Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 01, 2015 | Sep. 04, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | FREDS INC | |
Entity Central Index Key | 724,571 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 1, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-30 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,265,886 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 6,964 | $ 6,440 |
Receivables, less allowance for doubtful accounts of $3,228 and $2,404, respectively | 58,123 | 41,370 |
Inventories | 323,591 | 315,678 |
Other non-trade receivables | 41,227 | 43,487 |
Prepaid expenses and other current assets | 11,146 | 12,983 |
Total current assets | 441,051 | 419,958 |
Property and equipment, at depreciated cost | 140,310 | 143,985 |
Goodwill | 44,472 | 87 |
Other intangibles, net | 95,580 | 79,542 |
Other noncurrent assets, net | 8,741 | 5,674 |
Total assets | 730,154 | 649,246 |
Current liabilities: | ||
Accounts payable | 161,370 | 143,250 |
Current portion of indebtedness | 636 | 4,331 |
Accrued expenses and other | 53,781 | 45,599 |
Deferred income taxes | 13,386 | 13,386 |
Total current liabilities | 229,173 | 206,566 |
Long-term portion of indebtedness | 68,034 | 2,259 |
Other noncurrent liabilities | 23,323 | 24,785 |
Total liabilities | $ 320,530 | $ 233,610 |
Commitments and Contingencies (See Note 9 - Legal Contingencies) | ||
Shareholders' equity: | ||
Retained earnings | $ 301,059 | $ 310,571 |
Accumulated other comprehensive income | 570 | 570 |
Total shareholders' equity | 409,624 | 415,636 |
Total liabilities and shareholders' equity | $ 730,154 | $ 649,246 |
Nonvoting Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | ||
Nonvoting Series A Junior Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | ||
Common Class A [Member] | ||
Shareholders' equity: | ||
Common stock | $ 107,995 | $ 104,495 |
Nonvoting Common Class B [Member] | ||
Shareholders' equity: | ||
Common stock |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 |
Allowance for doubtful accounts | $ 3,228 | $ 2,404 |
Nonvoting Preferred Stock [Member] | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Nonvoting Series A Junior Preferred Stock [Member] | ||
Preferred stock, shares authorized | 224,594 | 224,594 |
Common Class A [Member] | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 37,265,456 | 36,969,268 |
Common stock, shares outstanding | 37,265,456 | 36,969,268 |
Nonvoting Common Class B [Member] | ||
Common stock, shares authorized | 11,500,000 | 11,500,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 546,083 | $ 491,185 | $ 1,055,130 | $ 989,449 |
Cost of goods sold | 414,166 | 377,516 | 786,122 | 733,306 |
Gross profit | 131,917 | 113,669 | 269,008 | 256,143 |
Depreciation and amortization | 11,508 | 10,210 | 22,390 | 20,049 |
Selling, general and administrative expenses | 128,187 | 129,600 | 254,321 | 252,206 |
Operating loss | (7,778) | (26,141) | (7,703) | (16,112) |
Interest expense | 449 | 163 | 711 | 298 |
Loss before income taxes | (8,227) | (26,304) | (8,414) | (16,410) |
Benefit for income taxes | (3,350) | (9,870) | (3,508) | (6,094) |
Net loss | $ (4,877) | $ (16,434) | $ (4,906) | $ (10,316) |
Net loss per share | ||||
Basic (in dollars per share) | $ (0.13) | $ (0.45) | $ (0.13) | $ (0.28) |
Diluted (in dollars per share) | $ (0.13) | $ (0.45) | $ (0.13) | $ (0.28) |
Weighted average shares outstanding | ||||
Basic (in shares) | 36,676 | 36,635 | 36,586 | 36,611 |
Effect of dilutive stock options (in shares) | 0 | 0 | 0 | 0 |
Diluted (in shares) | 36,676 | 36,635 | 36,586 | 36,611 |
Dividends per common share (in dollars per share) | $ 0.06 | $ 0.06 | $ 0.12 | $ 0.12 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (4,877) | $ (16,434) | $ (4,906) | $ (10,316) |
Other comprehensive income (expense), net of tax postretirement plan adjustment | ||||
Comprehensive loss | $ (4,877) | $ (16,434) | $ (4,906) | $ (10,316) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 01, 2015 | Aug. 02, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (4,906) | $ (10,316) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 22,390 | 20,049 |
Net gain on asset disposition | (107) | (2,707) |
Provision (benefit) for store closures and asset impairment | (2,840) | 14,922 |
Stock-based compensation | 928 | 1,364 |
Provision for uncollectible receivables | 824 | 1,240 |
LIFO reserve increase | 3,281 | 2,111 |
Deferred income tax benefit | (3,511) | (7,414) |
Income tax charge upon exercise of stock options | (214) | (58) |
(Increase) decrease in operating assets: | ||
Trade and non-trade receivables | (8,675) | $ 1,668 |
Insurance receivables | (189) | |
Inventories | (6,034) | $ 5,932 |
Other assets | 1,951 | 901 |
Increase (decrease) in operating liabilities: | ||
Accounts payable and accrued expenses | 3,947 | (5,247) |
Income taxes payable | 8,443 | (6,022) |
Other noncurrent liabilities | (2,464) | 729 |
Net cash provided by operating activities | 12,824 | 17,152 |
Cash flows from investing activities: | ||
Capital expenditures | (10,301) | (11,300) |
Proceeds from asset dispositions | 246 | 3,807 |
Asset acquisition , net (primarily intangibles) | (6,533) | $ (16,545) |
Acquisition of Reeves-Sain Drug Store, Inc., net of cash | (42,757) | |
Net cash used in investing activities | (59,345) | $ (24,038) |
Cash flows provided by (used in) financing activities: | ||
Proceeds from revolving line of credit | 451,004 | 304,154 |
Payments on revolving line of credit | (401,004) | (291,175) |
Payments of indebtedness and capital lease obligations | (510) | (992) |
Proceeds from other long-term liabilities | (410) | |
Excess tax charges from stock-based compensation | 214 | 58 |
Proceeds from exercise of stock options and employee stock purchase plan | 2,199 | 622 |
Cash dividends paid | (4,448) | (4,418) |
Net cash provided by financing activities | 47,045 | 8,249 |
Increase in cash and cash equivalents | 524 | 1,363 |
Cash and cash equivalents: | ||
Beginning of year | 6,440 | 6,725 |
End of period | 6,964 | 8,088 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 711 | 298 |
Income taxes paid | 3,849 | $ 8,021 |
Non-cash investing and financial activities: | ||
Acquisition related note payable, see Note 10 - Indebtedness | 13,000 | |
