 2015, the Company completed the acquisition of Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services. As part of the total consideration for the purchase, Fred’s provided notes payable totaling $13.0 million to the sellers of Reeves-Sain Drug Store, Inc. who joined Fred’s as part of the acquisition. The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the Company’s revolving line of credit. The notes payable have an adjustment mechanism based upon an earn-out provision that could result in an increase to the face value of the notes if certain financial metrics are achieved. Atlantic Retail Investors, LLC, which is partially owned by Michael J. Hayes, a former director and officer of the Company, owns the land and buildings occupied by three Fred’s stores. Richard H. Sain, former Senior Vice President of Retail Pharmacy Business Development, owns the land and building occupied by one of Fred’s Xpress Pharmacy locations. The terms and conditions regarding the leases on these locations were consistent in all material respects with other stores leases of the Company with unrelated landlords. The total rental payments for related party leases were $349.5 thousand for the year ended February 2, 2019 and $378.4 thousand for the year ended February 3, 2018. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Feb. 02, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 5 — FAIR VALUE MEASUREMENTS Due to their short-term nature, the Company’s financial instruments, which include cash and cash equivalents, receivables, accounts payable and indebtedness, are a reasonable estimate of their fair value as of February 2, 2019 and February 3, 2018. The fair value of the revolving line of credit is consistent with the carrying amount as repayments are short-term in nature. The fair value of the revolving line of credit and our mortgage loans are estimated using Level 2 inputs based on the Company's current incremental borrowing rate for comparable borrowing arrangements The table below details the fair value and carrying values for the revolving line of credit and mortgage loans as of the following years: February 2, 2019 February 3, 2018 (dollars in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 58,575 $ 58,573 $ 153,431 $ 153,431 Mortgage loans on land & buildings 1,512 1,684 1,579 1,684 Notes payable 13,000 12,333 13,000 12,421 Total 73,087 72,590 168,010 167,536 |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 02, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 6 — INCOME TAXES The provision (benefit) for income taxes consists of the following for the years ended February 2, 2019 and February 3, 2018. (dollars in thousands) 2018 2017 Current Federal $ 57 $ — State (113 ) 234 (56 ) 234 Deferred Federal 87 705 State 21 302 108 1,007 Provision for Income Tax $ 52 $ 1,241 On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted by the U.S. government. The TCJA contains several key provisions that affected the Company. The enacted provision impacted prior year financial statements and included a permanent reduction of the U.S. corporate income tax rate from 35 to 21 percent, effective January 1, 2018. As of February 2, 2019, U.S. statutory federal income tax rate was 21.0%. Because the Company had a February 3, 2018 fiscal year-end, the impact of the lower rate was phased in resulting in a U.S. statutory federal tax rate of approximately 33.7% for the fiscal year ended February 3, 2018. The 21% U.S. statutory federal rate applied to the fiscal year ended February 2, 2019. The Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118 (SAB 118) to address the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The ultimate impact may differ from provisional amounts recorded, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, and additional regulatory guidance that may be issued. The accounting is expected to be completed within one year from the enactment date of the TCJA. The Company recorded a provisional income tax effect of $0.0 million, after considering changes to the valuation allowance, in its consolidated financial statements for the fiscal year ended February 3, 2018. The Company was able to determine a reasonable estimate for the re-measurement of the Company’s U.S. federal deferred tax assets and liabilities at the lower rate (a reduction to net deferred tax assets of approximately $18.8 million offset by an equal reduction to the valuation allowance). The Company did a review of the full valuation allowance and determined no changes were deemed necessary to the provisional income tax effect for the previous fiscal year or the fiscal year ended February 2, 2019. The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities as of year-end are presented below: (dollars in thousands) 2018 2017 Deferred income tax assets: Accrual for incentive compensation $ 4,515 $ 2,782 Allowance for doubtful accounts 355 653 Insurance accruals 2,171 1,508 Other accruals 642 604 Net operating loss carryforwards 41,333 48,087 Deferred Revenue 199 352 Federal benefit on state reserves — 55 WOTC Credit Carryforward 6,259 5,295 Property, plant and equipment 4,064 — Amortization of intangibles 10,478 16,925 Postretirment benefits 142 159 Contribution Carryforward 312 315 Total deferred income tax assets 70,470 76,735 Less: Valuation allowance 63,046 59,299 Deferred income tax assets, net of valuation allowance 7,424 17,436 Deferred income tax liabilities: Postretirement benefits — — Property, plant and equipment — (5,567 ) Inventory valuation (6,950 ) (11,173 ) Prepaid expenses (474 ) (588 ) Total deferred income tax liabilities (7,424 ) (17,328 ) Net deferred income tax assets/liabilities $ — $ 108 The net operating loss carryforwards are available to reduce federal and state income taxes in future years. The federal carryforward is approximately $118.0 million and will expire in 2036. Carryforwards total approximately $323.2 million for state income tax purposes and expire at various times during the fiscal years 2019 through 2036. Federal income tax credit carryforwards total approximately $5.3 million and will expire in 2036. We maintain a valuation allowance for federal and state net operating losses and tax credits that we do not expect to utilize prior to their expiration. The valuation allowance increased $4.3 million and $37.1 million for the fiscal year ended February 2, 2019 and February 3, 2018, respectively. Based upon the expected reversal of deferred tax liabilities, management believes that it is more likely than not that the results of operations will not generate sufficient taxable income to realize the deferred income tax. A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows: 2018 2017 Income tax provision at statutory rate 21.0 % 33.7 State income taxes, net of federal benefit 4.7 3.5 Tax credits, principally jobs 0.2 0.6 Uncertain tax provisions 0.1 — Change in valuation allowance (25.8 ) (25.4 ) TCJA Rate Change — (13.7 ) Other — 1.3 Permanent differences (0.2 ) (0.9 ) Effective income tax rate (0.0 ) % (0.9 ) A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows: (in millions) 2018 2017 Beginning balance $ 2.3 $ 0.4 Additions for tax positions of prior years — 0.5 Additions for current year tax positions — 1.4 Deductions for tax position for prior years (2.0 ) — Settlements of tax position for prior years (0.3 ) — Balance at February 2,2019 $ — $ 2.3 As of February 2, 2019, the Company had no liability for unrecognized tax benefits. As of February 3, 2018, the Company recognized a liability for unrecognized tax benefits of $2.3 million recorded in the Consolidated Balance Sheet within “Other noncurrent liabilities.” The Company utilized $2.0 million of the prior year liability as tax deductions and $0.3 million of the prior year liability was utilized for settlements. Examinations by the state jurisdictions are expected to be completed within the next 12 months which could result in a change to our unrecognized tax benefits, but we are unable to estimate the amounts. ASC 740 further requires that interest and penalties required to be paid by the tax law on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the tax return and the tax benefit recognized in the financial statements. The Company includes potential interest and penalties recognized in accordance with ASC 740 in the financial statements as a component of income tax expense. As of February 2, 2019, accrued interest and penalties related to our unrecognized tax benefits totaled $0.0 million and $0.0 million, respectively. As of February 3, 2018, accrued interest and penalties related to our unrecognized tax benefits totaled $0.1 million and $0.1 million, respectively. Both accrued interest and penalties are recorded in the Consolidated Balance Sheet within “Other noncurrent liabilities.” The Company files numerous consolidated and separate company income tax returns in the U.S. federal jurisdiction and in many U.S. state jurisdictions. With few exceptions, we are subject to U.S. federal, state, and local income tax examinations by tax authorities for years 2013-2016. However, tax authorities have the ability to review years prior to these to the extent we utilized tax attributes carried forward from those prior years. |
Long-term Leases
Long-term Leases | 12 Months Ended |
Feb. 02, 2019 | |
Leases [Abstract] | |
LONG-TERM LEASES | NOTE 7 — LONG-TERM LEASES The Company leases certain of its store locations under noncancelable operating leases that require monthly rental payments primarily at fixed rates (although a number of the leases provide for additional rent based upon sales) expiring at various dates through fiscal 2029. None of our operating leases contain residual value guarantees. Many of these leases contain renewal options and require the Company to pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased properties. In addition, the Company leases various equipment under noncancelable operating leases. Total rent expense under operating leases was $49.2 million and $54.9 million for 2018 and 2017, respectively. Total contingent rentals included in operating leases above was $0.4 million for 2018 and $0.5 million for 2017. Future minimum rental payments under all operating leases as of February 2, 2019 are as follows: (in thousands) Operating Leases 2019 40,667 2020 35,189 2021 30,090 2022 23,376 2023 15,789 Thereafter 24,077 Total minimum lease payments $ 169,188 The gross amount of property and equipment under capital leases was $5.1 million at both February 2, 2019 and February 3, 2018. Accumulated amortization on property and equipment under capital leases was $5.1 million at both February 2, 2019 and February 3, 2018. There was no amortization expense on assets under capital lease for 2018 and 2017. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Feb. 02, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | NOTE 8 — SHAREHOLDERS’ EQUITY Purchases of Equity Securities by the Issuer and Affiliated Purchasers. On August 27, 2007, the Board approved a plan that authorized stock repurchases of up to 4.0 million shares of the Company’s common stock, of which 90.0 thousand shares remained at January 28, 2012. On February 16, 2012, Fred's Board authorized the expansion of the Company's existing stock re-purchase program by increasing the authorization to repurchase an additional 3.6 million shares. Under the plan, the Company may repurchase its common stock in open market or privately negotiated transactions at such times and at such prices as determined to be in the Company’s best interest. These purchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. On December 6, 2017, the Company announced the amendment of the share repurchase program described above. The amended program allowed for the repurchase of up to 3.8 million shares of the Company’s outstanding Class A voting common stock (the “common stock”). Under the amended program, the common stock could be purchased through a combination of a Rule 10b5-1 automatic trading plan and discretionary purchases on the open market, block trades or in privately negotiated transactions. The amount and timing of any purchases would depend on a number of factors, including trading price, trading volume and general market conditions. This repurchase program was valid for up to two years. In the fourth quarter of fiscal year 2017, the Company repurchased 1.2 million shares, leaving 2.6 million shares available for repurchase. During the fourth quarter of fiscal year 2018, the Company repurchased the remaining 2.6 million share available for repurchase. On January 30, 2019, the Company announced that it had approved a new share repurchase program in order to acquire up to 3.5 million shares of the Company’s common stock. Under the new program, the common stock may be purchased through a combination of a Rule 10b5-1 automatic trading plan and discretionary purchases on the open market, block trades or in privately negotiated transactions. The amount and timing of any purchases will depend on a number of factors, including trading price, trading volume and general market conditions. No assurance can be given that any particular amount of common stock will be repurchased. This new repurchase program is valid for up to two years and may be modified, extended or terminated by the Board at any time. As of the date hereof, no shares have been repurchased under this new program. The table below sets forth the Company’s share repurchases during fiscal year 2018: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Authorized Share Expansion Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program Balance at February 3, 2018 — $ — — 2,558,000 February 4 - March 3, 2018 — $ — — 2,558,000 March 4 - March 31, 2018 — $ — — 2,558,000 April 1 - May 5, 2018 — $ — — 2,558,000 May 6 - June 2, 2018 — $ — — 2,558,000 June 3 - June 30, 2018 — $ — — 2,558,000 July 1 - August 4, 2018 — $ — — 2,558,000 August 5 - September 1, 2018 — $ — — 2,558,000 September 2 - September 29, 2018 — $ — — 2,558,000 September 30 - November 3, 2018 — $ — — 2,558,000 November 4 - December 1, 2018 — $ — — 2,558,000 December 2 - January 5, 2019 1,507,302 $ 1.97 1,507,302 1,050,698 January 6 - February 2, 2019 1,050,698 $ 2.73 1,050,698 3,500,000 3,500,000 Rights Plan. On June 27, 2017, the Board declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of Class A Common Stock. The dividend was paid to the shareholders of record at the close of business on July 7, 2017 (the “Record Date”). Each Right entitles the holder, subject to the terms of the Rights Agreement dated as of June 27, 2017 (the “Original Rights Agreement”) between the Company and American Stock & Trust Company, LLC, as Rights Agent one one-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock On September 18, 2017, the Company amended and restated the Original Rights Agreement (the “Amended Rights Agreement”) to (i) decrease the Exercise Price, (ii) change the circumstances under which the Right may be exercised and (iii) extend the expiration of the Rights, in each case, as more fully described below. The purpose of the Amended Rights Agreement is to protect shareholder value by preserving the Company’s ability to use its net operating losses and certain other tax assets (“Tax Benefits”) to offset potential future taxable income and reduce federal income tax liability. The Company’s ability to use its Tax Benefits would be substantially limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). A company generally experiences such an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section 382 of the Code, increases by more than 50 percentage points over a rolling three-year period. The Amended Rights Agreement is intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s outstanding Common Stock. Pursuant to the Amended Rights Agreement, the Exercise Price will be $35.00. Further, the Rights will not be exercisable until the earlier to occur of (x) the close of business on the 10th business day following a public announcement or filing that a person has, or a group of affiliated or associated persons or persons acting in concert have, become an “Acquiring Person,” which is defined as a person or group of affiliated or associated persons or persons acting in concert who, at any time after the date of the Amended Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 4.9% or more of the Company’s outstanding shares of Class A Common Stock, subject to certain exceptions, and (y) the close of business on the 10th business day (or such other date as may be determined by action of the Board prior to such time as any person or group of affiliated or associated persons or persons acting in concert become an Acquiring Person) after the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”). Any existing shareholder or group that beneficially owns 4.9% or more of the Class A Common Stock will be grandfathered at its current ownership level, but the Rights will become exercisable if at any time after the announcement of the Amended Rights Agreement such shareholder or group increases its ownership of the Class A Common Stock by one share or more. The Rights, which are not exercisable until the Distribution Date, will expire at the earliest to occur of (w) the close of business on September 18, 2020; (x) the time at which the Rights are redeemed pursuant to the Amended Rights Agreement; (y) the time at which the Rights are exchanged pursuant to the Amended Rights Agreement; and (z) the time at which the Rights are terminated upon the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board prior to any person becoming an Acquiring Person. The above description of the Amended Rights Agreement does not purport to be complete and is qualified in its entirety by the full text of the Amended Rights Agreement, a copy of which is attached as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on September 18, 2017. |
Equity Incentive Plans
Equity Incentive Plans | 12 Months Ended |
Feb. 02, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity Incentive Plans | NOTE 9 – EQUITY INCENTIVE PLANS Long-Term Incentive Plan. The Company has a long-term incentive plan (the "2017 Plan"), which was approved by Fred's stockholders at the 2017 annual shareholders meeting. The 2017 Plan is substantially similar to the prior plan. The 2017 Plan increased the number of shares of the Company’s common stock authorized for issuance by 1,900,000 shares, from the 4,000,000 which was available under the prior plan to 5,900,000 shares. The plan expires March 18, 2022, and Section 10 of the 2002 Plan, which provides for supplemental cash payments or loans to individuals in connection with all or any part of an award under the plan, has been removed and is not part of the 2017 Plan. Shares available to be granted under the long-term incentive plan were 3,004,580 as of February 2, 2019 and 2,777,382 as of February 3, 2018. Options issued under the plans expire five to seven years from the date of grant. Options outstanding at February 2, 2019 expire in fiscal 2019 through fiscal 2024. The Company has granted stock options to key employees including executive officers, as well as other employees, as prescribed by the Compensation Committee (the “Committee”) of the Board. Options, which include non-qualified stock options and incentive stock options, are rights to purchase a specified number of shares of Fred's common stock at a price fixed by the Committee. Stock options granted have an exercise price equal to the market price of Fred's common stock on the date of grant. The exercise price for stock options issued under the plan that qualify as incentive stock options within the meaning of Section 422(b) of the Code shall not be less than 100% of the fair value as of the date of grant. The option exercise price may be satisfied in cash or by exchanging shares of Fred's common stock owned by the optionee for at least six months, or a combination of cash and shares. Options have a maximum term of five to seven years from the date of grant. Options granted under the plan generally become exercisable ratably over four years or ten percent during each of the first four years on the anniversary date and sixty percent on the fifth anniversary date. The rest vest ratably over the requisite service period. Stock option expense is recognized using the graded vesting attribution method. The plan also provides for annual stock grants at the market price of the common stock on the grant date to non-employee directors according to a non-discretionary formula. The number of shares granted is dependent upon current director compensation levels. Employee Stock Purchase Plan. The 2004 Employee Stock Purchase Plan ("ESPP"), which was approved by Fred's stockholders, permits eligible employees to purchase shares of our common stock through payroll deductions at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the market price at the time of exercise. In the fourth quarter of fiscal year 2017, management and the Board decided to suspend purchases through the ESPP effective December 31, 2017. As such, there were no shares issued under the ESPP plan in fiscal 2018. There were 90,225, shares issued during fiscal years 2017. There were 1,410,928 shares approved to be issued under the ESPP Plan as of February 2, 2019 and 595,681 shares were available. The following represents total stock-based compensation expense (a component of selling, general and administrative expenses) recognized in the consolidated financial statements (in thousands) (in thousands) 2018 2017 Continuing Operations Stock option expense $ 906 $ 649 Restricted stock expense 2,373 3,294 ESPP expense — 676 Subtotal stock-based compensation 3,279 4,619 Other stock based compensation expense (1) — 1,015 Total stock-based compensation $ 3,279 $ 5,634 Income tax benefit on stock-based compensation $ 44 $ 1,216 Discontinued Operations Stock option expense $ 59 $ 221 Restricted stock expense 43 44 ESPP expense — — Subtotal stock-based compensation 102 265 Income tax benefit on stock-based compensation $ 4 $ 28 Total stock-based compensation $ 3,381 $ 5,899 Total income tax benefit on stock-based compensation $ 48 $ 1,244 The Company uses the Modified Black-Scholes Option Valuation Model (“BSM”) to measure the fair value of stock options granted to employees. The BSM option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock volatility and option life. