Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 01, 2020 | Sep. 04, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 1, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | AEO | |
Entity Registrant Name | American Eagle Outfitters, Inc. | |
Entity Central Index Key | 0000919012 | |
Current Fiscal Year End Date | --01-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 166,113,983 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Security Exchange Name | NYSE | |
Entity File Number | 1-33338 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-2721761 | |
Entity Address, Address Line One | 77 Hot Metal Street | |
Entity Address, City or Town | Pittsburgh | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15203-2329 | |
City Area Code | 412 | |
Local Phone Number | 432-3300 | |
Document Quarterly Report | true | |
Document Transition Report | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Aug. 01, 2020 | Feb. 01, 2020 | Aug. 03, 2019 |
Current assets: | |||
Cash and cash equivalents | $ 898,787 | $ 361,930 | $ 267,166 |
Short-term investments | 55,000 | 50,000 | |
Merchandise inventory | 421,196 | 446,278 | 534,762 |
Accounts receivable, net | 107,243 | 119,064 | 98,604 |
Prepaid expenses and other | 155,141 | 65,658 | 69,541 |
Total current assets | 1,582,367 | 1,047,930 | 1,020,073 |
Property and equipment, at cost, net of accumulated depreciation | 659,351 | 735,120 | 754,031 |
Operating lease right-of-use assets | 1,271,491 | 1,418,916 | 1,462,544 |
Intangible assets net, including goodwill | 51,432 | 53,004 | 56,326 |
Non-current deferred income taxes | 30,224 | 22,724 | 16,759 |
Other Assets | 33,111 | 50,985 | 49,426 |
Total assets | 3,627,976 | 3,328,679 | 3,359,159 |
Current liabilities: | |||
Accounts payable | 295,296 | 285,746 | 316,995 |
Current portion of operating lease liabilities | 348,921 | 299,161 | 279,207 |
Accrued income and other taxes | 12,783 | 9,514 | 17,754 |
Accrued compensation and payroll taxes | 66,131 | 43,537 | 54,683 |
Dividends payable | 22,837 | ||
Unredeemed gift cards and gift certificates | 43,165 | 56,974 | 34,742 |
Other current liabilities and accrued expenses | 51,281 | 56,824 | 60,265 |
Total current liabilities | 840,414 | 751,756 | 763,646 |
Non-current liabilities: | |||
Long-term debt, net | 516,953 | ||
Non-current operating lease liabilities | 1,253,105 | 1,301,735 | 1,338,634 |
Other non-current liabilities | 19,604 | 27,335 | 28,302 |
Total non-current liabilities | 1,789,662 | 1,329,070 | 1,366,936 |
Commitments and contingencies | |||
Stockholders’ equity: | |||
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding | |||
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 166,090, 166,993 and 168,962 shares outstanding, respectively | 2,496 | 2,496 | 2,496 |
Contributed capital | 647,284 | 577,856 | 568,413 |
Accumulated other comprehensive loss | (47,991) | (33,168) | (36,630) |
Retained earnings | 1,807,687 | 2,108,292 | 2,070,077 |
Treasury stock, 83,476, 82,573 and 80,604 shares, respectively | (1,411,576) | (1,407,623) | (1,375,779) |
Total stockholders’ equity | 997,900 | 1,247,853 | 1,228,577 |
Total liabilities and stockholders’ equity | $ 3,627,976 | $ 3,328,679 | $ 3,359,159 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Aug. 01, 2020 | Feb. 01, 2020 | Aug. 03, 2019 |
Statement Of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 | 0 |
Preferred stock, outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 |
Common stock, shares issued | 249,566,000 | 249,566,000 | 249,566,000 |
Common stock, shares outstanding | 166,090,000 | 166,993,000 | 168,962,000 |
Treasury stock, shares | 83,476,000 | 82,573,000 | 80,604,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Income Statement [Abstract] | ||||
Total net revenue | $ 883,510 | $ 1,040,879 | $ 1,435,202 | $ 1,927,169 |
Cost of sales, including certain buying, occupancy and warehousing expenses | 618,311 | 658,308 | 1,141,697 | 1,219,677 |
Gross profit | 265,199 | 382,571 | 293,505 | 707,492 |
Selling, general and administrative expenses | 223,711 | 253,051 | 411,908 | 483,791 |
Impairment, restructuring and COVID-19 related charges | 14,611 | 2,728 | 170,231 | 4,272 |
Depreciation and amortization expense | 39,114 | 44,870 | 81,844 | 89,661 |
Operating (loss) income | (12,237) | 81,922 | (370,478) | 129,768 |