Acquisition related contingent liability | $ 1,000 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Aug. 01, 2015 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | NOTE 1: BASIS OF PRESENTATION Freds, Inc. and subsidiaries (Freds, We, Our, Us or Company) operates, as of August 1, 2015, 662 discount general merchandise stores and three specialty pharmacy-only locations, in 15 states in the southeastern United States. Included in the count of discount general merchandise stores are 19 franchised locations. There are 376 full service pharmacy departments located within our discount general merchandise stores. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and are presented in accordance with the requirements of Form 10-Q, and therefore, do not include all information and notes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The statements reflect all adjustments (consisting of only normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of financial position in conformity with GAAP. The statements should be read in conjunction with the Notes to the Consolidated Financial Statements for the fiscal year ended January 31, 2015 incorporated into Our Annual Report on Form 10-K. The results of operations for the thirteen week and twenty-six week periods ended August 1, 2015 are not necessarily indicative of the results to be expected for the full fiscal year. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Aug. 01, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 2: INVENTORIES Merchandise inventories are valued at the lower of cost or market using the retail first-in, first-out (FIFO) method for goods in our stores and the cost FIFO 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 assumptions that the retail inventory method provides for valuation at lower of cost or market and the inherent uncertainties therein are discussed in the following paragraphs. In order to assure valuation at the lower of cost or market, 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 net realizable value (market value). Therefore, after applying the cost to retail ratio, the cost value of our inventory is stated at the lower of cost or market as is prescribed by GAAP. Because the approximation of net realizable value (market 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 stores shrink rate, which is based on the previously mentioned factors, by the interim periods 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 Companys 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 Companys retail inventory method provides an inventory valuation which reasonably approximates cost and results in carrying inventory at the lower of cost or market. For pharmacy inventories, which were approximately $40.5 million and $43.5 million at August 1, 2015 and January 31, 2015, respectively, cost was determined using the retail last-in, first-out (LIFO) method in which inventory cost is maintained using the retail inventory method, then adjusted by application of the Producer Price Index published by the U.S. Department of Labor for the cumulative annual periods. The current cost of inventories exceeded the LIFO cost by approximately $43.2 million at August 1, 2015 and $39.9 million at January 31, 2015. The Company has historically included an estimate of inbound freight and certain general and administrative costs in merchandise inventory as prescribed by 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, inclusive of the accelerated recognition of freight capitalization expense, included in merchandise inventory at August 1, 2015 is $20.1 million, with the corresponding amount of $19.4 million at January 31, 2015. In the second quarter of 2014, the Company established a reserve for inventory clearance of product that management identified as low-productive and does not fit our go-forward convenient and pharmacy healthcare services model. The Company recorded a below-cost inventory adjustment in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 330, Inventory, of approximately $11.6 million (including $1.6 million, for the accelerated recognition of freight capitalization expense) in cost of goods sold to value inventory at the lower of cost or market on inventory identified as low-productive, which the Company began liquidating late in the second quarter of 2014, in accordance with our reconfiguration strategy. During the first six months of fiscal 2015, the Company utilized $3.3 million of the reserve associated with goods sold in 2015. The following table illustrates the inventory markdown reserve activity related to the low-productive inventory discussed in the previous paragraph (in millions): Balance at January 31, 2015 Additions Utilization Ending Balance August 1, 2015 Inventory markdown on low-productive inventory $ 7.0 $ $ (3.1 ) $ 3.9 Inventory provision for freight capitalization expense $ 0.5 $ $ (0.2 ) $ 0.3 Total $ 7.5 $ $ (3.3 ) $ 4.2 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Aug. 01, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 3: STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation plans in accordance with the FASB ASC 718 Compensation Stock Compensation. Under FASB ASC 718, 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 Companys historical forfeiture experience and will be revised in subsequent periods if actual forfeitures differ from those estimates. FASB 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 as required prior to FASB ASC 718. A summary of the Companys stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Stock option expense $ 175 $ 259 $ (194 ) $ 461 Restricted stock expense 485 386 1,025 793 ESPP expense 49 55 97 110 Total stock-based compensation $ 709 $ 700 $ 928 $ 1,364 Income tax benefit on stock-based compensation $ 181 $ 183 $ 202 $ 359 The fair value of each option granted during the thirteen and twenty-six week periods ended August 1, 2015 and August 2, 2014 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Thirteen Weeks Ended Twenty-Six Weeks Ended August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Stock Options Expected volatility 30.2 % 36.6 % 30.2 % 36.7 % Risk-free interest rate 1.9 % 1.8 % 1.7 % 1.8 % Expected option life (in years) 5.84 5.84 5.84 5.84 Expected dividend yield 1.72 % 1.55 % 1.59 % 1.55 % Weighted average fair value at grant date $ 4.95 $ 5.40 $ 4.63 $ 5.39 Employee Stock Purchase Plan Expected volatility 30.9 % 32.5 % 31.8 % 36.8 % Risk-free interest rate 0.3 % 0.2 % 0.3 % 0.2 % Expected option life (in years) 0.50 0.50 0.38 0.38 Expected dividend yield 0.76 % 0.90 % 0.57 % 0.68 % Weighted average fair value at grant date $ 3.92 $ 4.31 $ 3.74 $ 4.23 The following is a summary of the methodology applied to develop each assumption: Expected Volatility Risk-free Interest Rate Expected Lives Dividend Yield Forfeiture Rate Employee Stock Purchase Plan The 2004 Employee Stock Purchase Plan (the 2004 Plan), which was approved by Freds shareholders, 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 fair market value at the time of exercise. There were 24,553 shares issued during the twenty-six weeks ended August 1, 2015. There are 1,410,928 shares approved to be issued under the 2004 Plan and as of August 1, 2015, there were 779,020 shares available. Stock Options The following table summarizes stock option activity during the twenty-six weeks ended August 1, 2015: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (Thousands) Outstanding at January 31, 2015 946,553 $ 13.56 3.4 $ 2,954 Granted 177,900 $ 17.97 Forfeited / Cancelled (273,000 ) $ 13.84 Exercised (196,533 ) $ 10.43 Outstanding at August 1, 2015 654,920 $ 15.57 5.0 $ 1,707 Exercisable at August 1, 2015 84,597 $ 14.63 3.6 $ 291 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Freds closing stock price on the last trading day of the period ended August 1, 2015 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. As of August 1, 2015, total unrecognized stock-based compensation expense net of estimated forfeitures related to non-vested stock options was approximately $1.1 million, which is expected to be recognized over a weighted average period of approximately 3.6 years. The total fair value of options vested during the twenty-six weeks ended August 1, 2015 was $62.5 thousand. Restricted Stock The following table summarizes restricted stock activity during the twenty-six weeks ended August 1, 2015: Number of Shares Weighted Average Grant Date Fair Value Non-vested Restricted Stock at January 31, 2015 557,521 $ 14.72 Granted 72,854 $ 17.53 Forfeited / Cancelled (83,124 ) $ 13.87 Vested (34,195 ) $ 14.02 Non-vested Restricted Stock at August 1, 2015 513,056 $ 15.30 The aggregate pre-tax intrinsic value of restricted stock outstanding as of August 1, 2015 is $9.3 million with a weighted average remaining contractual life of 6.9 years. The unrecognized compensation expense net of estimated forfeitures, related to the outstanding stock is approximately $5.4 million, which is expected to be recognized over a weighted average period of approximately 3.8 years. The total fair value of restricted stock awards that vested during the twenty-six weeks ended August 1, 2015 was $56.0 thousand. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Aug. 01, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 4 FAIR VALUE MEASUREMENTS 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. Due to their short-term nature, the Companys financial instruments, which include cash and cash equivalents, receivables and accounts payable, are presented on the Condensed Consolidated Balance Sheets at a reasonable estimate of their fair value as of August 1, 2015 and January 31, 2015. There were $53.4 million of borrowings at August 1, 2015 under the Companys new Revolving Credit Agreement entered into on April 9, 2015 with Regions Bank and Bank of America as of August 1, 2015, and $3.8 million on the Companys prior revolving line of credit with Regions Bank and Bank of America on January 31, 2015. The fair value of the revolving lines of credit and our mortgage loans are estimated using Level 2 inputs based on the Companys current incremental borrowing rate for comparable borrowing arrangements. The table below details the fair value and carrying values for the revolving line of credit, notes payable and mortgage loans as of the following dates: August 1, 2015 January 31, 2015 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 53,367 $ 53,367 $ 3,777 $ 3,777 Notes Payable 13,000 12,677 Mortgage loans on land & buildings 2,303 2,502 2,813 3,072 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Aug. 01, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 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. 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 shorter of the remaining term of the lease (including the upcoming renewal option, if the renewal is reasonably assured) or the useful life of the improvement. Assets under capital leases are amortized in accordance with the Companys 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. Gains or losses on the sale of assets are recorded as a component of selling, general and administrative expenses. The following illustrates the breakdown of the major categories within Property and Equipment (in thousands): August 1, 2015 January 31, 2015 Property and equipment, at cost: Buildings and building improvements $ 117,760 $ 115,863 Leasehold improvements 79,111 76,822 Automobiles and vehicles 5,849 5,764 Airplane 4,697 4,697 Furniture, fixtures and equipment 273,056 267,397 480,473 470,543 Less: Accumulated depreciation and amortization (352,376 ) (339,195 ) 128,097 131,348 Construction in progress 3,570 4,033 Land 8,643 8,604 Total Property and equipment, at depreciated cost $ 140,310 $ 143,985 |
EXIT AND DISPOSAL ACTIVITIES
EXIT AND DISPOSAL ACTIVITIES | 6 Months Ended |
Aug. 01, 2015 | |
Restructuring and Related Activities [Abstract] | |