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The fair value of each option granted is estimated on the date of grant using the BSM with the following weighted average assumptions: Continuing Operations Stock Options 2018 2017 Expected volatility 0.0 % 42.3 % Risk-free interest rate 0.0 % 2.1 % Expected option life (in years) 0 8.84 Expected dividend yield 0.0 % 1.7 % Weighted average fair value at grant date $ — $ 3.91 Discontinued Operations Stock Options 2018 2017 Expected volatility 0.0 % 43.1 % Risk-free interest rate 0.0 % 2.2 % Expected option life (in years) 0 5.84 Expected dividend yield 0.0 % 1.9 % Weighted average fair value at grant date $ — $ 4.89 Employee Stock Purchase Plan 2018 2017 Expected volatility 0.0 % 80.6 % Risk-free interest rate 0.0 % 1.0 % Expected option life (in years) 0.00 0.63 Expected dividend yield 0.0 % 1.0 % Weighted average fair value at grant date $ — $ 7.14 The following is a summary of the methodology applied to develop each assumption: Expected Volatility Risk-free Interest Rate Expected Lives Dividend Yield Stock Options. The following table summarizes stock option activity from January 28, 2017 through February 2, 2019: Continuing Operations Options Weighted- Average Exercise Price Weighted- Averaged Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 28, 2017 1,453,281 $ 13.48 6.0 $ 1,947 Granted 233,312 11.00 Forfeited / Cancelled (514,768 ) 13.16 Exercised — — Outstanding at February 3, 2018 1,171,825 $ 13.12 5.1 $ — Granted — — Forfeited / Cancelled (584,091 ) 12.29 Exercised — — Outstanding at February 2, 2019 587,734 $ 13.95 4.2 $ — Exercisable at February 2, 2019 444,635 $ 14.49 4.1 $ — Discontinued Operations Options Weighted- Average Exercise Price Weighted- Averaged Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 28, 2017 154,375 $ 14.19 6.4 $ 124 Granted 25,000 13.52 Forfeited / Cancelled (12,000 ) 12.34 Exercised — — Outstanding at February 3, 2018 167,375 $ 14.23 5.4 $ — Granted — — Forfeited / Cancelled (158,984 ) 14.17 Exercised — — Outstanding at February 2, 2019 8,391 $ 15.44 4.2 $ — Exercisable at February 2, 2019 3,356 $ 15.44 4.2 $ — The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the excess of Fred's closing stock price on the last trading day of the fiscal year end and the exercise price of the option multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that date. This amount changes based on changes in the market value of Fred's stock. As of February 2, 2019, total unrecognized stock-based compensation expense net of estimated forfeitures related to non-vested stock options for continuing operations was approximately $0.8 million, which is expected to be recognized over a weighted average period of approximately 2.5 years. As of February 2, 2019, there was no unrecognized stock-based compensation expense net of estimated forfeitures related to non-vested stock options for discontinued operations. Other information relative to option activity during 2018 and 2017 is as follows: (dollars in thousands) 2018 2017 Continuing Operations Total fair value of stock options vested $ 962 $ 1,185 Total pretax intrinsic value of stock options exercised $ — $ — Discontinued Operations Total fair value of stock options vested $ 7 $ 121 Total pretax intrinsic value of stock options exercised $ — $ — The following table summarizes information about stock options outstanding at February 2, 2019: Options Outstanding Options Exercisable Range of Exercise Prices Shares Weighted- Averaged Contractual Life (years) Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Continuing Operations $ 4.57 - $12.55 157,003 5 $ 10.59 91,196 $ 11.53 $12.61 - $14.68 233,455 4.3 $ 14.27 170,163 $ 14.21 $14.74 - $19.64 197,276 3.4 $ 16.25 183,276 $ 16.22 587,734 444,635 Discontinued Operations - — — — — — - — — — — — $15.44 - $19.04 8,391 4.2 $ 15.44 3,356 $ 15.44 8,391 3,356 Restricted Stock. The Company’s equity incentive plans also allow for granting of restricted stock having a fixed number of shares at a purchase price that is set by the Compensation Committee of the Board, which purchase price may be set at zero, to certain executive officers, directors and key employees. The Company calculates compensation expense as the difference between the market price of the underlying stock on the date of grant and the purchase price if any. Restricted shares granted under the plan have various vesting types, which include cliff vesting and graded vesting with a requisite service period of three to ten years. Restricted stock has a maximum term of five to ten years from grant date. Compensation expense is recorded on a straight-line basis for shares that cliff vest and under the graded vesting attribution method for those that have graded vesting. The following table summarizes restricted stock from January 28, 2017 through February 2, 2019: Continuing Operations Shares Weighted- Average Grant Date Fair Value Non-vested Restricted Stock at January 28, 2017 582,126 $ 15.01 Granted 490,802 7.73 Forfeited / Cancelled (90,933 ) 11.96 Vested (328,100 ) 14.64 Non-vested Restricted Stock at February 3, 2018 653,895 $ 10.14 Granted 649,233 2.23 Forfeited / Cancelled (133,356 ) 11.77 Vested (475,649 ) 7.98 Non-vested Restricted Stock at February 2, 2019 694,123 $ 3.82 Discontinued Operations Shares Weighted- Average Grant Date Fair Value Non-vested Restricted Stock at January 28, 2017 21,658 $ 17.12 Granted 2,333 14.89 Forfeited / Cancelled (10,000 ) 19.07 Vested (2,797 ) 15.35 Non-vested Restricted Stock at February 3, 2018 11,194 $ 15.35 Granted — — Forfeited / Cancelled (8,862 ) 14.95 Vested (2,332 ) 15.44 Non-vested Restricted Stock at February 2, 2019 — $ — For continuing operations, the aggregate pre-tax intrinsic value of restricted stock outstanding as of February 2, 2019 is $2.0 million with a weighted average remaining contractual life of 8.6 years. The unrecognized compensation expense net of estimated forfeitures, related to the outstanding restricted stock is approximately $1.8 million, which is expected to be recognized over a weighted average period of approximately 2.5 years. The total fair value of restricted stock awards that vested for the year ended February 3, 2018 was $3.9 million. The total fair value of restricted stock awards that vested for the years ended to February 2, 2019 was $1.0 million. For discontinued operations the aggregate pre-tax intrinsic value of restricted stock outstanding as of February 2, 2019 is less than $0.1 million with a weighted average remaining contractual life of 5.5 years. The unrecognized compensation expense net of estimated forfeitures, related to the outstanding restricted stock is approximately $0.1 million, which is expected to be recognized over a weighted average period of approximately 3.5 years. The total fair value of restricted stock awards that vested for the year ended February 2, 2019 was less than $0.1 million. There were no significant modifications to the Company’s share-based compensation plans during fiscal 2018 and 2017. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Feb. 02, 2019 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NOTE 10 — NET INCOME PER SHARE Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if options to issue common stock were exercised into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Restricted stock is a participating security and is therefore included in the computation of basic earnings per share. However, in fiscal year 2018 and 2017, the Company experienced a losses and thus such restricted stock was excluded from the calculation of basic and diluted EPS because inclusion would have been antidilutive. Options to purchase shares of common stock that were outstanding at the end of the respective fiscal years were not included in the computation of diluted earnings per share when the options’ exercise prices were greater than the average market price of the common shares. There were 587,734 and 1,171,825 such options outstanding at February 2, 2019 and February 3, 2018, respectively. |
Other Commitments and Contingen
Other Commitments and Contingencies | 12 Months Ended |
Feb. 02, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS AND CONTINGENCIES | NOTE 11 — OTHER COMMITMENTS AND CONTINGENCIES Commitments. The Company had commitments approximating $0.5 million at February 2, 2019 and February 3, 2018 on issued letters of credit and open accounts, which support purchase orders for merchandise. Additionally, the Company had outstanding letters of credit aggregating approximately $17.4 million at February 2, 2019 and $9.3 million as of February 3, 2018 utilized as collateral for its risk management programs. Salary reduction profit sharing plan. The Company has defined contribution profit sharing plans for the benefit of qualifying employees who have completed three months of service and attained the age of 21. Participants may elect to make contributions to the plans up to 60% of their compensation or such lesser amounts based upon limitations established by the Internal Revenue Service. Company contributions are made at the discretion of the Board. Participants are 100% vested in their contributions and earnings thereon. Contributions by the Company and earnings thereon are fully vested upon completion of six years of service. The Company’s contributions for 2018, were $0.2 million and $0.2 million for 2017 Postretirement benefits. The Company provides certain health care benefits to its full-time employees that retire between the ages of 62 and 65 with certain specified levels of credited service. Health care coverage options for retirees under the plan are the same as those available to active employees. In accordance with ASC 715 " Compensation Retirement Benefits,” The Company’s change in benefit obligation based upon an actuarial valuation is as follows: For the Years Ended (in thousands) February 2, 2019 February 3, 2018 Benefit obligation at beginning of year $ 595 $ 655 Service cost 34 36 Interest cost 18 20 Actuarial loss (gain) (41 ) (46 ) Benefits paid (62 ) (70 ) Benefit obligation at end of year $ 544 $ 595 The Company’s components of net accumulated other comprehensive income were as follows: For the Years Ended (in thousands) February 2, 2019 February 3, 2018 Accumulated other comprehensive income $ 756 $ 765 Deferred tax (197 ) (206 ) Accumulated other comprehensive income, net $ 559 $ 559 The medical care cost trend used in determining this obligation is 6.4% at February 2, 2019, decreasing annually throughout the actuarial projection period. The below table illustrates a one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits: (in thousands) February 2, 2019 February 3, 2018 Effect of health care trend rate 1% increase effect on accumulated benefit obligations $ 65 $ 71 1% increase effect on periodic cost 10 11 1% decrease effect on accumulated benefit obligations (46 ) (53 ) 1% decrease effect on periodic cost (7 ) (8 ) The discount rate used in calculating the obligation was 3.45% in 2018 and 2017. The annual net postretirement cost is as follows: (in thousands) February 2, 2019 February 3, 2018 Service cost $ 34 $ 36 Interest cost 18 20 Amortization of prior service cost (11 ) (13 ) Amortization of unrecognized prior service costs (59 ) (58 ) Net periodic postretirement benefit cost $ (18 ) $ (15 ) The Company’s policy is to fund claims as incurred. Information about the expected cash flows for the postretirement medical plan follows: (in thousands) Postretirement Medical Plan Expected Benefit Payments, net of retiree contributions 2020 $ 44,541 2021 52,376 2022 57,737 2023 58,220 2024 49,140 Next 5 years 253,088 Litigation. On October 15, 2015, a lawsuit entitled Southern Independent Bank v. Fred’s, Inc. was filed in the U.S. District Court, Middle District of Alabama. The complaint includes allegations made by the plaintiff on behalf of itself and financial institutions similarly situated (“alleged class of financial institutions”) that the Company was negligent in failing to use reasonable care in obtaining, retaining, securing and deleting the personal and financial information of customers who use debit cards issued by the plaintiff and alleged class of financial institutions to make purchases at Fred’s stores. The complaint also includes allegations that the Company made negligent misrepresentations that the Company possessed and maintained adequate data security measures and systems that were sufficient to protect the personal and financial information of shoppers using debit cards issued by the plaintiff and alleged class of financial institutions. The complaint seeks monetary damages and equitable relief to be proved at trial as well as attorneys’ fees and costs. The Company has denied the allegations and has filed a motion to dismiss all claims. This motion has since been denied, and the Company filed a motion to reconsider by certifying the question to the Alabama Supreme Court for clarity. However, the Company’s motion was denied, and the Company has now completed discovery and is moving to trial. On March 13, 2019, the U.S. District Court, Middle District of Alabama denied plaintiff’s motion for class certification. Future costs or liabilities related to the incident may have a material adverse effect on the Company. The Company has not made an accrual for future losses related to these claims at this time as the future losses are not considered probable. The Company has a cyber liability policy with a $10 million limit and $100,000 deductible. On July 27, 2016, a lawsuit entitled The State of Mississippi v. Fred’s Inc., et al was filed in the Chancery Court of Desoto County, Mississippi, Third Judicial District. The complaint alleges that the Company fraudulently reported their usual and customary prices to Mississippi’s Division of Medicaid in order to receive higher reimbursements for prescription drugs. The complaint seeks declaratory and monetary relief for the profits alleged to have been unfairly earned as well as attorney costs. The Company denies these allegations and believes it acted appropriately in its dealings with the Mississippi Division of Medicaid. The Company successfully filed a Motion to Transfer to Desoto County Circuit Court. The State filed a Petition for Interlocutory Appeal with the Mississippi Supreme Court, but the Mississippi Supreme Court ruled in our favor and the case is now proceeding in Circuit Court. A hearing on the Company’s motion to dismiss was held in Circuit Court on March 28, 2019, and we await the Court’s ruling. Future costs and liabilities related to this case may have a material adverse effect on the Company; however, the Company has not made an accrual for future losses related to these claims as it is not possible at this time to evaluate the likelihood of an unfavorable outcome or to estimate the amount or range of any potential loss. The Company has multiple insurance policies which the Company believes will limit its potential exposure. On September 29, 2016, the Company reported to the Office of Civil Rights (“OCR”) that an unencrypted laptop containing clinical and demographic data for 9,624 individuals had been stolen from an employee’s vehicle while the vehicle was parked at the employee’s residence. On January 13, 2017, the OCR opened an investigation into the incident. The Company has fully complied with the investigation and timely responded to all requests for information from the OCR. The Company received several supplemental requests for information from the OCR during the third and fourth fiscal quarters of 2018, as well as two additional requests during the first fiscal quarter of 2019, to which the Company has timely responded. Future costs and liabilities related to this case may have a material adverse effect on the Company; however, the Company has not made an accrual for future losses related to these claims as future losses are not considered probable and an estimate is unavailable. On March 30, 2017, a lawsuit entitled Tiffany Taylor, individually and on behalf of others similarly situated, v. Fred’s, Inc. and Fred’s Stores of Tennessee, Inc. was filed in the United Stated District Court for the Northern District of Alabama Southern Division (the “Taylor Complaint”). The Taylor Complaint alleges that the Company wrongfully and willfully violated the Fair and Accurate Credit Transactions Act (“FACTA”). On April 11, 2017, a lawsuit entitled Melanie Wallace, Sascha Feliciano, and Heather Tyler, on behalf of themselves and all others similarly situated, v. Fred’s Stores of Tennessee, Inc. was filed in the Superior Court of Fulton County in the state of Georgia. The complaint alleges that the Company wrongfully and willfully violated FACTA. On April 13, 2017, a lawsuit entitled Lillie Williams and Cussetta Journey, on behalf of themselves and all others similarly situated, v. Fred’s Stores of Tennessee, Inc. was filed in the Superior Court of Fulton County in the state of Georgia. The complaint also alleges that the Company wrongfully and willfully violated FACTA. The complaints are filed as class actions, with the class being open for five (5) years before the date the complaint was filed. The complaint seeks statutory damages, attorney’s fees, punitive damages, an injunctive order, and other such relief that the court may deem just and equitable. The Company filed a Motion to Dismiss the Taylor Complaint, and this Motion has been granted by the Court. Plaintiff’s counsel has appealed the Taylor Complaint, which appeal is pending before the 11 th th th On March 3, 2018, a lawsuit entitled Abel Eddington and Judy Hudson, individually and on behalf of all others similarly situated, v. Fred’s Inc., and Fred’s Stores of Tennessee, Inc. was filed in the United States District Court Eastern District of Texas, Marshall Division. The complaint alleges that the Company committed various Federal and state wage and hours violations. The complaint is filed as class action and seeks back wages, attorneys’ fees, and all other damages allowable by law. The Company denies these allegations and believes it acted appropriately in its wage and hour calculations and payments. The Company and the named plaintiffs have settled the case for $250,000, including plaintiffs’ attorneys’ fees, and the settlement is currently being administered. On March 16, 2018, a lawsuit entitled Roxie Whitley , individually and as next friend of Baby Z.B.D., and Chris and Diane Denson, individually and as next friends of Baby L.D.L., on behalf of themselves and all others similarly situated, v. Purdue Pharma L.P.; Purdue Pharma, Inc.; The Purdue Frederick Company, Inc.; McKesson Corporation; Cardinal Health, Inc.; AmeriSourceBergen Corporation; Teva Pharmaceutical Industries, Ltd.; Teva Pharmaceuticals USA, Inc.; Cephalon, Inc.; Johnson & Johnson; Janssen Pharmaceuticals, Inc.; Ortho-McNeil-Janssen Pharmaceuticals, Inc. n/k/a Janssen Pharmaceuticals, Inc.; Janssen Pharmaceuticals, Inc. n/k/a Janssen Pharmaceuticals, Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals, Inc; Allergan PLC; Watson Pharmaceuticals, Inc. n/k/a Actavis, Inc.; Watson Laboratories, Inc.; Actavis LLC; Actavis Pharma, Inc. f/k/a Watson Pharma, Inc.; and Fred’s Stores of Tennessee, Inc. was filed in the Circuit Court of Fayette County, Tennessee for the 25 th In addition to the matters disclosed above, the Company is party to several pending legal proceedings and claims arising in the normal course of business. Although the outcomes of these proceedings and claims against the Company cannot be determined with certainty, management of the Company is of the opinion that these proceedings and claims should not have a material adverse effect on the Company’s financial statements as a whole. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial statements as a whole. |
Sales Mix
Sales Mix | 12 Months Ended |
Feb. 02, 2019 | |
Segment Reporting [Abstract] | |
SALES MIX | NOTE 12 – SALES MIX The Company manages its business on the basis of one reportable segment. See Note 1: “ Description of Business and Summary of Significant Accounting Policies Segment Reporting The Company’s sales mix by major category during the last 2 years was as follows: For the Years Ended February 2, 2019 February 3, 2018 Pharmacy 32.0 % 29.7 % Consumables 38.9 % 37.8 % Household Goods and Softlines 28.1 % 31.4 % Franchise 1.0 % 1.1 % Total Sales Mix 100.0 % 100.0 % |
Exit and Disposal Activity
Exit and Disposal Activity | 12 Months Ended |
Feb. 02, 2019 | |
Restructuring And Related Activities [Abstract] | |
EXIT AND DISPOSAL ACTIVITIES | NOTE 13 – EXIT AND DISPOSAL ACTIVITY Fixed Assets The Company’s policy is to review the carrying value of all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure impairment losses of fixed assets and leasehold improvements as the amount by which the carrying amount of a long-lived asset exceeds its fair value as prescribed by ASC 360, " Impairment or Disposal of Long-Lived Assets During 2017, the Company recorded disposal charges in the amount $5.5 million in association with the planned closure of additional underperforming stores and pharmacies. The charges were recorded in selling, general and administrative expense on the Consolidated Statement of Operations. In the third quarter of fiscal year 2017, a decision was made to sell the Company-owned airplane. The sale was completed in the fourth quarter, and the company recorded a loss of $1.8 million related to the sale. In the fourth quarter of fiscal year 2017, the Company recorded a charge of $1.1 million in selling, general and administrative expense for the fixed assets associated with several underperforming locations. None of the impairment charges relating to these assets were utilized as of February 3, 2018. During the fiscal year 2018, the Company recorded a charge of $2.5 million related to underperforming stores and pharmacies The charge related to the underperforming stores is included in selling, general and administrative expense the Consolidated Statement of Operations as of February 2, 2019. Inventory We adjust inventory values on a consistent basis to reflect current market conditions. In accordance with ASC 330, "Inventories," we write down inventory to net realizable value in the period in which conditions giving rise to the write-downs are first recognized. During the fiscal year 2018, the Company recorded $1.7 million in inventory write-downs that management identified as low-productive and did not fit the Company’s go-forward model. Lease Termination For lease obligations related to closed stores, we record the estimated future liability associated with the rental obligation on the cease use date (when the stores were closed). The lease obligations are established at the cease use date for the present value of any remaining operating lease obligations, net of estimated sublease income, and at the communication date for severance and other exit costs, as prescribed by ASC 420, “ Exit or Disposal Cost Obligations During fiscal 2016, the Company increased the lease liability for stores closed between 2014 and 2016 by $0.5 million and utilized $0.3 million, leaving a liability of $0.2 million. This reserve was utilized during fiscal year 2017 in full. In the first quarter of 2017, the Company recorded a lease liability relating to the 39 underperforming store closures in fiscal 2017 of $8.2 million. Additional $0.2 million reserve was recorded in the fourth quarter of 2017 and $2.1 million of reserve was utilized during the year, leaving $6.3 million reserve balance as of February 3, 2018. During 2018, the Company utilized $2.4 million of the liability and $4.5 million of the reserve balance remains as of February 2, 2019. The following table illustrates the lease liability related to the planned store closures discussed in the previous paragraphs (in millions): Balance at February 3, 2018 Additions Utilization Ending Balance February 2, 2019 Lease contract termination liability, store closures 6.3 0.6 (2.4 ) 4.5 |
Business Combinations
Business Combinations | 12 Months Ended |
Feb. 02, 2019 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 14 – BUSINESS COMBINATIONS On April 10, 2015, we acquired 100% of the equity interests in Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services (now classified as Assets Held for Sale). The total consideration for the purchase was approximately $66.0 million, less working capital adjustments of $10.3 million, which yielded an adjusted purchase consideration of $55.8 million. The Company incurred $0.5 million of transaction costs in connection with the acquisition. The transaction costs were expensed as incurred and are reflected in selling, general and administrative expenses in the consolidated statement of operations. The adjusted consideration consisted of $42.8 million in cash at the time of closing and $13.0 million in notes payable in three equal installments on January 31 st |
Subsequent Event
Subsequent Event | 12 Months Ended |
Feb. 02, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 15 – SUBSEQUENT EVENT On April 11, 2019, the Company announced that the Board had approved a plan to close 159 underperforming stores (the “Closures”) The Company is further evaluating certain additional store closures, although no applicable approvals have been obtained to do so at this time. The Company is currently unable in good faith to make a determination of an estimate of the amount or range of amounts expected to be incurred in connection with the Closures, both with respect to each major type of cost associated therewith and with respect to the total cost, or an estimate of the amount or range of amounts that will result in future cash expenditures. The Company is also currently unable in good faith to make a determination of an estimate of the amount or range of amounts of impairment charge to be incurred in connection with the Closures, or an estimate of the amount or range of amounts of the impairment charge that will result in future cash expenditures. The Company will file an amendment to the Current Report on Form 8-K on April 11, 2019 relating to, among other things, the Closures, after it determines such estimates or ranges of estimates. On April 11, 2019, the Company also announced that it had retained PJ Solomon to assist the Board in undertaking a comprehensive review of the full range of strategic alternatives available to the Company, which may include an evaluation of the Company’s current operating plan, as well as potential alternatives to maximize value, including, among other things, a sale, merger, a consolidation or business combination, further store closures, asset divestitures, financing transactions or restructurings. The Company has not set a timetable for completion of the evaluation process. As previously disclosed, no decision has been made to pursue any specific strategic transaction or any other strategic alternative, and there can be no assurance that the Board’s exploration of strategic alternatives will result in the completion of any transaction or other alternative. The Company does not intend to discuss or disclose developments with respect to this process unless and until the Board has approved a specific transaction, or otherwise deems further disclosure is appropriate or if disclosure is required by applicable law. See also Note 4 under the heading “Recent Developments Relating to the Revolving Credit Facility.” The foregoing recent developments involve various risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Information” and Item 1A: “Risk Factors” |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Feb. 02, 2019 | |
Valuation And Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Schedule II — Valuation and Qualifying Accounts (dollars in thousands) Beginning Balance Additions Charged to Costs and Expenses Deductions and Reclass Adjustments Ending Balance Deducted from applicable assets: Allowance for doubtful accounts Year ended February 2, 2019 $ 1,385 $ 316 $ 341 $ 1,360 Year ended February 3, 2018 $ 1,626 $ 692 $ 933 $ 1,385 Insurance reserves Year ended February 2, 2019 $ 11,285 $ 65,272 $ 68,311 $ 8,246 Year ended February 3, 2018 $ 10,859 $ 42,101 $ 41,675 $ 11,285 |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 02, 2019 | |
Accounting Policies [Abstract] | |
Description of business | Description of business. The primary business of Fred's, Inc. and its subsidiaries ("Fred's", “We”, “Our”, “Us” or “Company”) is the sale of general merchandise through its retail discount stores and full-service pharmacies. In addition, the Company sells general merchandise to its 11 franchisees. As of February 2, 2019, the Company had 557 retail stores, 169 of which had pharmacies and 11 franchised stores located in 15 states mainly in the Southeastern United States. We are licensed to dispense pharmaceuticals in 14 states. |
Basis of Presentation | Basis of Presentation. The Consolidated Financial Statements include the accounts of Fred's, Inc. and its subsidiaries. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles. All significant intercompany accounts and transactions are eliminated. Amounts are in thousands unless otherwise noted. During the second quarter of 2018, the Company completed the sale of its specialty pharmacy business for a cash purchase price of $40.0 million (plus an additional $5.5 million for inventory). During the fourth quarter of 2018, the Company completed its sale of certain prescription files and the related data and records, retail pharmaceutical inventory and certain other assets from 179 of the Company’s retail pharmacy stores for an aggregate cash consideration of approximately $176.7 million. The results of operations for both businesses have been presented as discontinued operations in accordance with Accounting Standards Codification (“ASC” Topic 205-20) Results of Operations – Discontinued operations . In addition, during the fourth quarter of 2018, the Company’s Board of Directors (the “Board”) approved a plan to actively market its headquarters building located in Memphis, TN. The building has been reflected as assets held for sale on the consolidated balance sheets in accordance with ASC 360 – Property Plant & Equipment . Excluding the Assets Held for Sale and Discontinued Operations Refer to Note 2 for additional information on discontinued operations. |
Subsequent Events | Subsequent Events. The Company has evaluated subsequent events through the financial statement issue date. See Note 15: Subsequent Events for additional discussion of the subsequent events through financial statement issuance date. See Note 4. Indebtedness |
Going Concern | Going Concern The Company has experienced significant net losses and negative cash flows from operating activities in recent years, and cannot offer assurance that such losses and negative cash flows will not continue for the foreseeable future. For the fiscal years ended February 2, 2019 and February 3, 2018, we incurred net losses of $136.2 million and $144.5 million, respectively, and our net cash flows used in operating activities were $91.7 million and $44.7 million, respectively. Furthermore, the Company has limited availability under its Revolving Credit Agreement, which along with cash from operations has traditionally been the Company’s primary source of working capital. As of April 30, 2019, the Company had outstanding borrowings of $78.4 million under our Revolving Credit Agreement and excess availability of $37.1 million. Under our Revolving Credit Agreement, we have a financial covenant to maintain at all times excess availability of at least the greater of $21,000,000 and 10% of the commitments, and if excess availability falls below such threshold, it would constitute an event of default under the Revolving Credit Agreement. The Company’s failure to comply with the financial covenants and other obligations under the Revolving Credit Agreement would result in an event of default, which if not cured or waived, may permit acceleration of our indebtedness and other remedies. If our indebtedness is accelerated, whether due to the Revolver EODs described in Note 4 or otherwise, the Company cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all, which could have a material adverse effect on the Company’s business, results of operations and financial condition and could impact our ability to continue as a going concern. Furthermore, our Revolving Credit Agreement has a maturity date of April 9, 2020, and we can provide no assurance that we will be able to renew or refinance such facility on terms acceptable to us or at all. The foregoing conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has evaluated its plans to alleviate this doubt, including engaging PJ Solomon in April 2019 to assist the Company in evaluating its strategic alternatives. In addition, while we analyze these strategic alternatives, the Company is also assessing potential alternative financing arrangements and undertaking a number of operational measures that we believe will enhance our cash position and improve our profitability, including, among other things: • Closing 159 stores by approximately the end of May 2019 and liquidating the inventory located at those stores, along with sale events at our other stores; • Attempting to renegotiate leases with our landlords to more favorable terms; • Reducing general and administrative expenses by eliminating corporate positions and expenses; and • Reducing capital expenditures associated with certain information technology and real estate projects. The Company can provide no assurance, however, regarding the outcome of its evaluation of strategic alternatives, that alternative financing will be on terms acceptable to us or at all, or that the operational measures being undertaken by the Company will be successful in improving the Company’s financial performance, in which case the Company may be unable to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. |
Fiscal year | Fiscal year. The Company utilizes a 52-53-week accounting period which ends on the Saturday closest to January 31. Fiscal years 2018 and 2017, as used herein, refer to the years ended February 2, 2019 and February 3, 2018, respectively. Fiscal year 2018 had 52 weeks and fiscal year 2017 had 53 weeks. |
Use of estimates | Use of estimates. The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates and such differences could be material to the financial statements. |
Cash and cash equivalents | Cash and cash equivalents. Cash on hand and in banks, together with other highly liquid investments which are subject to market fluctuations and having original maturities of three months or less, are classified as cash and cash equivalents. |
Allowance for doubtful accounts | Allowance for doubtful accounts . The Company is reimbursed for drugs sold by its pharmacies by many different payors including insurance companies, Medicare and various state Medicaid programs. The Company estimates the allowance for doubtful accounts based on the aging of receivables and additionally uses payor-specific information to assess collection risk, given its interpretation of the contract terms or applicable regulations. However, the reimbursement rates are often subject to interpretations that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract negotiations occur frequently, necessitating the Company’s continual review and assessment of the estimation process. Senior management reviews account receivable on a quarterly basis to determine if any receivables are potentially uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance account. |
Inventories | Inventories. Merchandise inventories are stated at the lower of cost or net realizable value (NRV) using the retail first-in, first-out method for goods in our stores and the cost first-in, first-out method for goods in our distribution centers. The retail inventory method is a reverse mark-up, averaging method which has been widely used in the retail industry for many years. This method calculates a cost-to-retail ratio that is applied to the retail value of inventory to determine the cost value of inventory and the resulting cost of goods sold and gross margin. The assumption that the retail inventory method provides for valuation at lower of cost or NRV and the inherent uncertainties therein are discussed in the following paragraphs. In order to assure valuation at the lower of cost or NRV, the retail value of our inventory is adjusted on a consistent basis to reflect current market conditions. These adjustments include increases to the retail value of inventory for initial markups to set the selling price of goods or additional markups to adjust pricing for inflation and decreases to the retail value of inventory for markdowns associated with promotional, seasonal or other declines in the market value. Because these adjustments are made on a consistent basis and are based on current prevailing market conditions, they approximate the carrying value of the inventory at NRV. Therefore, after applying the cost to retail ratio, the cost value of our inventory is stated at the lower of cost or NRV as is prescribed by U.S. GAAP. Because the approximation of net realizable value under the retail inventory method is based on estimates such as markups, markdowns and inventory losses (shrink), there exists an inherent uncertainty in the final determination of inventory cost and gross margin. In order to mitigate that uncertainty, the Company has a formal review by product class which considers such variables as current market trends, seasonality, weather patterns and age of merchandise to ensure that markdowns are taken currently, or a markdown reserve is established to cover future anticipated markdowns. This review also considers current pricing trends and inflation to ensure that markups are taken if necessary. The estimation of inventory losses (shrink) is a significant element in approximating the carrying value of inventory at net realizable value, and as such, the following paragraph describes our estimation method as well as the steps we take to mitigate the risk of this estimate in the determination of the cost value of inventory. The Company calculates inventory losses (shrink) based on actual inventory losses occurring as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between yearly physical inventory counts. The estimate for shrink occurring in the interim period between physical counts is calculated on a store-specific basis and is based on history, as well as performance on the most recent physical count. It is calculated by multiplying each store’s shrink rate, which is based on the previously mentioned factors, by the interim period’s sales for each store. Additionally, the overall estimate for shrink is adjusted at the corporate level to a three-year historical average to ensure that the overall shrink estimate is the most accurate approximation of shrink based on the Company’s overall history of shrink. The three-year historical estimate is calculated by dividing the “book to physical” inventory adjustments for the trailing 36 months by the related sales for the same period. In order to reduce the uncertainty inherent in the shrink calculation, the Company first performs the calculation at the lowest practical level (by store) using the most current performance indicators. This ensures a more reliable number, as opposed to using a higher-level aggregation or percentage method. The second portion of the calculation ensures that the extreme negative or positive performance of any particular store or group of stores does not skew the overall estimation of shrink. This portion of the calculation removes additional uncertainty by eliminating short-term peaks and valleys that could otherwise cause the underlying carrying cost of inventory to fluctuate unnecessarily. The methodology that we have applied in estimating shrink has resulted in variability that is not material to our financial statements. Management believes that the Company’s retail inventory method provides an inventory valuation which reasonably approximates cost and results in valuing inventory at the lower of cost or NRV. For pharmacy department inventories, which were approximately $13.2 million, and $11.5 million at February 2, 2019 and February 3, 2018, respectively, cost was determined using the retail LIFO ("last-in, first-out") method in which inventory cost is maintained using the retail inventory method, then adjusted by application of the highly inflationary Producer Price Index published by the U.S. Department of Labor for the cumulative annual periods. The current cost of inventories was less than the LIFO cost by approximately $28.8 million at February 2, 2019 and $28.8 million at February 3, 2018 respectively. The LIFO reserve remained flat The Company has historically included an estimate of inbound freight and certain general and administrative costs in merchandise inventory as prescribed by U.S. GAAP. These costs include activities surrounding the procurement and storage of merchandise inventory such as merchandise planning and buying, warehousing, accounting, information technology and human resources, as well as inbound freight. The total amount of procurement and storage costs and inbound freight included in merchandise inventory at February 2, 2019 is $21.3 million compared to $17.3 million at February 3, 2018. T he Company records inventory charges for the clearance of products that management identifies as low-productive and those that do not fit the Company’s go-forward model. In accordance with ASC 330, Inventory , during fiscal year 2017, the Company recorded a below-cost inventory adjustment of approximately $16.4 million (including $2.1 million for the accelerated recognition of freight capitalization expense), leaving $4.3 million in the reserve related to 2017 strategic initiatives. The inventory adjustment was recorded in cost of goods sold to value inventory at the lower of cost or net realizable value on inventory identified as low-productive. As of February 2, 2019, the Company had utilized the remaining $6.1 million (including $1.1 million for the accelerated recognition of freight capitalization expense) of the 2016 and 2017 strategic initiatives. During the fiscal year of 2018, $0.4 million was recorded as inventory charges for inventory clearance of products that management identified as low-productive and did not fit the go-forward model, however, the $0.4 million was utilized during 2018. No additional charges were recorded during 2018 related to the low productive products. The following table illustrates the inventory charges related to the inventory clearance initiatives discussed in the previous paragraph (in millions): Balance at February 3, 2018 Additions Utilization Ending Balance February 2, 2019 Inventory markdown on low-productive inventory (2016 initiatives) $ 1.7 $ 0.4 $ (2.1 ) $ — Inventory provision for freight capitalization expense (2016 initiatives) 0.1 — (0.1 ) — Inventory markdown on low-productive inventory (2017 initiatives) 3.3 — (3.3 ) — Inventory provision for freight capitalization expense (2017 initiatives) 1.0 (1.0 ) — Total $ 6.1 $ 0.4 $ (6.5 ) $ — |