EXIT AND DISPOSAL ACTIVITIES | NOTE 6: EXIT AND DISPOSAL ACTIVITIES Fixed Assets The Companys 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 FASB ASC 360, Impairment or Disposal of Long-Lived Assets. 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 assets 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 fiscal 2014, in association with the planned closure of stores not meeting the Companys operational performance targets, we recorded a charge of $2.9 million in selling, general and administrative expense for the impairment of fixed assets and leasehold improvements. Fifty-two stores closed in accordance with the Companys reconfiguration plan, and during 2014, the Company utilized $2.5 million of the reserve associated with fixed assets and leasehold improvements for the closed stores leaving $0.4 million remaining in the reserve as of January 31, 2015. In the first six months of 2015, the Company recorded an additional charge of $0.3 million for fixed assets and leasehold improvements related to the 2014 store closures leaving $0.7 million remaining in the reserve as of August 1, 2015. Inventory As discussed in Note 2 - Inventories, we adjust inventory values on a consistent basis to reflect current market conditions. In accordance with FASB 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. In the fourth quarter of 2013, a reserve in the amount of $1.7 million was established for the discontinuance of product categories that the Company has decided to exit in line with the strategies that are part of the Companys reconfiguration plan. Product categories the Company has decided to exit are furniture, electronics, and footwear. During 2014, the Company reserved an additional $0.3 million for the discontinuance of product categories that the Company has decided to exit and utilized $1.6 million of the reserve associated with goods sold in 2014. During the first six months of 2015, the Company utilized $0.1 million of the reserve associated with goods sold in 2015. 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 FASB ASC 420, Exit or Disposal Cost Obligations. Key assumptions in calculating the liability include the timeframe expected to terminate lease agreements, estimates related to the sublease potential of closed locations, and estimates of other related exit costs. If actual timing and potential termination costs or realization of sublease income differ from our estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary. A lease obligation still exists for some store closures that occurred in 2008. During the first six months of fiscal 2015, we utilized $0.1 million and added less than $0.1 million of the remaining lease liability for the fiscal 2008 store closures, leaving no reserve at August 1, 2015. The following table illustrates the exit and disposal reserves related to the store closures and inventory strategic initiatives discussed in the previous paragraphs (in millions): Balance at January 31, 2015 Additions Utilization Ending Balance August 1, 2015 Inventory markdowns for discontinuance of exit categories $ 0.4 $ $ (0.1 ) $ 0.3 Inventory provision for freight capitalization expense, exit categories $ 0.1 $ $ $ 0.1 Impairment charge for the disposal of fixed assets for 2014 planned closures $ 0.4 $ 0.3 $ $ 0.7 Lease contract termination liability, 2008 closures $ 0.1 $ $ (0.1 ) $ Total $ 1.0 $ 0.3 $ (0.2 ) $ 1.1 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended |
Aug. 01, 2015 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 7: ACCUMULATED OTHER 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 GAAP are recorded as an element of shareholders equity but are excluded from net income. The Companys accumulated other comprehensive income includes the unrecognized prior service costs, transition obligations and actuarial gains/losses associated with our postretirement benefit plan. The following table illustrates the activity in accumulated other comprehensive income: Thirteen Weeks Ended Year Ended (in thousands) August 1, 2015 August 2, 2014 January 31, 2015 Accumulated other comprehensive income $ 570 $ 703 $ 703 Amortization of postretirement benefit (133 ) Ending balance $ 570 $ 703 $ 570 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Aug. 01, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8: RELATED PARTY TRANSACTIONS Atlantic Retail Investors, LLC, which is partially owned by Michael J. Hayes, a director of the Company and Chairman of the Companys board of directors, owns the land and buildings occupied by three Freds stores. Richard H. Sain, Senior Vice President of Retail Pharmacy Business Development owns the land and building occupied by one of Freds Xpress Pharmacy locations. The terms and conditions regarding the leases on these locations are consistent in all material respects with other stores leases of the Company with unrelated landlords. The total rental payments related to related party leases were $288.0 thousand and $159.4 thousand for the twenty-six weeks ended August 1, 2015 and August 2, 2014, respectively. The increase is due to the timing of property tax and insurance payments for the store locations as well as the addition of the Xpress pharmacy location. 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, Freds provided notes payable totaling $13.0 million to the sellers of Reeves-Sain Drug Store, Inc. who joined Freds as part of the acquisition. The notes payable are due in three equal installments to be paid on January 31 st |
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES | 6 Months Ended |
Aug. 01, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL CONTINGENCIES | NOTE 9: LEGAL CONTINGENCIES In July 2008, a lawsuit styled Jessica Chapman, on behalf of herself and others similarly situated, v. Freds Stores of Tennessee, Inc. was filed in the United States District Court for the Northern District of Alabama, Southern Division, in which the plaintiff alleges that she and other female assistant store managers were paid less than comparable males and seeks compensable damages, liquidated damages, attorney fees and court costs. The plaintiff filed a motion seeking collective action. On or about March 15, 2013, the judge in the matter issued a Report and Recommendation that the case be conditionally certified as a collective action, which the District Court Judge affirmed. As a result, notice of a collective action was sent to the appropriate class as required by the Court. One hundred ninety four plaintiffs opted into the suit, and approximately one hundred seventy plaintiffs currently remain in the suit. Although, the Company believes that all of its assistant managers were always properly paid and that the matter was not appropriate for collective action treatment, the Company and its insurance company participated in mediation with the plaintiffs. On March 26, 2015, the plaintiffs, their counsel, the Company and