Property and equipment | Property and equipment. Property and equipment are carried at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets and presented in depreciation and amortization. Improvements to leased premises are amortized using the straight-line method over the shorter of the initial term of the lease or the useful life of the improvement. Leasehold improvements added late in the lease term are amortized over the lesser of the remaining term of the lease (including the upcoming renewal option, if the renewal is reasonably assured) or the estimated useful life of the improvement. Gains or losses on the sale of assets are recorded at disposal. The following average estimated useful lives are generally applied: Building and building improvements 8-31.5 years Furniture, fixtures and equipment 3-10 years Leasehold improvements 3-10 years or term of lease, if shorter Auto mobiles and vehicles 3-10 years or term of lease, if shorter Airplane 9 years Assets under capital lease are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term (regardless of renewal options), if shorter, and the charge to earnings is included in depreciation expense in the Consolidated Financial Statements. There was no amortization expense on assets under capital lease for 2018. |
Leases | Leases. Certain operating leases include rent increases during the initial lease term. For these leases, the Company recognizes the related rental expense on a straight-line basis over the term of the lease (which includes the pre-opening period of construction, renovation, fixturing and merchandise placement) and records the difference between the amounts charged to operations and amounts paid as a rent liability. Rent expense is recognized on a straight-line basis over the lease term, which includes any rent holiday period. The Company recognizes contingent rental expense when the achievement of specified sales targets are considered probable in accordance with ASC 840, Leases The Company occasionally receives reimbursements from landlords to be used towards construction of the store the Company intends to lease. The reimbursement is primarily for the purpose of performing work required to divide a much larger location into smaller segments, one of which the Company will use for its store. This work could include the addition or demolition of walls, separation of plumbing, utilities, electrical work, entrances (front and back) and other work as required. Leasehold improvements are recorded at their gross costs including items reimbursed by landlords. The reimbursements are initially recorded as a deferred credit and then amortized as a reduction of rent expense over the initial lease term. Based upon an overall analysis of store performance and expected trends, we periodically evaluate the need to close underperforming stores. When we determine that an underperforming store should be closed, and a lease obligation still exists, we record the estimated future liability associated with the rental obligation on the date the store is closed in accordance with ASC 420, Exit or Disposal Cost Obligations |
Impairment of long-lived assets | Impairment of long-lived assets. The Company’s policy is to review the carrying value of all property and equipment as well as purchased intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets , we review for impairment all stores open at least 3 years or remodeled more than 2 years ago. Impairment results when the carrying value of the assets exceeds the undiscounted future cash flows over the life of the lease, or 10 years for owned stores. Our estimate of undiscounted future cash flows over the lease term is based upon historical operations of the stores and estimates of future store profitability which encompasses many factors that are subject to management’s judgment and are difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The fair value is based on estimated market values for similar assets or other reasonable estimates of fair market value based upon using a discounted cash flow model During the fiscal year 2018, the Company continued to incur significant operating losses which further yielded net losses within the consolidated statement of operations. During 2017, current economic conditions indicated strength in the retail market, however; during the fiscal year 2018, the Company continued to incur declines in sales and gross profits, as consumer demand continued to shrink, indicating softness in the retail market. The Company witnessed other companies within the market filing for bankruptcy and/or shutting down operations. Given the outlook on the retail market, and the change of in the Company’s management, the decision was made to re-evaluate the standing forecast for operating results and cash flows for the upcoming year and for multiple subsequent years and adjusted the forecast to align with the demands of the market and thus providing for a triggering event, which caused the Company to reassess the carrying value of its current long-lived assets, including intangibles. The Company determined that the long-lived assets failed Step 1 of the two step process and determined an impairment expense may be necessary for the difference between the carrying value and fair value of the assets. The Company compared the fair value to carrying value or net book value of the long-lived assets, including intangibles, for both open and closed stores to determine if the carrying value of the asset exceeded the calculated fair value. The impairment test yielded a difference between carrying value and the fair value and an impairment charge of $27.8 million was recorded as the carrying value of the assets were deemed not to be recoverable. Additionally, during fiscal year 2018, the Company recorded an impairment charge of $4.0 million related to fixed assets in accordance with ASC 360 Impairment or Disposal of Long-Lived Assets. The assets impaired were not included as a part of the Walgreens sale, however; During fiscal year 2017, in association with planned closure of underperforming stores and pharmacies and based on the review of the carrying value of assets and the undiscounted future cash flows for these stores, the Company recorded impairment charges in the amount of $2.5 million. The impairment charge was recorded within impairment expense on the consolidated statement of operations. |
Impairment of goodwill and other intangibles | Impairment of goodwill and other intangibles. Goodwill and intangibles with indefinite lives must be tested for impairment annually or more frequently if events or changes in circumstances indicate that the related asset might be impaired in accordance with ASC 350, Intangibles – Goodwill and Other . An impairment of an investment in an unconsolidated affiliate is recognized when circumstances indicate that a decline in the investment value is other than temporary. An impairment loss should be recognized only if the carrying amount of the asset/goodwill is not recoverable and exceeds its fair value. Estimated fair values could change if, for example, there are changes in the business climate, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows or market capitalization. While we believe we have made reasonable assumptions to calculate the fair value, if future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. The analysis was broken down into two reporting units: the continuing operations and the discontinued specialty pharmacy (refer to Note 2 for more discussion surrounding discontinued operations). As of November 1, 2017, the estimated fair value of the business enterprise of the continuing operations was below the carrying value. As a result of the analysis, management recorded an impairment to goodwill of $87 thousand in the fourth quarter of 2017, the entire balance of goodwill for the continuing operations. The estimated fair value of the business enterprise for the discontinued specialty pharmacy exceeded the carrying value by approximately 10 percent and as a result did not have any impairment to goodwill. On February 3, 2018, the Company assessed the discontinued specialty pharmacy’s goodwill for impairment as a result of the plan to actively market it for sale and the deterioration in the price of our common stock and the resulting reduced market capitalization. As a result of the interim impairment test, the Company recognized a goodwill impairment charge of $10.8 million to its discontinued specialty pharmacy business. The Company determined the fair value of the reporting units using a weighted combination of the discounted cash flow method and the guideline company method. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating margins, weighted average costs of capital and future market conditions, among others. The Company believes the estimates and assumptions used in our impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in a materially different calculations of fair value and determinations of whether or not an impairment is indicated. Under the discounted cash flow method, the Company determined fair value based on estimated future cash flows of each reporting unit including estimates for capital expenditures, discounted to present value using the risk-adjusted rate, which reflect the overall level of inherent risk of the reporting unit. Cash flow projections are derived from one-year budgeted amounts and five-year operating forecasts plus an estimate of later period cash flows, all of which are evaluated by management. Subsequent period cash flows are developed for each reporting unit using growth rates that management believes are reasonably likely to occur. Under the guideline company method, the Company determined the estimated fair value of each of our reporting units by applying valuation multiples of comparable publicly-traded companies to each reporting unit’s projected revenue and EBITDA to determine the preliminary enterprise value. From that preliminary enterprise value, it is further adjusted by adding cash and cash equivalents and subtracting interest-bearing debt to determine the cash-adjusted equity value. In addition, the Company estimated a reasonable control premium representing the incremental value that accrues to the majority owner from the opportunity to dictate the strategic and operational actions of the business. One key assumption for the measurement of an impairment is management’s estimate of future cash flows and EBITDA. These estimates are based on the annual budget for the upcoming year and forecasted amounts for multiple subsequent years. The annual budget process is typically completed near the annual goodwill impairment testing date, and management uses the most recent information for the annual impairment tests. The forecast is also subjected to a comprehensive update annually in conjunction with the annual budget process and is revised periodically to reflect new information and/or revised expectations. The estimates of future cash flows and EBITDA are subjective in nature and are subject to impacts from the business risks described in “Item 1A. Risk Factors.” Therefore, the actual results could differ significantly from the amounts used for goodwill impairment testing, and significant changes in fair value estimates could occur in a given period. Such changes in fair value estimates could result in additional impairments in future periods. Therefore, the actual results could differ significantly from the amounts used for goodwill impairment testing, and significant changes in fair value estimates could occur in a given period, resulting in additional impairments. As of February 2, 2019, there was no goodwill presented within the consolidated balance sheet. During 2017, the Company recorded $1.1 million for the accelerated recognition of amortization of intangible assets associated with the closing pharmacies. Assets held for sale and Discontinued Operations During the fourth quarter of 2018, the Company recorded an impairment charge of $1.5 million related to the non-compete agreements associated with the Retail Pharmacy sale. The non-compete agreements were all associated with the related Retail Pharmacy sale. |
Intangible assets | Intangible assets. Other identifiable intangible assets primarily represent customer lists associated with acquired pharmacies and are being amortized on a straight-line basis over seven years. Based on the Company's historical experience, seven years approximates the actual lives of these assets. (in thousands) February 2, 2019 February 3, 2018 Estimated Useful Lives (years) Customer prescription files $ 18,743 $ 27,828 7 Non-compete agreements 2,334 5,356 3 - 15 Software 386 1,048 3 Other — 115 — $ 21,463 $ 34,347 Amortization expense for 2018 and 2017, was $9.8 million and $10.6 million, respectively. Estimated amortization expense for the assets recognized as of February 2, 2019, in millions for each of the next 7 years is as follows: (in millions) 2019 2020 2021 2022 2023 Thereafter Estimated amortization expense $ 7.4 $ 6.2 $ 4.7 $ 2.3 $ 0.8 $ 0.1 |
Goodwill | Goodwill . The Company records goodwill when the purchase price exceeds the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill and intangibles under ASC 350, Intangibles – Goodwill and Other , which does not permit amortization, but requires the Company to test goodwill and other indefinite-lived assets for impairment annually or whenever events or circumstances indicate that impairment may exist. On a continuing basis, the company no longer has goodwill. |
Revenue recognition | Revenue recognition. The Company markets goods and services through 557 Company-owned stores and 11 franchised stores. Net sales include sales of merchandise from Company-owned stores, net of returns and exclusive of sales taxes. Sales to franchised stores are recorded when the merchandise is shipped from the Company’s warehouse. The vast majority of Fred’s contracts with customers are made at the point of sale (POS) in the retail stores, and the performance obligation is the transfer of merchandise which is satisfied at POS when customer pays for merchandise and title transfers to them. 340B Revenues We evaluated principal versus agent considerations with regards to the 340B Direct program under ASC 606, Revenue from Contracts with Customers Revenue from sales of pharmaceutical products is recognized at the time the prescription is filled. This approximates when a customer picks up the prescription or when the prescription has been delivered and is recorded net of an allowance for prescriptions that were filled but not picked up by the customer. For all periods presented, there is no material difference between the revenue recognized at the time the prescription is filled and that which would be recognized when the customer picks up the prescription. Prescriptions are generally not returnable. Gift Card and Breakage When customers purchase gift cards, the sale is not recognized until the card is redeemed. The gift cards are not always fully redeemed and as such, the Company recognizes breakage. The Company will recognize aged liabilities as revenue when the likelihood of the gift card being redeemed is remote. The Company records a gift card liability on the date the gift card is issued to the customer. Revenue is recognized, and the gift card liability is reduced as the customer redeems the gift card. During 2018, we recognized no gift card breakage revenue. During 2017 we recognized $0.3 million of gift breakage revenue, or less than $0.01 per share. Layaway Plans Store layaways are agreements with our customers to provide or deliver goods for a specified price at a future date. Layaway programs run annually for a duration of less than one year and are most popular during the Christmas seasons. Under the Company’s layaway plan, the customer is obligated to pay only the amount equivalent to the value of the good plus sales tax. The Company does not assess a layaway fee or interest but requires an upfront deposit. The customer does not take delivery of the merchandise until the full value is collected. Our performance obligation is the transfer of merchandise which is satisfied at the point of customer pick-up, not at transaction initiation. Any payments received prior to customer pick-up are considered advance payments and deferred and recognized when the performance obligation is satisfied. Layaway sales are deferred when the customer transaction is initiated and are recognized as revenue when the layaway merchandise is transferred. In addition, the Company charges its franchised stores a fee based on a percentage of their purchases from the Company. These fees represent a reimbursement for use of the Fred's name and other administrative costs incurred on behalf of the franchised stores. Total franchise income for 2018 and 2017 was $0.6 million, $0.7 million, respectively. Disaggregated Revenues In the following table, consolidated sales are disaggregated by major merchandising category. For the Years Ended February 2, 2019 February 3, 2018 Pharmacy $ 406,559 $ 414,753 Consumables 494,515 527,641 Household Goods and Softlines 357,639 438,355 Franchise 13,033 15,096 Total Sales Mix $ 1,271,746 $ 1,395,845 |
Cost of goods sold | Cost of goods sold. Cost of goods sold includes the purchase cost of inventory and the freight costs to the Company’s distribution centers. Warehouse and occupancy costs are not included in cost of goods sold, but are included as a component of selling, general and administrative expenses. Depreciation and amortization related to warehouse and occupancy costs are included in depreciation and amortization. |
Vendor Rebates And Allowances | Vendor rebates and allowances. The Company receives rebates for a variety of merchandising activities, such as volume commitment rebates, relief for temporary and permanent price reductions, cooperative advertising programs, and for the introduction of new products in our stores. ASC 606, Revenue from Contracts with Customers addresses the accounting and income statement classification for consideration given by a vendor to a retailer in connection with the sale of the vendor’s products or for the promotion of sales of the vendor’s products. Such consideration received from vendors is reflected as a decrease in prices paid for inventory and recognized in cost of sales as the related inventory is sold, unless specific criteria are met qualifying the consideration for treatment as reimbursement of specific, identifiable incremental costs. |
Selling, general and administrative expenses | Selling, general and administrative expenses. The Company includes buying, warehousing, distribution, advertising, depreciation and amortization and occupancy costs in selling, general and administrative expenses. |
Advertising | Advertising. In accordance with ASC 720-35, Advertising Costs , the Company charges advertising, including production costs, to selling, general and administrative expense on the first day of the advertising period. Gross advertising expenses for 2018 and 2017 $14.5 million and $23.2 million, respectively. Gross advertising expenses were reduced by vendor cooperative advertising allowances of $14.0 million and $20.9 million for 2018 and 2017, respectively. |
Pre-opening costs | Pre-opening costs. The Company charges to expense the pre-opening costs of new stores as incurred. These costs are primarily labor to stock the store, rent, pre-opening advertising, store supplies and other expendable items. |
Fair value of financial instruments | Fair value of financial instruments. Fair value is defined as 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. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. • Level 1, defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3, defined as unobservable inputs for the asset or liability, which are based on an entity’s own assumptions as there is little, if any, observable activity in identical assets or liabilities. At February 2, 2019, the Company did not have any outstanding derivative instruments. The recorded value of the Company’s financial instruments, which include cash and cash equivalents, receivables, accounts payable and indebtedness, approximates fair value. The following methods and assumptions were used to estimate fair value of each class of financial instrument: (1) the carrying amounts of current assets and liabilities approximate fair value because of the short maturity of those instruments and (2) the fair value of the Company’s indebtedness is estimated based on the current borrowing rates available to the Company for bank loans with similar terms and average maturities. Most of our indebtedness is under variable interest rates. |
Insurance reserves | Insurance reserves . The Company is largely self-insured for workers compensation, general liability and employee medical insurance. The Company’s liability for self-insurance is determined based on claims known at the time of determination of the reserve and estimates for future payments against incurred losses and claims that have been incurred but not reported. Estimates for future claims costs include uncertainty because of the variability of the factors involved, such as the type of injury or claim, required services by the providers, healing time, age of claimant, case management costs, location of the claimant, and governmental regulations. These uncertainties or a deviation in future claims trends from recent historical patterns could result in the Company recording additional expenses or expense reductions that might be material to the Company’s results of operations. The Company’s worker's compensation and general liability insurance policy coverages run August 1 through July 31 of each fiscal year. Our employee medical insurance policy coverage runs from January 1 through December 31. The Company purchases excess insurance coverage for certain of its self-insured liabilities, or stop loss coverage. The stop loss limits for excessive or catastrophic claims for general liability remained at $350,000, worker’s compensation remained at $500,000 and employee medical changed to $250,000 effective January 1, 2017. The Company’s insurance reserve was $8.4 million and $11.3 million as of February 2, 2019 and February 3, 2018, respectively. Changes in the reserve for the year ended February 2, 2019, were attributable to additional reserve requirements of $70.4 million netted with payments of $68.3million. |
Stock-based compensation | Stock-based compensation. The Company uses the fair value recognition provisions of ASC 718, Compensation – Stock Compensation , whereby the Company recognizes share-based payments to employees and directors in the Consolidated Statements of Operations on a straight-line basis for shares that cliff vest and under the graded vesting attribution method for those shares that have graded vesting. The Company calculates the income tax effects of stock-based compensation in accordance with ASC 718, Compensation Stock Compensation ASC 718 also requires the benefits of income tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. ASC 718 results depends on, among other things, levels of share-based payments granted, actual forfeiture rates and the timing of option exercises. Stock-based compensation expense is based on awards ultimately expected to vest, and therefore has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant based on the Company’s historical forfeiture experience and will be revised in subsequent periods if actual forfeitures differ from those estimates. The Company adopted the provisions of ASU 2016-09 beginning with its fiscal 2017 first quarter. The ASU provisions did not have a material impact on the Company’s income tax expense as a result of the valuation allowance position eliminating the tax effects on the income statement. |
Income taxes | Income Taxes. The Company reports income taxes in accordance with ASC 740, Income Taxes . Under ASC 740, the asset and liability method are used for computing future income tax consequences of events, which have been recognized in the Company’s Consolidated Financial Statements or income tax returns. Deferred income tax expense or benefit is the net change during the year in the Company’s deferred income tax assets and liabilities See Note 6: Income Taxes for additional information. ASC 740 prescribes a minimum recognition threshold of more-likely-than-not to be sustained upon examination that a tax position must meet before being recognized in the financial statements. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. The Company recognizes and measures tax benefits from uncertain tax positions if it is "more likely than not" that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon final settlement with a taxing authority fully knowing all relevant information. Additionally, ASC 740 provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. See Note 6: Income Taxes for additional information. ASC 740 also requires that interest and penalties required to be paid on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the tax return and the tax benefit recognized in the financial statements. The Company includes potential interest and penalties recognized in accordance with ASC 740 in the financial statements as a component of income tax expense. Accrued interest and penalties related to our unrecognized tax benefits are recorded in the consolidated balance sheet within “ Other non-current liabilities The Company records valuation allowances to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. Valuation allowances against the deferred tax assets totaled $63.0 million and $59.3 million on February 2, 2019 and February 3, 2018, respectively. |
Business segments | Business segments. The Company is organized around individual stores. The Company stores have similar economic characteristics, offer pharmaceuticals or general merchandise consistent with all other locations, and have discrete financial information. Each store therefore represents an operating segment that is aggregated into one reportable segment |
Comprehensive income | Comprehensive income. Comprehensive income consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that under generally accepted accounting principles are recorded as an element of shareholders’ equity but are excluded from net income. The Company applies the guidance of ASC 715, Compensation – Retirement Benefits to the accounting and disclosure requirements of accumulated other comprehensive income. See Note 11: Commitments and Contingencies for additional information. |
Reclassifications | Reclassifications. Certain prior year amounts have been reclassified to conform to the 2018 presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory In February 2016, the FASB established ASU No. 2016-02 Leases Leases The Company has selected a lease accounting and administration software to maintain all leases in compliance with this pronouncement and is currently working on the software implementation and testing, as well as accounting process development to ensure compliance with this standard upon adoption in 2019. We are evaluating the necessary changes to our controls and processes to address the lease standard. Adoption of the standard is expected to have a material impact on our consolidated statement of financial position for the addition of lease assets and liabilities, primarily related to real estate operating leases. ASU 2016-02 also requires expanded disclosure regarding the amounts, timing and uncertainties of cash flows related to a company’s lease portfolio. We are evaluating these disclosure requirements and are incorporating the collection of relevant data into our processes in preparation for disclosure in our first 10-Q filing for fiscal 2019. We do not expect ASU 2016-02 to have a material impact on our annual results of operations and/or cash flows. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers No retrospectively application was required. |
Termination of Asset Purchase Agreement | Termination of Asset Purchase Agreement On December 19, 2016, Fred’s and its wholly-owned subsidiary, AFAE, LLC (“Buyer”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Rite Aid Corporation (“Rite Aid”) and Walgreens Boots Alliance, Inc. (“Walgreens”), pursuant to which Buyer agreed to purchase 865 stores, certain intellectual property and other tangible assets (collectively, the “Assets”) and to assume certain liabilities for a cash purchase price of $950 million (the “Rite Aid Transaction”). Pursuant to Section 8.01(g) of the Asset Purchase Agreement, each of Buyer, Walgreens or Rite Aid was permitted to terminate the Asset Purchase Agreement upon the termination of that certain Agreement and Plan of Merger, dated as of October 27, 2015, among Walgreens, Rite Aid and the other parties thereto (as amended, the “Merger Agreement”). On June 29, 2017, the Merger Agreement was terminated and, accordingly, the Asset Purchase Agreement was also terminated, effective immediately. In connection with the termination of the Asset Purchase Agreement, the Company received a termination fee payment of $25 million on June 30, 2017 from Walgreens. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Accounting Policies [Abstract] | |
Schedule of inventory impairment charges | The following table illustrates the inventory charges related to the inventory clearance initiatives discussed in the previous paragraph (in millions): Balance at February 3, 2018 Additions Utilization Ending Balance February 2, 2019 Inventory markdown on low-productive inventory (2016 initiatives) $ 1.7 $ 0.4 $ (2.1 ) $ — Inventory provision for freight capitalization expense (2016 initiatives) 0.1 — (0.1 ) — Inventory markdown on low-productive inventory (2017 initiatives) 3.3 — (3.3 ) — Inventory provision for freight capitalization expense (2017 initiatives) 1.0 (1.0 ) — Total $ 6.1 $ 0.4 $ (6.5 ) $ — |
Schedule of estimated useful life | The following average estimated useful lives are generally applied: Building and building improvements 8-31.5 years Furniture, fixtures and equipment 3-10 years Leasehold improvements 3-10 years or term of lease, if shorter Auto mobiles and vehicles 3-10 years or term of lease, if shorter Airplane 9 years |
Schedule of Other Identifiable Intangible Assets | Other identifiable intangible assets primarily represent customer lists associated with acquired pharmacies and are being amortized on a straight-line basis over seven years. Based on the Company's historical experience, seven years approximates the actual lives of these assets. (in thousands) February 2, 2019 February 3, 2018 Estimated Useful Lives (years) Customer prescription files $ 18,743 $ 27,828 7 Non-compete agreements 2,334 5,356 3 - 15 Software 386 1,048 3 Other — 115 — $ 21,463 $ 34,347 |
Schedule of Estimated Amortization Expense for Assets Recognized | Estimated amortization expense for the assets recognized as of February 2, 2019, in millions for each of the next 7 years is as follows: (in millions) 2019 2020 2021 2022 2023 Thereafter Estimated amortization expense $ 7.4 $ 6.2 $ 4.7 $ 2.3 $ 0.8 $ 0.1 |
Disaggregated Revenues | In the following table, consolidated sales are disaggregated by major merchandising category. For the Years Ended February 2, 2019 February 3, 2018 Pharmacy $ 406,559 $ 414,753 Consumables 494,515 527,641 Household Goods and Softlines 357,639 438,355 Franchise 13,033 15,096 Total Sales Mix $ 1,271,746 $ 1,395,845 |
Assets Held-For-Sale and Disc_2
Assets Held-For-Sale and Discontinued Operations (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Assets Held For Sale And Discontinued Operations [Abstract] | |
Schedule of major classes of assets and liabilities | The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities held for sale in the accompanying consolidated balance sheet for each of the periods presented: Specialty Pharmacy Retail Pharmacy Headquarters Building Total Assets Held for Sale February 2, February 3, February 2, February 3, February 2, February 3, February 2, February 3, 2019 2018 2019 2018 2019 2018 2019 2018 (in thousands) Current assets: Receivables, less allowance for doubtful accounts $ — $ 15,983 $ — $ — $ — $ — $ — $ 15,983 Inventories — 3,756 — 15,344 — — — 19,100 Other non-trade receivables — 152 — — — — — 152 Prepaid expenses and other current assets — 12 — — — — — 12 Total current assets held for sale $ — $ 19,903 $ — $ 15,344 $ — $ — $ — $ 35,247 Property and equipment, less accumulated depreciation and amortization — 1,036 — — 4,839 4,927 4,839 5,963 Goodwill — 30,609 — — — — — 30,609 Intangible assets, net — 9,533 — 20,541 — — — 30,074 Other noncurrent assets, net — 539 — — — — — 539 Total noncurrent assets held for sale $ — $ 41,717 $ — $ 20,541 $ 4,839 $ 4,927 $ 4,839 $ 67,185 Current liabilities: Accounts payable — 22,045 — — — — — 22,045 Accrued expenses and other — 4,527 — — — — — 4,527 Total current liabilities held for sale $ — $ 26,572 $ — $ — $ — $ — $ — $ 26,572 Deferred income taxes — — — — — — — — Other noncurrent liabilities — 48 — — — — — 48 Total noncurrent liabilities held For sale $ — $ 48 $ — $ — $ — $ — $ — $ 48 |
Schedule of discontinued operations | The following table summarizes the results of discontinued operations for the years ended February 2, 2019 and February 3, 2018, respectively. Discontinued Operations – Specialty Pharmacy (in thousands) 2018 2017 Revenues $ 90,112 $ 275,952 Cost of Goods Sold 88,454 264,153 Gross Margin 1,658 11,799 Depreciation and amortization 796 2,630 Impairment expense — 11,422 Selling, general and administrative expenses 11,952 11,778 Loss from discontinued operations before income taxes (11,090 ) (14,031 ) Loss on sale of assets (446 ) — Income tax expense — (3,113 ) Loss from discontinued operations, net of tax $ (11,536 ) $ (10,918 ) Discontinued Operations – Retail Pharmacy (in thousands) 2018 2017 Revenues $ 329,326 $ 409,560 Cost of Goods Sold 264,712 314,216 Gross Margin 64,614 95,344 Depreciation and amortization 4,071 7,279 Impairment Expense — 1,123 Selling, general and administrative expenses 70,537 81,670 Income (Loss) from discontinued operations before income taxes (9,994 ) 5,272 Gain on sale of assets 145,746 — Income tax expense — — Income from discontinued operations, net of tax $ 135,752 $ 5,272 Total Discontinued Operations (in thousands) 2018 2017 Revenues $ 419,438 $ 685,512 Cost of Goods Sold 353,166 578,369 Gross Margin 66,272 107,143 Depreciation and amortization 4,867 9,909 Impairment Expense — 12,545 Selling, general and administrative expenses 82,489 93,448 Loss from discontinued operations before income taxes (21,084 ) (8,759 ) Gain on sale of assets 145,300 — Income tax expense — (3,113 ) Income (loss) from discontinued operations, net of tax $ 124,216 $ (5,646 ) |
Detail of Certain Balance She_2
Detail of Certain Balance Sheet Accounts (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of property and equipment | Details of certain balance sheet accounts as of February 2, 2019 and February 3, 2018 are as follows: (in thousands) Property and equipment, at cost: 2018 2017 Buildings and building improvements $ 101,220 $ 114,843 Leasehold improvements 85,148 86,268 Automobiles and vehicles 3,751 4,525 Furniture, fixtures and equipment 278,793 286,962 468,911 492,598 Less: Accumulated depreciation and amortization (413,228 ) (390,633 ) 55,683 101,965 Construction in progress 2,790 590 Land 7,873 7,984 Total Property and equipment, at depreciated cost $ 66,346 $ 110,539 |
Schedule of other non-trade receivables | (in thousands) Other non-trade receivables: 2018 2017 Vendor receivables $ 19,337 $ 22,073 Income tax receivable 848 1,812 Franchise stores receivable 1,700 1,688 Insurance claims receivable 238 — Coupon receivable 364 375 Other 7,926 5,552 Total other non-trade receivable $ 30,412 $ 31,500 |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets: 2018 2017 Prepaid rent $ 4,115 $ 4,214 Supplies 3,247 3,061 Other 2,712 2,780 Total prepaid expenses and other current assets $ 10,074 $ 10,055 |
Schedule of accrued expenses and other | (in thousands) Accrued expenses and other: 2018 2017 Payroll and benefits $ 13,361 $ 12,579 Accrued payroll taxes and withholdings $ 2,134 $ 2,963 Insurance reserves 8,357 11,290 Legal and professional fees 3,037 7,048 Closed Store Reserve 4,548 6,484 Property, sales and use taxes payable 7,867 9,323 Project cost accrual — 2,512 Deferred / Contingent Rent 2,130 1,637 Accrued import liability 2,332 — Accrued pharmacy programs expense 5,056 4,937 Other 9,530 9,204 Total accrued expenses and other $ 58,352 $ 67,977 |
Schedule of other noncurrent liabilities | Other noncurrent liabilities: 2018 2017 Unearned vendor allowances (see Note 1 - Vendor Rebates and Allowances) $ 15,015 $ 25,170 Uncertain tax positions — 372 Total other noncurrent liabilities $ 15,015 $ 25,542 |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | The table below shows the notes payable, along with the long-term debt related to the mortgages discussed above, due for the next five years as of February 2, 2019, which are both related to continuing operations. (in thousands) 2019 2020 2021 2022 2023 Thereafter Total Notes payable $ — $ 62,908 $ 4,333 $ 4,333 $ — $ — $ 71,575 Mortgage loans on land & buildings 68 75 1,369 — $ — — 1,512 Total $ 68 $ 62,983 $ 5,703 $ 4,333 $ — $ — $ 73,087 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value and carrying values for the revolving line of credit, notes payable and mortgage loans | The table below details the fair value and carrying values for the revolving line of credit and mortgage loans as of the following years: February 2, 2019 February 3, 2018 (dollars in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 58,575 $ 58,573 $ 153,431 $ 153,431 Mortgage loans on land & buildings 1,512 1,684 1,579 1,684 Notes payable 13,000 12,333 13,000 12,421 Total 73,087 72,590 168,010 167,536 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision (benefit) for income taxes consists of the following for the years ended February 2, 2019 and February 3, 2018. (dollars in thousands) 2018 2017 Current Federal $ 57 $ — State (113 ) 234 (56 ) 234 Deferred Federal 87 705 State 21 302 108 1,007 Provision for Income Tax $ 52 $ 1,241 |
Schedule of deferred income tax assets and deferred income tax liabilities | The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities as of year-end are presented below: (dollars in thousands) 2018 2017 Deferred income tax assets: Accrual for incentive compensation $ 4,515 $ 2,782 Allowance for doubtful accounts 355 653 Insurance accruals 2,171 1,508 Other accruals 642 604 Net operating loss carryforwards 41,333 48,087 Deferred Revenue 199 352 Federal benefit on state reserves — 55 WOTC Credit Carryforward 6,259 5,295 Property, plant and equipment 4,064 — Amortization of intangibles 10,478 16,925 Postretirment benefits 142 159 Contribution Carryforward 312 315 Total deferred income tax assets 70,470 76,735 Less: Valuation allowance 63,046 59,299 Deferred income tax assets, net of valuation allowance 7,424 17,436 Deferred income tax liabilities: Postretirement benefits — — Property, plant and equipment — (5,567 ) Inventory valuation (6,950 ) (11,173 ) Prepaid expenses (474 ) (588 ) Total deferred income tax liabilities (7,424 ) (17,328 ) Net deferred income tax assets/liabilities $ — $ 108 |
Schedule of reconciliation of the statutory federal income tax rate | A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows: 2018 2017 Income tax provision at statutory rate 21.0 % 33.7 State income taxes, net of federal benefit 4.7 3.5 Tax credits, principally jobs 0.2 0.6 Uncertain tax provisions 0.1 — Change in valuation allowance (25.8 ) (25.4 ) TCJA Rate Change — (13.7 ) Other — 1.3 Permanent differences (0.2 ) (0.9 ) Effective income tax rate (0.0 ) % (0.9 ) |
Schedule of unrecognized tax benefits | A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows: (in millions) 2018 2017 Beginning balance $ 2.3 $ 0.4 Additions for tax positions of prior years — 0.5 Additions for current year tax positions — 1.4 Deductions for tax position for prior years (2.0 ) — Settlements of tax position for prior years (0.3 ) — Balance at February 2,2019 $ — $ 2.3 |
Long-term Leases (Tables)
Long-term Leases (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Leases [Abstract] | |