the Companys insurance carrier reached a tentative agreement whereby the case would be settled for a total of $315,000, and the plaintiffs would be bound by the terms of a settlement agreement, and the case dismissed with prejudice. The Company has tendered the matter to its Employment Practices Liability Insurance (EPLI) carrier for coverage under its EPLI policy. As stated above, the EPLI carrier participated in the resolution of the suit. The settlement agreement has been signed, and the parties are working towards the final distribution of the settlement proceeds. The Court has been notified of the settlement and that the matter will be dismissed with prejudice. On August 10, 2015, following an investigation by a third-party cyber-security firm, the Company reported that there had been unauthorized access to two Company servers through which payment card data is routed. The investigation uncovered malware on the two servers beginning on March 23, 2015, and that malware operated on one server until April 8 and on the other server until April 24. The malware was designed to search only for track 2 datadata from the magnetic stripe of payment cards that contains only the card number, expiration date and verification code. During this time period, track 2 data was at risk of disclosure; however, the third-party cyber-security firm did not find evidence that track 2 data was removed from the Companys system. No other customer information was involved. The malware has been removed from the Companys system, and the Company has implemented and is continuing to implement enhanced security measures to prevent similar events from occurring in the future. At this time, the Company is not able to estimate the costs or a range of costs related to this incident; however, costs related to the incident may have a material adverse effect on the Company. Costs may include liabilities to payment card networks for reimbursement of payment card fraud and reissuance costs, liabilities from current and future civil litigation, governmental investigations and enforcement proceedings, as well as legal and investigative costs. The Company has cyber-security risk insurance, which may offset some of these costs. I n 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 outcome of the proceedings and claims 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 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 financial statements as a whole. |
INDEBTEDNESS
INDEBTEDNESS | 6 Months Ended |
Aug. 01, 2015 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | NOTE 10: INDEBTEDNESS On April 9, 2015, the Company entered into a new agreement with Regions Bank and Bank of America (the New Agreement) to replace the January 25, 2013 Revolving Loan and Credit Agreement that the Company had previously entered into with Regions Bank and Bank of America. The proceeds from the New Agreement were used in part to refinance the January 25, 2013 Revolving Loan and Credit Agreement and will also be used to support acquisitions and the Companys working capital needs. The New Agreement provides for a $150.0 million secured revolving line of credit, which will include a sublimit for letters of credit and swingline loans. The New Agreement will expire on April 9, 2020 and will bear interest at 1.25% or 1.50% plus either LIBOR or the LIBOR index rate, depending on our FIFO inventory balance. The Companys interest rate for the unused portion of the credit line is 20.0 basis points, or 2%. The New Agreement also bears a credit facility fee which will be amortized over the agreement term. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Aug. 01, 2015 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 11: BUSINESS COMBINATIONS On April 10, 2015, we completed the stock purchase agreement to acquire Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services. The total consideration for the purchase was approximately $67.0 million, less working capital adjustments of $10.2 million, which yielded an adjusted purchase consideration of $56.8 million. 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 A summary of the preliminary purchase price allocation for Reeves-Sain Drug Store, Inc. is as follows: Total purchase consideration: Cash $ 42,757.0 Notes payable 13,000.0 Contingent liability 1,000.0 Total purchase consideration $ 56,757.0 Allocation of the purchase consideration: Accounts receivables $ 14,474.0 Inventory 2,005.0 Other assets 298.0 Goodwill 44,392.0 Identifiable intangible assets 18,180. Total assets acquired $ 79,349. Accounts payable $ 21,448.0 Other current liabilities 1,144.0 Total liabilities assumed $ 22,592.0 Net assets acquired $ 56,757.0 The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands): Amount Weighted Average Life (Years) Customer prescription files $ 7,820.0 4 Referral and relationships 1,400.0 2 Trade name 6,900.0 Non-compete agreements 1,800.0 8 Business licenses 260.0 1 $ 18,180.0 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory markdown reserve activity | The following table illustrates the inventory markdown reserve activity related to the low-productive inventory discussed in the previous paragraph (in millions): Balance at January 31, 2015 Additions Utilization Ending Balance August 1, 2015 Inventory markdown on low-productive inventory $ 7.0 $ $ (3.1 ) $ 3.9 Inventory provision for freight capitalization expense $ 0.5 $ $ (0.2 ) $ 0.3 Total $ 7.5 $ $ (3.3 ) $ 4.2 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of company's stock-based compensation | A summary of the Companys stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Stock option expense $ 175 $ 259 $ (194 ) $ 461 Restricted stock expense 485 386 1,025 793 ESPP expense 49 55 97 110 Total stock-based compensation $ 709 $ 700 $ 928 $ 1,364 Income tax benefit on stock-based compensation $ 181 $ 183 $ 202 $ 359 |