Schedule of future minimum rental payments | Future minimum rental payments under all operating leases as of February 2, 2019 are as follows: (in thousands) Operating Leases 2019 40,667 2020 35,189 2021 30,090 2022 23,376 2023 15,789 Thereafter 24,077 Total minimum lease payments $ 169,188 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Shareholders Equity Tables [Abstract] | |
Schedule of Share Repurchases | The table below sets forth the Company’s share repurchases during fiscal year 2018: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Authorized Share Expansion Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program Balance at February 3, 2018 — $ — — 2,558,000 February 4 - March 3, 2018 — $ — — 2,558,000 March 4 - March 31, 2018 — $ — — 2,558,000 April 1 - May 5, 2018 — $ — — 2,558,000 May 6 - June 2, 2018 — $ — — 2,558,000 June 3 - June 30, 2018 — $ — — 2,558,000 July 1 - August 4, 2018 — $ — — 2,558,000 August 5 - September 1, 2018 — $ — — 2,558,000 September 2 - September 29, 2018 — $ — — 2,558,000 September 30 - November 3, 2018 — $ — — 2,558,000 November 4 - December 1, 2018 — $ — — 2,558,000 December 2 - January 5, 2019 1,507,302 $ 1.97 1,507,302 1,050,698 January 6 - February 2, 2019 1,050,698 $ 2.73 1,050,698 3,500,000 3,500,000 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Schedule of company's stock-based compensation | The following represents total stock-based compensation expense (a component of selling, general and administrative expenses) recognized in the consolidated financial statements (in thousands) (in thousands) 2018 2017 Continuing Operations Stock option expense $ 906 $ 649 Restricted stock expense 2,373 3,294 ESPP expense — 676 Subtotal stock-based compensation 3,279 4,619 Other stock based compensation expense (1) — 1,015 Total stock-based compensation $ 3,279 $ 5,634 Income tax benefit on stock-based compensation $ 44 $ 1,216 Discontinued Operations Stock option expense $ 59 $ 221 Restricted stock expense 43 44 ESPP expense — — Subtotal stock-based compensation 102 265 Income tax benefit on stock-based compensation $ 4 $ 28 Total stock-based compensation $ 3,381 $ 5,899 Total income tax benefit on stock-based compensation $ 48 $ 1,244 |
Schedule of stock option weighted average assumptions | The fair value of each option granted is estimated on the date of grant using the BSM with the following weighted average assumptions: Continuing Operations Stock Options 2018 2017 Expected volatility 0.0 % 42.3 % Risk-free interest rate 0.0 % 2.1 % Expected option life (in years) 0 8.84 Expected dividend yield 0.0 % 1.7 % Weighted average fair value at grant date $ — $ 3.91 Discontinued Operations Stock Options 2018 2017 Expected volatility 0.0 % 43.1 % Risk-free interest rate 0.0 % 2.2 % Expected option life (in years) 0 5.84 Expected dividend yield 0.0 % 1.9 % Weighted average fair value at grant date $ — $ 4.89 Employee Stock Purchase Plan 2018 2017 Expected volatility 0.0 % 80.6 % Risk-free interest rate 0.0 % 1.0 % Expected option life (in years) 0.00 0.63 Expected dividend yield 0.0 % 1.0 % Weighted average fair value at grant date $ — $ 7.14 |
Schedule of stock option activity | The following table summarizes stock option activity from January 28, 2017 through February 2, 2019: Continuing Operations Options Weighted- Average Exercise Price Weighted- Averaged Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 28, 2017 1,453,281 $ 13.48 6.0 $ 1,947 Granted 233,312 11.00 Forfeited / Cancelled (514,768 ) 13.16 Exercised — — Outstanding at February 3, 2018 1,171,825 $ 13.12 5.1 $ — Granted — — Forfeited / Cancelled (584,091 ) 12.29 Exercised — — Outstanding at February 2, 2019 587,734 $ 13.95 4.2 $ — Exercisable at February 2, 2019 444,635 $ 14.49 4.1 $ — Discontinued Operations Options Weighted- Average Exercise Price Weighted- Averaged Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 28, 2017 154,375 $ 14.19 6.4 $ 124 Granted 25,000 13.52 Forfeited / Cancelled (12,000 ) 12.34 Exercised — — Outstanding at February 3, 2018 167,375 $ 14.23 5.4 $ — Granted — — Forfeited / Cancelled (158,984 ) 14.17 Exercised — — Outstanding at February 2, 2019 8,391 $ 15.44 4.2 $ — Exercisable at February 2, 2019 3,356 $ 15.44 4.2 $ — |
Schedule of other information relative to option activity | Other information relative to option activity during 2018 and 2017 is as follows: (dollars in thousands) 2018 2017 Continuing Operations Total fair value of stock options vested $ 962 $ 1,185 Total pretax intrinsic value of stock options exercised $ — $ — Discontinued Operations Total fair value of stock options vested $ 7 $ 121 Total pretax intrinsic value of stock options exercised $ — $ — |
Schedule of stock options outstanding and exercisable | The following table summarizes information about stock options outstanding at February 2, 2019: Options Outstanding Options Exercisable Range of Exercise Prices Shares Weighted- Averaged Contractual Life (years) Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Continuing Operations $ 4.57 - $12.55 157,003 5 $ 10.59 91,196 $ 11.53 $12.61 - $14.68 233,455 4.3 $ 14.27 170,163 $ 14.21 $14.74 - $19.64 197,276 3.4 $ 16.25 183,276 $ 16.22 587,734 444,635 Discontinued Operations - — — — — — - — — — — — $15.44 - $19.04 8,391 4.2 $ 15.44 3,356 $ 15.44 8,391 3,356 |
Schedule of restricted stock activity | The following table summarizes restricted stock from January 28, 2017 through February 2, 2019: Continuing Operations Shares Weighted- Average Grant Date Fair Value Non-vested Restricted Stock at January 28, 2017 582,126 $ 15.01 Granted 490,802 7.73 Forfeited / Cancelled (90,933 ) 11.96 Vested (328,100 ) 14.64 Non-vested Restricted Stock at February 3, 2018 653,895 $ 10.14 Granted 649,233 2.23 Forfeited / Cancelled (133,356 ) 11.77 Vested (475,649 ) 7.98 Non-vested Restricted Stock at February 2, 2019 694,123 $ 3.82 Discontinued Operations Shares Weighted- Average Grant Date Fair Value Non-vested Restricted Stock at January 28, 2017 21,658 $ 17.12 Granted 2,333 14.89 Forfeited / Cancelled (10,000 ) 19.07 Vested (2,797 ) 15.35 Non-vested Restricted Stock at February 3, 2018 11,194 $ 15.35 Granted — — Forfeited / Cancelled (8,862 ) 14.95 Vested (2,332 ) 15.44 Non-vested Restricted Stock at February 2, 2019 — $ — |
Other Commitments and Conting_2
Other Commitments and Contingencies (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of change in benefit obligation based upon an actuarial valuation | The Company’s change in benefit obligation based upon an actuarial valuation is as follows: For the Years Ended (in thousands) February 2, 2019 February 3, 2018 Benefit obligation at beginning of year $ 595 $ 655 Service cost 34 36 Interest cost 18 20 Actuarial loss (gain) (41 ) (46 ) Benefits paid (62 ) (70 ) Benefit obligation at end of year $ 544 $ 595 |
Schedule of components of net accumulated other comprehensive income | The Company’s components of net accumulated other comprehensive income were as follows: For the Years Ended (in thousands) February 2, 2019 February 3, 2018 Accumulated other comprehensive income $ 756 $ 765 Deferred tax (197 ) (206 ) Accumulated other comprehensive income, net $ 559 $ 559 |
Schedule of one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits | The below table illustrates a one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits: (in thousands) February 2, 2019 February 3, 2018 Effect of health care trend rate 1% increase effect on accumulated benefit obligations $ 65 $ 71 1% increase effect on periodic cost 10 11 1% decrease effect on accumulated benefit obligations (46 ) (53 ) 1% decrease effect on periodic cost (7 ) (8 ) |
Schedule of annual net postretirement cost | The annual net postretirement cost is as follows: (in thousands) February 2, 2019 February 3, 2018 Service cost $ 34 $ 36 Interest cost 18 20 Amortization of prior service cost (11 ) (13 ) Amortization of unrecognized prior service costs (59 ) (58 ) Net periodic postretirement benefit cost $ (18 ) $ (15 ) |
Schedule of expected cash flows for the postretirement medical plan | The Company’s policy is to fund claims as incurred. Information about the expected cash flows for the postretirement medical plan follows: (in thousands) Postretirement Medical Plan Expected Benefit Payments, net of retiree contributions 2020 $ 44,541 2021 52,376 2022 57,737 2023 58,220 2024 49,140 Next 5 years 253,088 |
Sales Mix (Tables)
Sales Mix (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Segment Reporting [Abstract] | |
Schedule of company's sales mix by major category | The Company’s sales mix by major category during the last 2 years was as follows: For the Years Ended February 2, 2019 February 3, 2018 Pharmacy 32.0 % 29.7 % Consumables 38.9 % 37.8 % Household Goods and Softlines 28.1 % 31.4 % Franchise 1.0 % 1.1 % Total Sales Mix 100.0 % 100.0 % |
Exit and Disposal Activity (Tab
Exit and Disposal Activity (Tables) | 12 Months Ended |
Feb. 02, 2019 | |
Restructuring And Related Activities [Abstract] | |
Schedule of exit and disposal reserves | The following table illustrates the lease liability related to the planned store closures discussed in the previous paragraphs (in millions): Balance at February 3, 2018 Additions Utilization Ending Balance February 2, 2019 Lease contract termination liability, store closures 6.3 0.6 (2.4 ) 4.5 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) | May 31, 2019Store | Feb. 02, 2019USD ($)Number | Feb. 03, 2018USD ($)Number | Apr. 09, 2015 | Feb. 02, 2019USD ($)Number | Aug. 04, 2018USD ($) | Feb. 03, 2018USD ($)Number | Feb. 03, 2018USD ($)Number | Feb. 03, 2019USD ($) | Feb. 02, 2019USD ($)Number$ / shares | Feb. 03, 2018USD ($)Number$ / shares | Jan. 28, 2017USD ($) | Apr. 30, 2019USD ($) | Jun. 30, 2017USD ($) | Dec. 19, 2016USD ($)Number |
Number of states | Number | 15 | 15 | 15 | ||||||||||||
Number of stores | Number | 557 | 557 | 557 | ||||||||||||
Number of pharmacy | Number | 169 | 169 | 169 | ||||||||||||
Number of franchisee | Number | 11 | 11 | 11 | ||||||||||||
Inventory | $ 246,517,000 | $ 263,831,000 | $ 246,517,000 | $ 263,831,000 | $ 263,831,000 | $ 246,517,000 | $ 263,831,000 | ||||||||
Net losses | 144,500,000 | $ 136,200,000 | $ (12,967,000) | (150,185,000) | |||||||||||
Net cash flows used in operating activities | 44,700,000 | $ 91,700,000 | |||||||||||||
Period of historical average to estimate shrink | 3 years | ||||||||||||||
Trailing period of inventory adjustments | 36 months | ||||||||||||||
LIFO reserve increase | 1,446,000 | ||||||||||||||
Inventory adjustments | $ 400,000 | $ 16,400,000 | |||||||||||||
Freight capitalization expense | 948,777,000 | 1,032,058,000 | |||||||||||||
Reserve related to strategic initiative | 4,300,000 | ||||||||||||||
Inventory remaining adjustments utilized | 6,100,000 | ||||||||||||||
Utilized remaining freight capitalization expense | 1,100,000 | ||||||||||||||
Inventory adjustments utilized | 400,000 | ||||||||||||||
Inventory additional charges recorded | $ 0 | $ 0 | 0 | ||||||||||||
Amortization expense on assets under capital lease | 0 | 0 | |||||||||||||
Rent expense | $ 400,000 | 500,000 | |||||||||||||
Description of impairment or disposal of long-lived assets | In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets, we review for impairment all stores open at least 3 years or remodeled more than 2 years ago. Impairment results when the carrying value of the assets exceeds the undiscounted future cash flows over the life of the lease, or 10 years for owned stores. | ||||||||||||||
Minimum period stores open for considering impairment review | 3 years | ||||||||||||||
Minimum Period of stores remodeled for considering impairment review | 2 years | ||||||||||||||
Impairment of fixed assets | $ 27,800,000 | 2,500,000 | |||||||||||||
Goodwill impairment charge | 87,000 | $ 0 | |||||||||||||
Estimated fair value of business exceeded the carrying value, percentage | 10.00% | 10.00% | 10.00% | ||||||||||||
Amortization expense | $ 9,800,000 | 10,600,000 | |||||||||||||
Goodwill | $ 0 | $ 0 | 0 | ||||||||||||
Net sales | $ 1,271,746,000 | $ 1,395,845,000 | |||||||||||||
Share price (in dollars per share) | $ / shares | $ (0.36) | $ (4.02) | |||||||||||||
Advertising expenses | $ 14,500,000 | $ 23,200,000 | |||||||||||||
Reduction of advertising expenses | 14,000,000 | 20,900,000 | |||||||||||||
Workers compensation | 500,000 | 500,000 | 500,000 | ||||||||||||
Increase (decrease) in self insurance reserve | 8,400,000 | 11,300,000 | |||||||||||||
Self insurance reserve | 70,400,000 | 68,300,000 | 70,400,000 | 68,300,000 | 68,300,000 | 70,400,000 | 68,300,000 | ||||||||
Valuation allowances against deferred tax assets | $ 63,046,000 | $ 59,299,000 | 63,046,000 | $ 59,299,000 | $ 59,299,000 | $ 63,046,000 | 59,299,000 | ||||||||
Number of operating segment | Number | 1 | 1 | |||||||||||||
Asset Purchase Agreement [Member] | Rite Aid Corporation & Walgreens Boots Alliance, Inc [Member] | |||||||||||||||
Number of stores | Number | 865 | ||||||||||||||
Total purchase consideration | $ 950,000,000 | ||||||||||||||
Termination fee received | $ 25,000,000 | ||||||||||||||
Layaway [Member] | |||||||||||||||
Net sales | $ 600,000 | 700,000 | |||||||||||||
Maximum | Catastrophic Claims [Member] | |||||||||||||||
Increase (decrease) in insurance liabilities | 250,000 | ||||||||||||||
Minimum [Member] | Catastrophic Claims [Member] | |||||||||||||||
Increase (decrease) in insurance liabilities | 350,000 | ||||||||||||||
Gift Card Breakage Revenue | |||||||||||||||
Net sales | $ 0 | $ 300,000 | |||||||||||||
Gift Card Breakage Revenue | Maximum | |||||||||||||||
Share price (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||||
General Merchandise [Member] | |||||||||||||||
Number of stores | Number | 557 | 557 | 557 | 557 | |||||||||||
Franchised Fred's Stores [Member] | |||||||||||||||
Number of franchisee | Number | 11 | 11 | 11 | 11 | |||||||||||
Customer Prescription Files [Member] | |||||||||||||||
Intangible assets useful life | 7 years | ||||||||||||||
Pharmacy closures [Member] | |||||||||||||||
Amortization expense | $ 1,100,000 | ||||||||||||||
Trade Name [Member] | |||||||||||||||
Goodwill impairment charge | $ 600,000 | ||||||||||||||
Impairment related to the trade name | 628,000 | ||||||||||||||
Merchandise Inventory [Member] | |||||||||||||||
Procurement and storage costs and inbound freight cost | $ 21,300,000 | $ 17,300,000 | 21,300,000 | 17,300,000 | 17,300,000 | $ 21,300,000 | $ 17,300,000 | ||||||||
Scenario, Forecast [Member] | |||||||||||||||
Number of stores closed | Store | 159 | ||||||||||||||
Revolving Credit Agreement [Member] | |||||||||||||||
Outstanding borrowings | 80,300,000 | 80,300,000 | 80,300,000 | ||||||||||||
Financial covenant, minimum required excess availability amount of commitments | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | ||||||||||||
Financial covenant, minimum required excess availability percentage of commitments | 10.00% | 10.00% | 10.00% | ||||||||||||
Financial covenant description | Under our Revolving Credit Agreement, we have a financial covenant to maintain at all times excess availability of at least the greater of $21,000,000 and 10% of the commitments, and if excess availability falls below such threshold, it would constitute an event of default under the Revolving Credit Agreement. | ||||||||||||||
Maturity date of agreement | Apr. 9, 2020 | Apr. 9, 2020 | |||||||||||||
Revolving Credit Agreement [Member] | Subsequent Event [Member] | |||||||||||||||
Outstanding borrowings | $ 78,400,000 | ||||||||||||||
Excess availability of borrowings | 37,100,000 | ||||||||||||||
Financial covenant, minimum required excess availability amount of commitments | $ 21,000,000 | ||||||||||||||
Financial covenant, minimum required excess availability percentage of commitments | 10.00% | ||||||||||||||
Discontinued Operations Disposed of By Sale [Member] | |||||||||||||||
Number of retail pharmacy sold | Number | 179 | 179 | 179 | ||||||||||||
Aggregate cash consideration from sale | $ 176,700,000 | ||||||||||||||
Specialty Pharmacy Business | |||||||||||||||
Proceeds from sale of business | $ 40,000,000 | ||||||||||||||
Inventory | $ 5,500,000 | ||||||||||||||
Pharmacy Department [Member] | |||||||||||||||
Number of states | Number | 14 | 14 | 14 | ||||||||||||
Inventory | $ 13,200,000 | 11,500,000 | $ 13,200,000 | 11,500,000 | 11,500,000 | $ 13,200,000 | 11,500,000 | ||||||||
LIFO inventory amount | $ 28,800,000 | $ 28,800,000 | 28,800,000 | $ 28,800,000 | $ 28,800,000 | 28,800,000 | 28,800,000 | ||||||||
LIFO reserve increase | 1,400,000 | ||||||||||||||
Goodwill impairment charge | $ 1,500 | 10,800,000 | |||||||||||||
Net sales | 406,559,000 | $ 414,753,000 | |||||||||||||
Cargo and Freight [Member] | |||||||||||||||
Freight capitalization expense | $ 2,100,000 | ||||||||||||||
Stores and Pharmacies [Member] | |||||||||||||||
Impairment charge to fixed assets | $ 4,000,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Inventory Impairment Charges (Details) $ in Millions | 12 Months Ended |
Feb. 02, 2019USD ($) | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Balance at beginning | $ 6.1 |
Additions | 0.4 |
Utilization | (6.5) |
Inventory Markdown on Low Productive Inventory (2016 Initiatives) [Member] | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Balance at beginning | 1.7 |
Additions | 0.4 |
Utilization | (2.1) |
Inventory Provision For Freight Capitalization Expense (2016 initiatives) [Member] | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Balance at beginning | 0.1 |
Utilization | (0.1) |
Inventory Markdown on Low Productive Inventory (2017 Initiatives) [Member] | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Balance at beginning | 3.3 |
Utilization | (3.3) |
Inventory Provision For Freight Capitalization Expense (2017 Initiatives) [Member] | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Balance at beginning | 1 |
Utilization | $ (1) |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Schedule of Estimated Useful Life (Details) | 12 Months Ended |
Feb. 02, 2019 | |
Building and Building Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 8 years |
Building and Building Improvements [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 31 years 6 months |
Furniture, Fixtures and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture, Fixtures and Equipment [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Leasehold Improvements [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Auto Mobiles and Vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Auto Mobiles and Vehicles [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Airplane [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 9 years |
Description of Business and S_7
Description of Business and Summary of Significant Accounting Policies - Schedule of Other Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 21,463 | $ 34,347 |
Customer Prescription Files [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 18,743 | 27,828 |
Intangible assets useful life | 7 years | |
Non-Compete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 2,334 | 5,356 |
Non-Compete Agreements [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets useful life | 3 years | |
Non-Compete Agreements [Member] | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets useful life | 15 years | |
Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 386 | 1,048 |
Intangible assets useful life | 3 years | |
Other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 115 |
Description of Business and S_8
Description of Business and Summary of Significant Accounting Policies - Schedule of Estimated Amortization Expense for Assets Recognized (Details) $ in Millions | Feb. 02, 2019USD ($) |
Amortization Expense, fiscal year maturity [Abstract] | |
2019 | $ 7.4 |
2020 | 6.2 |
2021 | 4.7 |
2022 | 2.3 |
2023 | 0.8 |
Thereafter | $ 0.1 |
Description of Business and S_9
Description of Business and Summary of Significant Accounting Policies - Disaggregated Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information [Line Items] | ||
Total Sales Mix | $ 1,271,746 | $ 1,395,845 |
Pharmacy Department [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 406,559 | 414,753 |
Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 494,515 | 527,641 |
Household Goods and Softlines [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 357,639 | 438,355 |
'Franchise [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | $ 13,033 | $ 15,096 |
Assets Held-For-Sale and Disc_3
Assets Held-For-Sale and Discontinued Operations - Additional Information (Details) | Jan. 17, 2019USD ($) | Feb. 02, 2019USD ($)Number | Feb. 03, 2018USD ($) | Feb. 03, 2018USD ($) | Feb. 02, 2019USD ($)Number | Feb. 03, 2018USD ($) | Oct. 23, 2018USD ($)Number |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Income (loss) from discontinued operations, net of tax | $ (124,216,000) | $ 5,646,000 | |||||
Goodwill impairment charge | $ 87,000 | 0 | |||||
Proceeds from asset dispositions | 2,203,000 | 2,206,000 | |||||
Inventory | $ 246,517,000 | $ 263,831,000 | 263,831,000 | 246,517,000 | 263,831,000 | ||
Gain (loss) on sale of assets | $ 145,300,000 | ||||||
Number of pharmacy | Number | 169 | 169 | |||||
Cash proceeds | $ 156,100,000 | ||||||
Proceeds from sale of inventory | 20,600,000 | ||||||