Schedule of stock option granted using the Black-Scholes option-pricing model | The fair value of each option granted during the thirteen and twenty-six week periods ended August 1, 2015 and August 2, 2014 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Thirteen Weeks Ended Twenty-Six Weeks Ended August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Stock Options Expected volatility 30.2 % 36.6 % 30.2 % 36.7 % Risk-free interest rate 1.9 % 1.8 % 1.7 % 1.8 % Expected option life (in years) 5.84 5.84 5.84 5.84 Expected dividend yield 1.72 % 1.55 % 1.59 % 1.55 % Weighted average fair value at grant date $ 4.95 $ 5.40 $ 4.63 $ 5.39 Employee Stock Purchase Plan Expected volatility 30.9 % 32.5 % 31.8 % 36.8 % Risk-free interest rate 0.3 % 0.2 % 0.3 % 0.2 % Expected option life (in years) 0.50 0.50 0.38 0.38 Expected dividend yield 0.76 % 0.90 % 0.57 % 0.68 % Weighted average fair value at grant date $ 3.92 $ 4.31 $ 3.74 $ 4.23 |
Schedule of stock option activity | The following table summarizes stock option activity during the twenty-six weeks ended August 1, 2015: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (Thousands) Outstanding at January 31, 2015 946,553 $ 13.56 3.4 $ 2,954 Granted 177,900 $ 17.97 Forfeited / Cancelled (273,000 ) $ 13.84 Exercised (196,533 ) $ 10.43 Outstanding at August 1, 2015 654,920 $ 15.57 5.0 $ 1,707 Exercisable at August 1, 2015 84,597 $ 14.63 3.6 $ 291 |
Schedule of restricted stock activity | The following table summarizes restricted stock activity during the twenty-six weeks ended August 1, 2015: Number of Shares Weighted Average Grant Date Fair Value Non-vested Restricted Stock at January 31, 2015 557,521 $ 14.72 Granted 72,854 $ 17.53 Forfeited / Cancelled (83,124 ) $ 13.87 Vested (34,195 ) $ 14.02 Non-vested Restricted Stock at August 1, 2015 513,056 $ 15.30 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
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, notes payable and mortgage loans as of the following dates: August 1, 2015 January 31, 2015 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 53,367 $ 53,367 $ 3,777 $ 3,777 Notes Payable 13,000 12,677 Mortgage loans on land & buildings 2,303 2,502 2,813 3,072 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment | The following illustrates the breakdown of the major categories within Property and Equipment (in thousands): August 1, 2015 January 31, 2015 Property and equipment, at cost: Buildings and building improvements $ 117,760 $ 115,863 Leasehold improvements 79,111 76,822 Automobiles and vehicles 5,849 5,764 Airplane 4,697 4,697 Furniture, fixtures and equipment 273,056 267,397 480,473 470,543 Less: Accumulated depreciation and amortization (352,376 ) (339,195 ) 128,097 131,348 Construction in progress 3,570 4,033 Land 8,643 8,604 Total Property and equipment, at depreciated cost $ 140,310 $ 143,985 |
EXIT AND DISPOSAL ACTIVITIES (T
EXIT AND DISPOSAL ACTIVITIES (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of exit and disposal reserves | The following table illustrates the exit and disposal reserves related to the store closures and inventory strategic initiatives discussed in the previous paragraphs (in millions): Balance at January 31, 2015 Additions Utilization Ending Balance August 1, 2015 Inventory markdowns for discontinuance of exit categories $ 0.4 $ $ (0.1 ) $ 0.3 Inventory provision for freight capitalization expense, exit categories $ 0.1 $ $ $ 0.1 Impairment charge for the disposal of fixed assets for 2014 planned closures $ 0.4 $ 0.3 $ $ 0.7 Lease contract termination liability, 2008 closures $ 0.1 $ $ (0.1 ) $ Total $ 1.0 $ 0.3 $ (0.2 ) $ 1.1 |
ACCUMULATED OTHER COMPREHENSI23
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income | The following table illustrates the activity in accumulated other comprehensive income: Thirteen Weeks Ended Year Ended (in thousands) August 1, 2015 August 2, 2014 January 31, 2015 Accumulated other comprehensive income $ 570 $ 703 $ 703 Amortization of postretirement benefit (133 ) Ending balance $ 570 $ 703 $ 570 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Business Combinations [Abstract] | |
Schedule of preliminary purchase price allocation | A summary of the preliminary purchase price allocation for Reeves-Sain Drug Store, Inc. is as follows: Total purchase consideration: Cash $ 42,757.0 Notes payable 13,000.0 Contingent liability 1,000.0 Total purchase consideration $ 56,757.0 Allocation of the purchase consideration: Accounts receivables $ 14,474.0 Inventory 2,005.0 Other assets 298.0 Goodwill 44,392.0 Identifiable intangible assets 18,180.0 Total assets acquired $ 79,349.0 Accounts payable $ 21,448.0 Other current liabilities 1,144.0 Total liabilities assumed $ 22,592.0 Net assets acquired $ 56,757.0 |
Schedule of identifiable intangible assets acquired | The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands): Amount Weighted Average Life (Years) Customer prescription files $ 7,820.0 4 Referral and relationships 1,400.0 2 Trade name 6,900.0 Non-compete agreements 1,800.0 8 Business licenses 260.0 1 $ 18,180.0 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) | Aug. 01, 2015Number |
Number of states in which entity operates | 15 |
Number of specialty pharmacy | 3 |
General Merchandise [Member] | |
Number of stores | 662 |
Number of specialty pharmacy | 376 |
Franchised Fred's Stores [Member] | |
Number of stores | 19 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Aug. 02, 2014 | Aug. 01, 2015 | |
Inventory Valuation Reserves [RollForward] | ||
Inventory Valuation Reserves, Beginning Balance | $ 7,500 | |
Inventory Valuation Reserves Additions | $ 11,600 | |
Inventory Valuation Reserves Utilization | (3,300) | |
Inventory Valuation Reserves, Ending Balance | 4,200 | |
Inventory markdowns for discontinuance of exit categories [Member] | ||
Inventory Valuation Reserves [RollForward] | ||
Inventory Valuation Reserves, Beginning Balance | 7,000 | |
Inventory Valuation Reserves Utilization | (3,100) | |
Inventory Valuation Reserves, Ending Balance | 3,900 | |
Inventory provision for freight capitalization expense, exit categories [Member] | ||
Inventory Valuation Reserves [RollForward] | ||
Inventory Valuation Reserves, Beginning Balance | 500 | |
Inventory Valuation Reserves Additions | $ 1,600 | |
Inventory Valuation Reserves Utilization | (200) | |
Inventory Valuation Reserves, Ending Balance | $ 300 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Aug. 02, 2014 | Aug. 01, 2015 | Jan. 31, 2015 | |
LIFO inventory amount | $ 40,500 | $ 43,500 | |
Current cost of inventories exceeded LIFO cost | 43,200 | 39,900 | |
Merchandise inventory | 20,100 | $ 19,400 | |
Inventory valuation reserves additions | $ 11,600 | ||