Entrust [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Gain (loss) on sale of assets | $ (400,000) | ||||||
Retail Pharmacy Discontinued Operations [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Income (loss) from discontinued operations, net of tax | (135,752,000) | (5,272,000) | |||||
Gain (loss) on sale of assets | 145,700,000 | 145,746,000 | |||||
Asset Purchase Agreement [Member] | Advance Care Scripts, Inc. [Member] | Entrust [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Proceeds from asset dispositions | 40,000,000 | ||||||
Asset Purchase Agreement [Member] | Advance Care Scripts, Inc. [Member] | Entrust [Member] | Maximum | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Inventory | $ 5,500,000 | 5,500,000 | |||||
Amended WBA Asset Purchase Agreement [Member] | Walgreen Co., an Illinois corporation [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Inventory | 20,600,000 | ||||||
Number of retail pharmacy sold | Number | 179 | ||||||
Number of pharmacy | Number | 346 | ||||||
Total purchase consideration | $ 156,100,000 | $ 157,000,000 | |||||
Amended WBA Asset Purchase Agreement [Member] | Maximum | Walgreen Co., an Illinois corporation [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Inventory | $ 35,000,000 | ||||||
Pharmacy Department [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Income (loss) from discontinued operations, net of tax | 11,500,000 | ||||||
Goodwill impairment charge | 1,500 | 10,800,000 | |||||
Inventory | $ 13,200,000 | 11,500,000 | $ 11,500,000 | 13,200,000 | $ 11,500,000 | ||
Gain (loss) on sale of assets | $ (400,000) | ||||||
Trade Name [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Goodwill impairment charge | 600,000 | ||||||
Goodwill [Member] | |||||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||||
Goodwill impairment charge | $ 10,800,000 |
Assets Held-For-Sale and Disc_4
Assets Held-For-Sale and Discontinued Operations - Schedule of Major Classes of Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Current assets: | ||
Receivables, less allowance for doubtful accounts | $ 15,983 | |
Inventories | 19,100 | |
Other non-trade receivables | 152 | |
Prepaid expenses and other current assets | 12 | |
Total current assets held for sale | 35,247 | |
Property and equipment, less accumulated depreciation and amortization | $ 4,839 | 5,963 |
Goodwill | 30,609 | |
Intangible assets, net | 30,074 | |
Other noncurrent assets, net | 539 | |
Total noncurrent assets held for sale | 4,839 | 67,185 |
Current liabilities: | ||
Accounts payable | 22,045 | |
Accrued expenses and other | 4,527 | |
Total current liabilities held for sale | 26,572 | |
Other noncurrent liabilities | 48 | |
Total noncurrent liabilities held For sale | 48 | |
Retail Pharmacy [Member] | ||
Current assets: | ||
Inventories | 15,344 | |
Total current assets held for sale | 15,344 | |
Intangible assets, net | 20,541 | |
Total noncurrent assets held for sale | 20,541 | |
Specialty Pharmacy [Member] | ||
Current assets: | ||
Receivables, less allowance for doubtful accounts | 15,983 | |
Inventories | 3,756 | |
Other non-trade receivables | 152 | |
Prepaid expenses and other current assets | 12 | |
Total current assets held for sale | 19,903 | |
Property and equipment, less accumulated depreciation and amortization | 1,036 | |
Goodwill | 30,609 | |
Intangible assets, net | 9,533 | |
Other noncurrent assets, net | 539 | |
Total noncurrent assets held for sale | 41,717 | |
Current liabilities: | ||
Accounts payable | 22,045 | |
Accrued expenses and other | 4,527 | |
Total current liabilities held for sale | 26,572 | |
Other noncurrent liabilities | 48 | |
Total noncurrent liabilities held For sale | 48 | |
Headquarters Building [Member] | ||
Current assets: | ||
Property and equipment, less accumulated depreciation and amortization | 4,839 | 4,927 |
Total noncurrent assets held for sale | $ 4,839 | $ 4,927 |
Assets Held-For-Sale and Disc_5
Assets Held-For-Sale and Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands | Jan. 17, 2019 | Feb. 02, 2019 | Feb. 03, 2018 |
Revenues | $ 419,438 | $ 685,512 | |
Cost of Goods Sold | 353,166 | 578,369 | |
Gross Margin | 66,272 | 107,143 | |
Depreciation and amortization | 4,867 | 9,909 | |
Impairment expense | 12,545 | ||
Selling, general and administrative expenses | 82,489 | 93,448 | |
Loss from discontinued operations before income taxes | (21,084) | (8,759) | |
Gain (loss) on sale of assets | 145,300 | ||
Income tax expense | (3,113) | ||
Loss from discontinued operations, net of tax | 124,216 | (5,646) | |
Retail Pharmacy Discontinued Operations [Member] | |||
Revenues | 329,326 | 409,560 | |
Cost of Goods Sold | 264,712 | 314,216 | |
Gross Margin | 64,614 | 95,344 | |
Depreciation and amortization | 4,071 | 7,279 | |
Impairment expense | 1,123 | ||
Selling, general and administrative expenses | 70,537 | 81,670 | |
Loss from discontinued operations before income taxes | (9,994) | 5,272 | |
Gain (loss) on sale of assets | $ 145,700 | 145,746 | |
Loss from discontinued operations, net of tax | 135,752 | 5,272 | |
Specialty Pharmacy [Member] | |||
Revenues | 90,112 | 275,952 | |
Cost of Goods Sold | 88,454 | 264,153 | |
Gross Margin | 1,658 | 11,799 | |
Depreciation and amortization | 796 | 2,630 | |
Impairment expense | 11,422 | ||
Selling, general and administrative expenses | 11,952 | 11,778 | |
Loss from discontinued operations before income taxes | (11,090) | (14,031) | |
Gain (loss) on sale of assets | (446) | ||
Income tax expense | (3,113) | ||
Loss from discontinued operations, net of tax | $ (11,536) | $ (10,918) |
Detail of Certain Balance She_3
Detail of Certain Balance Sheet Accounts - Schedule of Certain Balance Sheet Accounts (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Property and equipment, at cost: | ||
Property and equipment, gross | $ 468,911 | $ 492,598 |
Less: Accumulated depreciation and amortization | (413,228) | (390,633) |
Property and equipment before construction in progress and land | 55,683 | 101,965 |
Construction in progress | 2,790 | 590 |
Land | 7,873 | 7,984 |
Total Property and equipment, at depreciated cost | 66,346 | 110,539 |
Buildings and Building Improvements [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 101,220 | 114,843 |
Leasehold Improvements [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 85,148 | 86,268 |
Auto Mobiles and Vehicles [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 3,751 | 4,525 |
Furniture, Fixtures and Equipment [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | $ 278,793 | $ 286,962 |
Detail of Certain Balance She_4
Detail of Certain Balance Sheet Accounts - Additional Information (Details) - USD ($) $ in Thousands | Feb. 03, 2018 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 21,400 | $ 24,700 | ||
Loss on sale of airplane | $ 3,624 | 275 | ||
Impairment charge | $ 33,243 | 2,489 | ||
Certain Fixed Assets [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charge | $ 4,000 | |||
Selling, General and Administrative Expenses [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Loss on sale of airplane | $ 2,600 |
Detail of Certain Balance She_5
Detail of Certain Balance Sheet Accounts - Schedule of Certain Balance Sheet Accounts (Details 1) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Other non-trade receivables: | ||
Vendor receivables | $ 19,337 | $ 22,073 |
Income tax receivable | 848 | 1,812 |
Franchise stores receivable | 1,700 | 1,688 |
Insurance claims receivable | 238 | |
Coupon receivable | 364 | 375 |
Other | 7,926 | 5,552 |
Total other non-trade receivable | $ 30,412 | $ 31,500 |
Detail of Certain Balance She_6
Detail of Certain Balance Sheet Accounts - Schedule of Certain Balance Sheet Accounts (Details 2) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Prepaid expenses and other current assets: | ||
Prepaid rent | $ 4,115 | $ 4,214 |
Supplies | 3,247 | 3,061 |
Other | 2,712 | 2,780 |
Total prepaid expenses and other current assets | $ 10,074 | $ 10,055 |
Detail of Certain Balance She_7
Detail of Certain Balance Sheet Accounts - Schedule of Certain Balance Sheet Accounts (Details 3) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Accrued expenses and other: | ||
Payroll and benefits | $ 13,361 | $ 12,579 |
Accrued payroll taxes and withholdings | 2,134 | 2,963 |
Insurance reserves | 8,357 | 11,290 |
Legal and professional fees | 3,037 | 7,048 |
Closed Store Reserve | 4,548 | 6,484 |
Property, sales and use taxes payable | 7,867 | 9,323 |
Project cost accrual | 2,512 | |
Deferred / Contingent Rent | 2,130 | 1,637 |
Accrued import liability | 2,332 | |
Accrued pharmacy programs expense | 5,056 | 4,937 |
Other | 9,530 | 9,204 |
Total accrued expenses and other | $ 58,352 | $ 67,977 |
Detail of Certain Balance She_8
Detail of Certain Balance Sheet Accounts - Schedule of Certain Balance Sheet Accounts (Details 4) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Other noncurrent liabilities: | ||
Unearned vendor allowances (see Note 1 - Vendor Rebates and Allowances) | $ 15,015 | $ 25,170 |
Uncertain tax positions | 372 | |
Total other noncurrent liabilities | $ 15,015 | $ 25,542 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Details) | Jun. 30, 2017USD ($) | Apr. 10, 2015USD ($) | Apr. 09, 2015USD ($) | Oct. 28, 2017USD ($) | Feb. 03, 2019 | Feb. 02, 2019USD ($)Number | Feb. 03, 2018USD ($) | Apr. 30, 2019USD ($) | Apr. 15, 2019USD ($) | Aug. 23, 2018USD ($) | Jul. 31, 2017USD ($) | Jun. 09, 2017USD ($) | Dec. 19, 2016USD ($)Number | Oct. 31, 2007 |
Aggregate line of credit | $ 500,000 | $ 500,000 | ||||||||||||
Interest rate basis spread (percentage) | 2.00% | |||||||||||||
Number of stores | Number | 557 | |||||||||||||
Purchase of mortgage debt | $ 1,500,000 | |||||||||||||
Weighted average interest rate | 7.40% | |||||||||||||
Description of collateral | Land and buildings. | |||||||||||||
Investment on offset bonds | $ 34,600,000 | |||||||||||||
Total rent expense under operating leases | $ 49,200,000 | 54,900,000 | ||||||||||||
Reeves-Sain Drug Store, Inc [Member] | ||||||||||||||
Description of notes payable | The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the Company’s revolving line of credit. | The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the Company’s revolving line of credit. | ||||||||||||
Notes payable | $ 13,000,000 | |||||||||||||
Walgreens Boots Alliance, Inc. [Member] | Asset Purchase Agreement [Member] | ||||||||||||||
Agreement termination fees | $ 25,000,000 | |||||||||||||
Related Party [Member] | ||||||||||||||
Total rent expense under operating leases | $ 349,500 | $ 378,400 | ||||||||||||
Commitment Letters [Member] | Lenders [Member] | Rite Aid Corporation [Member] | ||||||||||||||
Number of stores | Number | 865 | |||||||||||||
Face amount | $ 2,200,000,000 | $ 1,650,000,000 | ||||||||||||
Debt issuance costs | $ 30,000,000 | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Revolving credit agreement, additional reserve | $ 20,000,000 | |||||||||||||
Cash control event, balance of excess availability | $ 37,900,000 | |||||||||||||
Minimum [Member] | ||||||||||||||
Fixed interest rates | 6.31% | |||||||||||||
Maximum | ||||||||||||||
Fixed interest rates | 7.40% | |||||||||||||
LIBOR [Member] | Minimum [Member] | ||||||||||||||
Interest rate basis spread (percentage) | 1.75% | |||||||||||||
LIBOR [Member] | Maximum | ||||||||||||||
Interest rate basis spread (percentage) | 2.25% | |||||||||||||
Base Rate [Member] | Minimum [Member] | ||||||||||||||
Interest rate basis spread (percentage) | 0.75% | |||||||||||||
Base Rate [Member] | Maximum | ||||||||||||||
Interest rate basis spread (percentage) | 1.25% | |||||||||||||
Revolving Credit Agreement [Member] | ||||||||||||||
Description of interest terms | Commitment fees on the unused portion of the credit line are 37.5 basis points. | |||||||||||||
Commitment fees on the unused portion of the credit line | 0.375% | |||||||||||||
Maximum line of credit | $ 210,000,000 | |||||||||||||
Aggregate line of credit | $ 58,600,000 | |||||||||||||
Current borrowing line of credit | 80,300,000 | |||||||||||||
Maturity date of agreement | Apr. 9, 2020 | Apr. 9, 2020 | ||||||||||||
Cash control event, minimum required excess availability amount of commitments | $ 26,250,000 | |||||||||||||
Cash control event, minimum required excess availability percentage of commitments | 12.50% | |||||||||||||
Financial covenant, minimum required excess availability amount of commitments | $ 21,000,000 | |||||||||||||
Financial covenant, minimum required excess availability percentage of commitments | 10.00% | |||||||||||||
Revolving Credit Agreement [Member] | Subsequent Event [Member] | ||||||||||||||
Current borrowing line of credit | $ 78,400,000 | |||||||||||||
Financial covenant, minimum required excess availability amount of commitments | $ 21,000,000 | |||||||||||||
Financial covenant, minimum required excess availability percentage of commitments | 10.00% | |||||||||||||
Revolving Credit Agreement [Member] | LIBOR [Member] | ||||||||||||||
Description of variable rate basis | The Company may choose to borrow at a spread to either LIBOR or a Base Rate. For LIBOR loans the spread ranges from 1.75% to 2.25% and for Base Rate loans the spread ranges from 0.75% to 1.25%. | |||||||||||||
Revolving Line of Credit [Member] | ||||||||||||||
Maximum line of credit | $ 270,000,000 | |||||||||||||
Seventh Amendment Line of Credit [Member] | ||||||||||||||
Maximum line of credit | $ 210,000,000 |
Indebtedness - Schedule of Note
Indebtedness - Schedule of Notes Payable Along With Long term Debt Related to Mortgages (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
2019 | $ 68 | |
2020 | 62,983 | |
2021 | 5,703 | |
2022 | 4,333 | |
Total | 73,087 | $ 168,010 |
Notes Payable [Member] | ||
2020 | 62,908 | |
2021 | 4,333 | |
2022 | 4,333 | |
Total | 71,575 | |
Mortgage Loans on Land and Buildings [Member] | ||
2019 | 68 | |
2020 | 75 | |
2021 | 1,369 | |
Total | $ 1,512 | $ 1,579 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value and Carrying Values for Revolving Line of Credit and Mortgage Loans (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Short Term Debt [Line Items] | ||
Carrying Value | $ 73,087 | $ 168,010 |
Fair Value | 72,590 | 167,536 |
Secured Revolving Line of Credit [Member] | ||
Short Term Debt [Line Items] | ||
Carrying Value | 58,575 | 153,431 |
Fair Value | 58,573 | 153,431 |
Mortgage Loans on Land and Buildings [Member] | ||
Short Term Debt [Line Items] | ||
Carrying Value | 1,512 | 1,579 |
Fair Value | 1,684 | 1,684 |
Notes Payable [Member] | ||
Short Term Debt [Line Items] | ||
Carrying Value | 71,575 | |
Carrying Value, Notes payable | 13,000 | 13,000 |
Fair Value | $ 12,333 | $ 12,421 |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision (benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Current | ||
Federal | $ 57 | |
State | (113) | $ 234 |
Total current tax benefits | (56) | 234 |
Deferred | ||
Federal | 87 | 705 |
State | 21 | 302 |
Total deferred tax benefits | 108 | 1,007 |
Provision for Income Tax | $ 52 | $ 1,241 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Operating Loss Carryforwards [Line Items] | ||||
Federal income tax rate | 21.00% | 33.70% | 35.00% | 35.00% |
Reduce tax expense | $ 0 | |||
Estimated reduction amount of deferred tax assets | 18.8 | |||
Net operating loss carryforwards | $ 323.2 | |||
Net operating loss carryforwards expire period | fiscal years 2019 through 2036 | |||
Increase (decrease) in valuation allowance | $ (4.3) | 37.1 | ||
Unrecognized tax benefits | 0 | 2.3 | $ 0.4 | |
Tax deductions | 2 | |||
Settlements | 0.3 | |||
Unrecognized tax benefits accrued interest | 0 | 0.1 | ||
Unrecognized tax benefits accrued penalties | 0 | $ 0.1 | ||
Federal [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 118 | |||
Net operating loss carryforwards expire period | expire in 2036 | |||
Federal income tax credits | $ 5.3 | |||
Federal income tax credits expire period | expire in 2036 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets and Deferred Income Tax Liabilities (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Deferred income tax assets: | ||
Accrual for incentive compensation | $ 4,515 | $ 2,782 |
Allowance for doubtful accounts | 355 | 653 |
Insurance accruals | 2,171 | 1,508 |
Other accruals | 642 | 604 |
Net operating loss carryforwards | 41,333 | 48,087 |
Deferred Revenue | 199 | 352 |
Federal benefit on state reserves | 55 | |
WOTC Credit Carryforward | 6,259 | 5,295 |
Property, plant and equipment | 4,064 | |
Amortization of intangibles | 10,478 | 16,925 |
Postretirment benefits | 142 | 159 |
Contribution Carryforward | 312 | 315 |
Total deferred income tax assets | 70,470 | 76,735 |
Valuation allowances against deferred tax assets | 63,046 | 59,299 |
Deferred income tax assets, net of valuation allowance | 7,424 | 17,436 |
Deferred income tax liabilities: | ||
Property, plant and equipment | (5,567) | |
Inventory valuation | (6,950) | (11,173) |
Prepaid expenses | (474) | (588) |
Total deferred income tax liabilities | $ (7,424) | (17,328) |
Net deferred income tax assets/liabilities | $ 108 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of the Statutory Federal Income Tax Rate (Details) | 12 Months Ended | |||
Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision at statutory rate | 21.00% | 33.70% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 4.70% | 3.50% | ||
Tax credits, principally jobs | 0.20% | 0.60% | ||
Uncertain tax provisions | 0.10% | |||
Change in state valuation allowance | (25.80%) | (25.40%) | ||
TCJA Rate Change | (13.70%) | |||
Other | 1.30% | |||
Permanent differences | (0.20%) | (0.90%) | ||
Effective income tax rate | 0.00% | (0.90%) |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 2.3 | $ 0.4 |
Additions for tax positions of prior years | 0.5 | |
Additions for current year tax positions | 1.4 | |
Deductions for tax position for prior years | (2) | |
Settlements of tax position for prior years | (0.3) | |
Balance at February 2,2019 | $ 0 | $ 2.3 |
Long-term Leases - Additional I
Long-term Leases - Additional Information (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Leases [Abstract] | ||
Total rent expense under operating leases | $ 49,200,000 | $ 54,900,000 |
Total contingent rentals included in operating leases | 400,000 | 500,000 |
Property and equipment under capital leases | 5,100,000 | 5,100,000 |
Accumulated amortization on property and equipment under capital leases | 5,100,000 | 5,100,000 |
Amortization expense on assets under capital lease | $ 0 | $ 0 |
Long-term Leases - Schedule of
Long-term Leases - Schedule of Future Minimum Rental Payments (Details) $ in Thousands | Feb. 02, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 40,667 |
2020 | 35,189 |
2021 | 30,090 |
2022 | 23,376 |
2023 | 15,789 |
Thereafter | 24,077 |
Total minimum lease payments | $ 169,188 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) | Jun. 27, 2017Right$ / shares | Feb. 02, 2019shares | Jan. 30, 2019shares | Feb. 03, 2018shares | Dec. 06, 2017shares | Sep. 18, 2017$ / sharesshares | Aug. 27, 2017shares | Jan. 28, 2017shares | Feb. 16, 2012shares | Jan. 28, 2012shares |
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Number of common shares repurchased | 0 | 1,200,000 | ||||||||
Number of common shares repurchased remaining | 2,600,000 | 2,600,000 | ||||||||
Dividend record date | Jul. 7, 2017 | |||||||||
Dividend declared date | Jun. 27, 2017 | |||||||||
Dividends terms | Each Right entitles the holder, subject to the terms of the Rights Agreement dated as of June 27, 2017 (the “Original Rights Agreement”) between the Company and American Stock & Trust Company, LLC, as Rights Agent, to purchase from the Company one one-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock at a price of $60.00 (the "Exercise Price"), subject to certain adjustments. | |||||||||
Amended Rights Agreement [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 35 | |||||||||
Description of agreement terms | A company generally experiences such an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section 382 of the Code, increases by more than 50 percentage points over a rolling three-year period. The Amended Rights Agreement is intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s outstanding Common Stock | |||||||||
Amended Rights Agreement [Member] | Minimum [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Beneficial ownership percentage | 4.90% | |||||||||
Voting Class A Common Stock [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Number of common shares repurchased | 3,800,000 | |||||||||
Number of rights issued and outstanding on dividend declared | Right | 1 | |||||||||
Voting Class A Common Stock [Member] | Minimum [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Number of common stock increased | 1 | |||||||||
Common Stock [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Number of common shares repurchased | 3,500,000 | |||||||||
Voting Series C Junior Preferred Stock [Member] | Rights Agreement [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 60 | |||||||||
Stock Re-Purchase Program [Member] | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Number of common shares repurchased | 4,000,000 | 3,600,000 | ||||||||