Inventory valuation reserves utilization | (3,300) | ||
Inventory provision for freight capitalization expense, exit categories [Member] | |||
Inventory valuation reserves additions | $ 1,600 | ||
Inventory valuation reserves utilization | $ (200) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Total stock-based compensation | $ 709 | $ 700 | $ 928 | $ 1,364 |
Income tax benefit on stock-based compensation | 181 | 183 | 202 | 359 |
Stock Option [Member] | ||||
Total stock-based compensation | 175 | 259 | (194) | 461 |
Restricted Stock [Member] | ||||
Total stock-based compensation | 485 | 386 | 1,025 | 793 |
ESPP [Member] | ||||
Total stock-based compensation | $ 49 | $ 55 | $ 97 | $ 110 |
STOCK-BASED COMPENSATION (Det29
STOCK-BASED COMPENSATION (Details 1) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Expected volatility | 30.20% | 36.60% | 30.20% | 36.70% |
Risk-free interest rate | 1.90% | 1.80% | 1.70% | 1.80% |
Expected option life (in years) | 5 years 10 months 2 days | 5 years 10 months 2 days | 5 years 10 months 2 days | 5 years 10 months 2 days |
Expected dividend yield | 1.72% | 1.55% | 1.59% | 1.55% |
Weighted average fair value at grant date | $ 4.95 | $ 5.40 | $ 4.63 | $ 5.39 |
ESPP [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Expected volatility | 30.90% | 32.50% | 31.80% | 36.80% |
Risk-free interest rate | 0.30% | 0.20% | 0.30% | 0.20% |
Expected option life (in years) | 6 months | 6 months | 4 months 17 days | 4 months 17 days |
Expected dividend yield | 0.76% | 0.90% | 0.57% | 0.68% |
Weighted average fair value at grant date | $ 3.92 | $ 4.31 | $ 3.74 | $ 4.23 |
STOCK-BASED COMPENSATION (Det30
STOCK-BASED COMPENSATION (Details 2) - Aug. 01, 2015 - Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | Total |
Number of Options | |
Outstanding, beginning balance | 946,553 |
Granted | 177,900 |
Forfeited / Cancelled | (273,000) |
Exercised | (196,533) |
Outstanding, ending balance | 654,920 |
Options Exercisable | 84,597 |
Weighted Average Exercise Price | |
Outstanding, beginning balance | $ 13.56 |
Granted | 17.97 |
Forfeited / Cancelled | 13.84 |
Exercised | 10.43 |
Outstanding, ending balance | 15.57 |
Options Exercisable | $ 14.63 |
Weighted Average Remaining Contractual Life | |
Outstanding, Beginning | 3 years 4 months 24 days |
Outstanding, ending | 5 years |
Options exercisable | 3 years 7 months 6 days |
Aggregate Intrinsic Value | |
Outstanding, Beginning Balance | $ 2,954 |
Outstanding, Ending Balance | 1,707 |
Options Exercisable | $ 291 |
STOCK-BASED COMPENSATION (Det31
STOCK-BASED COMPENSATION (Details 3) - 6 months ended Aug. 01, 2015 - Restricted Stock [Member] - $ / shares | Total |
Number of Shares | |
Non-vested Restricted Stock, Beginning balance | 557,521 |
Granted | 72,854 |
Forfeited / Cancelled | (83,124) |
Vested | (34,195) |
Non-vested Restricted Stock, Ending balance | 513,056 |
Weighted Average Grant Date Fair Value | |
Non-vested Restricted Stock, Beginning balance | $ 14.72 |
Granted | 17.53 |
Forfeited / Cancelled | 13.87 |
Vested | 14.02 |
Non-vested Restricted Stock, Ending balance | $ 15.30 |
STOCK-BASED COMPENSATION (Det32
STOCK-BASED COMPENSATION (Details Narrative) - Aug. 01, 2015 - USD ($) | Total |
ESPP [Member] | |
Number of shares issued during the period (in shares) | 24,553 |
Number of shares authorized (in shares) | 1,410,928 |
Number of shares available for grant (in shares) | 779,020 |
Stock Option [Member] | |
Unrecognized stock-based compensation expense related to non-vested stock options | $ 1,100,000 |
Unrecognized stock-based compensation expense related to non-vested awards, weighted average period | 3 years 7 months 6 days |
Total fair value of options vested | $ 62,500 |
Restricted Stock [Member] | |
Unrecognized stock-based compensation expense related to non-vested awards, weighted average period | 3 years 9 months 18 days |
Weighted average remaining contractual terms | 6 years 10 months 24 days |
Total fair value of vested | $ 56,000 |
Aggregate pre-tax intrinsic value | 9,300,000 |
Unrecognized stock-based compensation expense related to outstanding options | $ 5,400,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 |
Mortgage loans on land & buildings, Carrying Value | $ 2,303 | $ 2,813 |
Mortgage loans on land & buildings, Fair Value | 2,502 | 3,072 |
Secured Revolving Line of Credit [Member] | ||
Mortgage loans on land & buildings, Carrying Value | 53,367 | 3,777 |
Mortgage loans on land & buildings, Fair Value | 53,367 | $ 3,777 |
Notes Payable, Other Payables [Member] | ||
Mortgage loans on land & buildings, Carrying Value | 13,000 | |
Mortgage loans on land & buildings, Fair Value | $ 12,677 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 |
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | $ 140,310 | $ 143,985 |
Buildings and building improvements [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 117,760 | 115,863 |
Leasehold improvements [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 79,111 | 76,822 |
Automobiles and vehicles [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 5,849 | 5,764 |
Airplane [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 4,697 | 4,697 |
Furniture, fixtures and equipment [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 273,056 | 267,397 |
Construction in progress [Member] | ||
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | 3,570 | 4,033 |
Land [Member] | ||
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | 8,643 | 8,604 |
Property, plant and equipment [Member] | ||
Property and equipment, at cost: | ||
Property and Equipment, Gross | 480,473 | 470,543 |
Less: Accumulated depreciation and amortization | (352,376) | (339,195) |
Total Property and equipment, at depreciated cost | $ 128,097 | $ 131,348 |
EXIT AND DISPOSAL ACTIVITIES (D
EXIT AND DISPOSAL ACTIVITIES (Details) $ in Thousands | 6 Months Ended |
Aug. 01, 2015USD ($) | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve, Beginning Balance | $ 1,000 |
Restructuring Reserve, Additions | 300 |
Restructuring Reserve, Utilization | (200) |
Restructuring Reserve, Ending Balance | 1,100 |
Inventory markdowns for discontinuance of exit categories [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve, Beginning Balance | 400 |