Number of common shares repurchased remaining | 90,000 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Share Repurchases (Details) - $ / shares | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 |
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | 0 | 1,200,000 | |
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,600,000 | 2,600,000 | |
February 3, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
February 4 - March 3, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
March 4 - March 31, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
April 1 - May 5, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
May 6 - June 2, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
June 3 - June 30, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
July 1 - August 4, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
August 5 - September 1, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
September 2 - September 29, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
September 30 - November 3, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
November 4 - December 1, 2018 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | |||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 2,558,000 | ||
December 2 - January 5, 2019 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased | 1,507,302 | ||
Average Price Paid Per Share | $ 1.97 | ||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | 1,507,302 | ||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 1,050,698 | ||
January 6 - February 2, 2019 [Member] | |||
Class Of Stock [Line Items] | |||
Total Number of Shares Purchased | 1,050,698 | ||
Average Price Paid Per Share | $ 2.73 | ||
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | 1,050,698 | ||
Authorized Share Expansion | 3,500,000 | ||
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program | 3,500,000 |
Equity Incentive Plans - Additi
Equity Incentive Plans - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Feb. 02, 2019 | Feb. 03, 2018 | Feb. 02, 2018 | Jan. 28, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share authorized | 5,900,000 | |||
Number of shares granted | 90,225 | |||
Unrecognized compensation expense | $ 0.8 | |||
Amount recognition period | 2 years 6 months | |||
Discontinued Operations [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 0 | |||
Stock Option [Member] | Discontinued Operations [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 25,000 | |||
Stock Option [Member] | Continuing Operations [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 233,312 | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of restricted stock awards vested | 1 | |||
Restricted Stock [Member] | Discontinued Operations [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 0.1 | |||
Amount recognition period | 3 years 6 months | |||
Intrinsic value | $ 0.1 | |||
Contractual term | 5 years 6 months | |||
Fair value of restricted stock awards vested | $ 0.1 | |||
Restricted Stock [Member] | Continuing Operations [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 1.8 | |||
Amount recognition period | 2 years 6 months | |||
Intrinsic value | $ 2 | |||
Contractual term | 8 years 7 months 6 days | |||
Fair value of restricted stock awards vested | $ 3.9 | |||
Minimum [Member] | Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards expiration period | 1 year 6 months | |||
Minimum [Member] | Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period after grant date | 5 years | |||
Awards expiration period | 3 years | |||
Maximum | Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards expiration period | 7 years | |||
Maximum | Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period after grant date | 10 years | |||
Awards expiration period | 10 years | |||
Long-Term Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares additionally authorized | 1,900,000 | |||
Number of share authorized | 4,000,000 | |||
Expiration date | Mar. 18, 2022 | |||
Number of shares available for grant | 3,004,580 | 2,777,382 | ||
Expiration period after grant date | 4 years | |||
Percentage of options exercisable | 10.00% | |||
Description of vesting rights | exercisable ratably over four years or ten percent during each of the first four years on the anniversary date and sixty percent on the fifth anniversary date. | |||
Long-Term Incentive Plan [Member] | Fifth Anniversary [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of options exercisable | 60.00% | |||
Long-Term Incentive Plan [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period after grant date | 5 years | 5 years | ||
Long-Term Incentive Plan [Member] | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period after grant date | 7 years | |||
Awards expiration period | 7 years | |||
2004 Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share authorized | 1,410,928 | |||
Number of shares available for grant | 595,681 | |||
Description of plan | purchase shares of our common stock through payroll deductions at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the market price at the time of exercise. | |||
Percentage of payroll deductions lower of fair market value of stock at time of grant | 85.00% | |||
Percentage of market price at time of grant | 85.00% | |||
Number of shares granted | 0 |
Equity Incentive Plans - Schedu
Equity Incentive Plans - Schedule of Company's Stock-Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation | $ 3,279 | $ 4,619 |
Selling, General and Administrative Expenses [Member] | Continuing Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 3,279 | 4,619 |
Other stock based compensation expense | 1,015 | |
Stock-based compensation | 3,279 | 5,634 |
Income tax benefit on stock-based compensation | 44 | 1,216 |
Selling, General and Administrative Expenses [Member] | Continuing Operations [Member] | 2004 Employee Stock Purchase Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 676 | |
Selling, General and Administrative Expenses [Member] | Discontinued Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 102 | 265 |
Other stock based compensation expense | 4 | 28 |
Stock-based compensation | 3,381 | 5,899 |
Income tax benefit on stock-based compensation | 48 | 1,244 |
Selling, General and Administrative Expenses [Member] | Stock Option [Member] | Continuing Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 906 | 649 |
Selling, General and Administrative Expenses [Member] | Stock Option [Member] | Discontinued Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 59 | 221 |
Selling, General and Administrative Expenses [Member] | Restricted Stock [Member] | Continuing Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | 2,373 | 3,294 |
Selling, General and Administrative Expenses [Member] | Restricted Stock [Member] | Discontinued Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subtotal stock-based compensation | $ 43 | $ 44 |
Equity Incentive Plan - Schedul
Equity Incentive Plan - Schedule of Stock Option Weighted Average Assumptions (Details) - $ / shares | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
2004 Employee Stock Purchase Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 0.00% | 80.60% |
Risk-free interest rate | 0.00% | 1.00% |
Expected option life (in years) | 0 years | 7 months 17 days |
Expected dividend yield | 0.00% | 1.00% |
Weighted average fair value at grant date | $ 7.14 | |
Stock Option [Member] | Continuing Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 0.00% | 42.30% |
Risk-free interest rate | 0.00% | 2.10% |
Expected option life (in years) | 0 years | 8 years 10 months 2 days |
Expected dividend yield | 0.00% | 1.70% |
Weighted average fair value at grant date | $ 3.91 | |
Stock Option [Member] | Discontinued Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 0.00% | 43.10% |
Risk-free interest rate | 0.00% | 2.20% |
Expected option life (in years) | 0 years | 5 years 10 months 2 days |
Expected dividend yield | 0.00% | 1.90% |
Weighted average fair value at grant date | $ 4.89 |
Equity Incentive Plans - Sche_2
Equity Incentive Plans - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Granted | 90,225 | ||
Stock Option [Member] | Continuing Operations [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning balance | 1,171,825 | 1,453,281 | |
Granted | 233,312 | ||
Forfeited / Cancelled | (584,091) | (514,768) | |
Outstanding, ending balance | 587,734 | 1,171,825 | 1,453,281 |
Exercisable at end | 444,635 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding, beginning balance | $ 13.12 | $ 13.48 | |
Granted | 11 | ||
Forfeited / Cancelled | 12.29 | 13.16 | |
Outstanding, ending balance | 13.95 | $ 13.12 | $ 13.48 |
Exercisable at end | $ 14.49 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Life [Roll Forward] | |||
Outstanding, beginning balance | 4 years 2 months 12 days | 5 years 1 month 6 days | 6 years |
Exercisable at end | 4 years 1 month 6 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | |||
Outstanding, beginning balance | $ 1,947 | ||
Outstanding, ending balance | $ 1,947 | ||
Stock Option [Member] | Discontinued Operations [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning balance | 167,375 | 154,375 | |
Granted | 25,000 | ||
Forfeited / Cancelled | (158,984) | (12,000) | |
Outstanding, ending balance | 8,391 | 167,375 | 154,375 |
Exercisable at end | 3,356 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding, beginning balance | $ 14.23 | $ 14.19 | |
Granted | 13.52 | ||
Forfeited / Cancelled | 14.17 | 12.34 | |
Outstanding, ending balance | 15.44 | $ 14.23 | $ 14.19 |
Exercisable at end | $ 15.44 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Life [Roll Forward] | |||
Outstanding, beginning balance | 4 years 2 months 12 days | 5 years 4 months 24 days | 6 years 4 months 24 days |
Exercisable at end | 4 years 2 months 12 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | |||
Outstanding, beginning balance | $ 124 | ||
Outstanding, ending balance | $ 124 |
Equity Incentive Plans - Sche_3
Equity Incentive Plans - Schedule of Other Information Relative to Option Activity (Details) - Stock Option [Member] - Continuing Operations [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total fair value of stock options vested | $ 962 | $ 1,185 |
Total fair value of stock options vested | $ 7 | $ 121 |
Equity Incentive Plans - Sche_4
Equity Incentive Plans - Schedule of Stock Options Outstanding and Exercisable (Details) - Stock Option [Member] | 12 Months Ended |
Feb. 02, 2019$ / sharesshares | |
Continuing Operations [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 587,734 |
Options Exercisable | 444,635 |
Continuing Operations [Member] | Exercise price $4.57 - $12.55 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 157,003 |
Weighted-Averaged Contractual Life (years) | 5 years |
Weighted- Average Exercise Price | $ / shares | $ 10.59 |
Options Exercisable | 91,196 |
Weighted- Average Exercise Price | $ / shares | $ 11.53 |
Continuing Operations [Member] | Exercise price $12.61 - $14.68 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 233,455 |
Weighted-Averaged Contractual Life (years) | 4 years 3 months 18 days |
Weighted- Average Exercise Price | $ / shares | $ 14.27 |
Options Exercisable | 170,163 |
Weighted- Average Exercise Price | $ / shares | $ 14.21 |
Continuing Operations [Member] | Exercise price $14.74 - $19.64 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 197,276 |
Weighted-Averaged Contractual Life (years) | 3 years 4 months 24 days |
Weighted- Average Exercise Price | $ / shares | $ 16.25 |
Options Exercisable | 183,276 |
Weighted- Average Exercise Price | $ / shares | $ 16.22 |
Discontinued Operations [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 8,391 |
Weighted-Averaged Contractual Life (years) | 0 years |
Options Exercisable | 3,356 |
Discontinued Operations [Member] | Exercise price $15.44 - $19.04 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding | 8,391 |
Weighted-Averaged Contractual Life (years) | 4 years 2 months 12 days |
Weighted- Average Exercise Price | $ / shares | $ 15.44 |
Options Exercisable | 3,356 |
Weighted- Average Exercise Price | $ / shares | $ 15.44 |
Equity Incentive Plans - Sche_5
Equity Incentive Plans - Schedule of Restricted Stock Activity (Details) - Restricted Stock [Member] - $ / shares | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Continuing Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested Restricted Stock, Beginning balance | 653,895 | 582,126 |
Granted | 649,233 | 490,802 |
Forfeited / Cancelled | (133,356) | (90,933) |
Vested | (475,649) | (328,100) |
Non-vested Restricted Stock, Ending balance | 694,123 | 653,895 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Non-vested Restricted Stock, Beginning balance | $ 10.14 | $ 15.01 |
Granted | 2.23 | 7.73 |
Forfeited / Cancelled | 11.77 | 11.96 |
Vested | 7.98 | 14.64 |
Non-vested Restricted Stock, Ending balance | $ 3.82 | $ 10.14 |
Discontinued Operations [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested Restricted Stock, Beginning balance | 11,194 | 21,658 |
Granted | 2,333 | |
Forfeited / Cancelled | (8,862) | (10,000) |
Vested | (2,332) | (2,797) |
Non-vested Restricted Stock, Ending balance | 11,194 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Non-vested Restricted Stock, Beginning balance | $ 15.35 | $ 17.12 |
Granted | 14.89 | |
Forfeited / Cancelled | 14.95 | 19.07 |
Vested | $ 15.44 | 15.35 |
Non-vested Restricted Stock, Ending balance | $ 15.35 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) - shares | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Earnings Per Share [Abstract] | ||
Number of antidilutive shares | 587,734 | 1,171,825 |
Other Commitments and Conting_3
Other Commitments and Contingencies - Additional Information (Details) - USD ($) | Oct. 15, 2015 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Mar. 31, 2018 |
Defined Contribution Plan Disclosure [Line Items] | |||||
Aggregate line of credit | $ 500,000 | $ 500,000 | |||
Outstanding letters of credit | $ 17,400,000 | 9,300,000 | |||
Employers contribution | $ 200,000 | $ 200,000 | |||
Percentage of medical care cost trend | 6.40% | ||||
Percentage of discount rate obligation | 3.45% | 3.45% | |||
Cyber liability deductible amount | $ 100,000 | ||||
Cyber liability policy limit | $ 10,000,000 | ||||
Description of allegation | On September 29, 2016, the Company reported to the Office of Civil Rights (“OCR”) that an unencrypted laptop containing clinical and demographic data for 9,624 individuals had been stolen from an employee’s vehicle while the vehicle was parked at the employee’s residence. | ||||
Texas, Marshall Division [Member] | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Payment to settle the case | $ 250,000 | ||||
Defined Contribution Profit Sharing Plans [Member] | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage for qualifying contribution | 60.00% | ||||
Percentage of vesting contribution and earning | 100.00% |
Other Commitments and Conting_4
Other Commitments and Contingencies - Schedule of Company's Change in Benefit Obligation Based Upon an Actuarial Valuation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Defined Benefit Plan, Funded Status of Plan [Roll Forward] | ||
Benefit obligation at beginning of year | $ 595 | $ 655 |
Service cost | 34 | 36 |
Interest cost | 18 | 20 |
Actuarial loss (gain) | (41) | (46) |
Benefits paid | (62) | (70) |
Benefit obligation at end of year | $ 544 | $ 595 |
Other Commitments and Conting_5
Other Commitments and Contingencies - Schedule of Components of Net Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Feb. 02, 2019 | Feb. 03, 2018 |
Commitments And Contingencies Disclosure [Abstract] | ||
Accumulated other comprehensive income | $ 756 | $ 765 |
Deferred tax | (197) | (206) |
Accumulated other comprehensive income, net | $ 559 | $ 559 |
Other Commitments and Conting_6
Other Commitments and Contingencies - One Percentage Point Increase or Decrease in the Healthcare Cost Trendrate Assumed for Postretirement Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Effect of health care trend rate | ||
1% increase effect on accumulated benefit obligations | $ 65 | $ 71 |
1% increase effect on periodic cost | 10 | 11 |
1% decrease effect on accumulated benefit obligations | (46) | (53) |
1% decrease effect on periodic cost | $ (7) | $ (8) |
Other Commitments and Conting_7
Other Commitments and Contingencies - Schedule of Annual Net Postretirement Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | ||
Service cost | $ 34 | $ 36 |
Interest cost | 18 | 20 |
Amortization of prior service cost | (11) | (13) |
Amortization of unrecognized prior service costs | (59) | (58) |
Net periodic postretirement benefit cost | $ (18) | $ (15) |
Other Commitments and Conting_8
Other Commitments and Contingencies - Schedule of Expected Cash Flows for the Postretirement Medical Plan (Details) $ in Thousands | Feb. 02, 2019USD ($) |
Expected Benefit Payments, net of retiree contributions | |
2020 | $ 44,541 |
2021 | 52,376 |
2022 | 57,737 |
2023 | 58,220 |
2024 | 49,140 |
Next 5 years | $ 253,088 |
Sales Mix - Additional Informat
Sales Mix - Additional Information (Details) - Number | Feb. 02, 2019 | Feb. 02, 2019 |
Segment Reporting [Abstract] | ||
Number of operating segment | 1 | 1 |
Sales Mix - Schedule of Company
Sales Mix - Schedule of Company's Sales Mix by Major Category (Details) | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 100.00% | 100.00% |
Pharmacy Department [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 32.00% | 29.70% |
Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 38.90% | 37.80% |
Household Goods and Softlines [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 28.10% | 31.40% |
'Franchise [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Sales Mix | 1.00% | 1.10% |
Exit and Disposal Activity - Ad
Exit and Disposal Activity - Additional Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Feb. 03, 2018USD ($) | Oct. 28, 2017USD ($) | Apr. 28, 2017USD ($)Number | Feb. 02, 2019USD ($) | Feb. 03, 2018USD ($) | |
Disposal charges | $ 5,500 | ||||
Loss on sale | $ (1,800) | ||||
Asset impairment charges | $ 33,243 | 2,489 | |||
Restructing charges | 2,500 | ||||
Additions | 400 | ||||
Utilizations lease contract termination liability | 2,400 | ||||
Lease contract termination liability | 4,500 | ||||
Inventory Markdown on Low Productive Inventory [Member] | |||||
Additions | $ 1,700 | ||||
2016 Store Closures [Member] | |||||
Asset impairment charges | $ 1,100 | ||||
Lease Contract Termination Liability, 2014-2016 Closures [Member] | |||||
Additions lease contract termination liability | 500 | ||||
Utilizations lease contract termination liability | 300 | ||||
Lease contract termination liability | 200 | 200 | |||
Lease Contract Termination Liability, 2017 Closures [Member] | |||||
Additions lease contract termination liability | $ 8,200 | 200 | |||
Utilizations lease contract termination liability | 2,100 | ||||
Lease contract termination liability | $ 6,300 | $ 6,300 | |||
Number of underperforming stores | Number | 39 |
Exit and Disposal Activity - Sc
Exit and Disposal Activity - Schedule of Exit and Disposal Reserves (Details) $ in Millions | 12 Months Ended |
Feb. 02, 2019USD ($) | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Utilization | $ (2.4) |
Ending Balance | 4.5 |
Lease Contract Termination Liability, 2014-2016 Closures [Member] | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |
Beginning Balance | 6.3 |
Additions | 0.6 |
Utilization | (2.4) |
Ending Balance | $ 4.5 |
Business Combinations - Additio
Business Combinations - Additional Information (Details) - Reeves-Sain Drug Store, Inc [Member] - USD ($) $ in Millions | Apr. 10, 2015 | Feb. 02, 2019 |
Business Acquisition [Line Items] | ||
Percentage of interest acquired | 100.00% | |
Description of acquired entity | Provider of retail and specialty pharmaceutical services. | |
Total purchase consideration gross | $ 66 | |
Working capital adjustments | 10.3 | |
Total purchase consideration | 55.8 | |
Business acquisition cost | 0.5 | |
Adjusted consideration in cash | 42.8 | |
Adjusted consideration in notes payable | $ 13 | |
Description about notes payable | The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the Company’s revolving line of credit. | The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the Company’s revolving line of credit. |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) | Apr. 11, 2019Store |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Number of stores to be closed | 159 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Allowance For Doubtful Accounts [Member] | ||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning Balance | $ 1,385 | $ 1,626 |
Additions Charged to Costs and Expenses | 316 | 692 |
Deductions and Reclass Adjustments | 341 | 933 |
Ending Balance | 1,360 | 1,385 |
Insurance Reserves [Member] | ||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning Balance | 11,285 | 10,859 |
Additions Charged to Costs and Expenses | 65,272 | 42,101 |
Deductions and Reclass Adjustments | 68,311 | 41,675 |
Ending Balance | $ 8,246 | $ 11,285 |