Restructuring Reserve, Utilization | (100) |
Restructuring Reserve, Ending Balance | 300 |
Inventory provision for freight capitalization expense, exit categories [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve, Beginning Balance | 100 |
Restructuring Reserve, Ending Balance | 100 |
Impairment Charge For The Disposal Of Fixed Assets For 2014 Planned Closures [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve, Beginning Balance | 400 |
Restructuring Reserve, Additions | 300 |
Restructuring Reserve, Ending Balance | 700 |
Lease Contract Termination Liability 2008 Closures [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve, Beginning Balance | 100 |
Restructuring Reserve, Utilization | (100) |
Restructuring Reserve, Ending Balance | $ 100 |
EXIT AND DISPOSAL ACTIVITIES 36
EXIT AND DISPOSAL ACTIVITIES (Details Narrative) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Aug. 01, 2015USD ($) | Feb. 01, 2014USD ($)Number | Jan. 31, 2015USD ($) | Feb. 02, 2013USD ($) | |
Restructuring reserve | $ 1,100 | $ 1,000 | ||
Impairment Charge For The Disposal Of Fixed Assets For 2014 Planned Closures [Member] | ||||
Restructuring and related cost | $ 2,900 | |||
Number of store restructured | Number | 52 | |||
Restructuring reserve | 700 | $ 2,500 | 400 | |
Restructuring reserve, period increase (decrease) | 300 | |||
Inventory Markdowns For Discontinuance Of Exit Categories And Provision For Freight Capitalization Expense [Member] | ||||
Restructuring and related cost | 100 | 1,600 | ||
Restructuring reserve | $ 1,700 | |||
Restructuring reserve, period increase (decrease) | $ 300 | |||
Lease Contract Termination Liability 2008 Closures [Member] | ||||
Restructuring and related cost | 100 | |||
Restructuring reserve | $ 100 | $ 100 |
ACCUMULATED OTHER COMPREHENSI37
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | Jan. 31, 2015 | |
Equity [Abstract] | |||||
Accumulated other comprehensive income | $ 570 | $ 703 | $ 703 | ||
Amortization of postretirement benefit | (133) | ||||
Ending balance | $ 570 | $ 703 | $ 570 | $ 703 | $ 570 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Apr. 10, 2015 | Aug. 01, 2015 | Aug. 02, 2014 |
Reeves-Sain Drug Store, Inc [Member] | |||
Adjusted purchase consideration in notes payable | $ 13,000,000 | ||
Noncash or part noncash acquisition | $ 1,000,000 | $ 1,000,000 | |
Description of notes payable | Notes payable in three equal installments on January 31st of 2021, 2022 and 2023. | ||
Atlantic Retail Investors ( Partially owned by Michael J. Hayes) [Member] | |||
Total rental payments | $ 288,000 | $ 159,400 |
LEGAL CONTINGENCIES (Details Na
LEGAL CONTINGENCIES (Details Narrative) - Employment Practices Liability Insurance Litigation Case [Member] $ in Thousands | Mar. 26, 2015USD ($) | Mar. 15, 2013Number | Aug. 01, 2015 |
Name of the plaintiff | Jessica Chapman, on behalf of herself and others similarly situated | ||
Domicile of litigation | United States District Court for the Northern District of Alabama, Southern Division | ||
Description of allegation | Alleges that she and other female assistant store managers were paid less than comparable males and seeks compensable damages | ||
Legal damage paid | $ | $ 315 | ||
Number of plaintiffs | 194 | ||
Number of plaintiffs currently remain in the suit | 170 |
INDEBTEDNESS (Details Narrative
INDEBTEDNESS (Details Narrative) - Apr. 09, 2015 - Secured Revolving Line of Credit [Member] - USD ($) $ in Thousands | Total |
Line of credit facility, maximum borrowing capacity | $ 1,500 |
Expiration date of agreement | Apr. 9, 2020 |
Description of agreement interest rate | 1.25% or 1.50% plus either LIBOR or the LIBOR index rate, depending on our FIFO inventory balance. The Companys interest rate for the unused portion of the credit line is 20.0 basis points, or 2%. |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) | Aug. 01, 2015 | Apr. 10, 2015 | Jan. 31, 2015 |
Allocation of the purchase consideration: | |||
Goodwill | $ 44,472,000 | $ 87,000 | |
Identifiable intangible assets | 18,180,000 | ||
Reeves-Sain Drug Store, Inc [Member] | |||
Total purchase consideration: | |||
Cash | 42,757,000 | ||
Notes payable | 13,000,000 | $ 13,000,000 | |
Contingent liability | 1,000,000 | 1,000,000 | |
Total purchase consideration | 56,757,000 | 56,800,000 | |
Allocation of the purchase consideration: | |||
Accounts receivables | 14,474,000 | ||
Inventory | 2,005,000 | ||
Other assets | 298,000 | ||
Goodwill | 44,392,000 | ||
Identifiable intangible assets | 18,180,000 | ||
Total assets acquired | 79,349,000 | ||
Accounts payable | 21,448,000 | ||
Other current liabilities | 1,144,000 | ||
Total liabilities assumed | 22,592,000 | ||
Net assets acquired | $ 56,757,000 | $ 56,800,000 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details 1) - Aug. 01, 2015 - USD ($) $ in Thousands | Total |
Business combination total | $ 18,180 |
Trade name [Member] | |
Indefinite-lived intangible assets acquired | 6,900 |
Customer prescription files [Member] | |
Finite-lived intangible assets acquired | $ 7,820 |
Weighted average life (in years) | 4 years |
Referral and relationships [Member] | |
Finite-lived intangible assets acquired | $ 1,400 |
Weighted average life (in years) | 2 years |
Non-compete agreements [Member] | |
Finite-lived intangible assets acquired | $ 1,800 |
Weighted average life (in years) | 8 years |
Business licenses [Member] | |
Finite-lived intangible assets acquired | $ 260 |
Weighted average life (in years) | 1 year |
BUSINESS COMBINATIONS (Detail43
BUSINESS COMBINATIONS (Details Narrative) - USD ($) | Apr. 10, 2015 | Aug. 01, 2015 | Aug. 02, 2014 |
Noncash or part noncash acquisition | $ 1,000,000 | ||
Reeves-Sain Drug Store, Inc [Member] | |||
Description of acquired entity | Provider of retail and specialty pharmaceutical services. | ||
Total purchase consideration gross | $ 67,000,000 | ||
Working capital adjustments | 10,200,000 | ||
Total purchase consideration | 56,800,000 | 56,757,000 | |
Adjusted consideration in cash | 42,800,000 | ||
Adjusted consideration in notes payable | $ 13,000,000 | $ 13,000,000 | |
Description about notes payable | Notes payable in three equal installments on January 31st of 2021, 2022 and 2023. | ||
Noncash or part noncash acquisition | $ 1,000,000 |