Other (expense) income, net | (6,993) | 3,990 | (10,122) | 8,172 |
(Loss) income before income taxes | (19,230) | 85,912 | (380,600) | 137,940 |
(Benefit) provision for income taxes | (5,478) | 20,931 | (109,685) | 32,206 |
Net (loss) income | $ (13,752) | $ 64,981 | $ (270,915) | $ 105,734 |
Net (loss) income per basic share | $ (0.08) | $ 0.38 | $ (1.63) | $ 0.61 |
Net (loss) income per diluted share | $ (0.08) | $ 0.38 | $ (1.63) | $ 0.61 |
Weighted average common shares outstanding - basic | 166,315 | 170,756 | 166,461 | 172,291 |
Weighted average common shares outstanding - diluted | 166,315 | 171,781 | 166,461 | 173,701 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (13,752) | $ 64,981 | $ (270,915) | $ 105,734 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 7,059 | (1,276) | (14,823) | (1,798) |
Other comprehensive (loss) income: | 7,059 | (1,276) | (14,823) | (1,798) |
Comprehensive (loss) income | $ (6,693) | $ 63,705 | $ (285,738) | $ 103,936 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Contributed Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Treasury Stock | Accumulated Other Comprehensive (Loss) |
Beginning Balance at Feb. 02, 2019 | $ 1,287,555 | $ 2,496 | $ 574,929 | $ 2,054,654 | $ (1,309,692) | $ (34,832) | ||
Beginning Balance (in shares) at Feb. 02, 2019 | 172,436,000 | |||||||
Stock awards | 14,166 | 14,166 | ||||||
Repurchase of common stock as part of publicly announced programs | (80,000) | (80,000) | ||||||
Repurchase of common stock as part of publicly announced programs (in shares) | (4,336,000) | |||||||
Repurchase of common stock from employees | (7,921) | (7,921) | ||||||
Repurchase of common stock from employees (in shares) | (421,000) | |||||||
Reissuance of treasury stock | 2,141 | (21,672) | 1,979 | 21,834 | ||||
Reissuance of treasury stock (in shares) | 1,283,000 | |||||||
Net (loss) income | 105,734 | 105,734 | ||||||
Other comprehensive income (loss) | (1,798) | (1,798) | ||||||
Cash dividends declared and dividend equivalents | (46,865) | 990 | (47,855) | |||||
Ending Balance at Aug. 03, 2019 | $ 1,228,577 | $ (44,435) | $ 2,496 | 568,413 | 2,070,077 | $ (44,435) | (1,375,779) | (36,630) |
Ending Balance (in shares) at Aug. 03, 2019 | 168,962,000 | 168,962,000 | ||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | |||||||
Beginning Balance at May. 04, 2019 | $ 1,241,751 | $ 2,496 | 570,443 | 2,028,627 | (1,324,461) | (35,354) | ||
Beginning Balance (in shares) at May. 04, 2019 | 171,870,000 | |||||||
Stock awards | 9,207 | 9,207 | ||||||
Repurchase of common stock as part of publicly announced programs | (60,000) | (60,000) | ||||||
Repurchase of common stock as part of publicly announced programs (in shares) | (3,425,000) | |||||||
Repurchase of common stock from employees | (4,423) | (4,423) | ||||||
Repurchase of common stock from employees (in shares) | (252,000) | |||||||
Reissuance of treasury stock | 1,569 | (11,797) | 261 | 13,105 | ||||
Reissuance of treasury stock (in shares) | 769,000 | |||||||
Net (loss) income | 64,981 | 64,981 | ||||||
Other comprehensive income (loss) | (1,276) | (1,276) | ||||||
Cash dividends declared and dividend equivalents | (23,232) | 560 | (23,792) | |||||
Ending Balance at Aug. 03, 2019 | $ 1,228,577 | $ (44,435) | $ 2,496 | 568,413 | 2,070,077 | $ (44,435) | (1,375,779) | (36,630) |
Ending Balance (in shares) at Aug. 03, 2019 | 168,962,000 | 168,962,000 | ||||||
Beginning Balance at Feb. 01, 2020 | $ 1,247,853 | $ 2,496 | 577,856 | 2,108,292 | (1,407,623) | (33,168) | ||
Beginning Balance (in shares) at Feb. 01, 2020 | 166,993,000 | 166,993,000 | ||||||
Stock awards | $ 15,354 | 15,354 | ||||||
Repurchase of common stock as part of publicly announced programs | (20,000) | (20,000) | ||||||
Repurchase of common stock as part of publicly announced programs (in shares) | (1,720,000) | |||||||
Repurchase of common stock from employees | (5,215) | (5,215) | ||||||
Repurchase of common stock from employees (in shares) | (436,000) | |||||||
Convertible Notes- Equity portion, net of tax | 68,330 | 68,330 | ||||||
Reissuance of treasury stock | (379) | (14,788) | (6,853) | 21,262 | ||||
Reissuance of treasury stock (in shares) | 1,253,000 | |||||||
Net (loss) income | (270,915) | (270,915) | ||||||
Other comprehensive income (loss) | (14,823) | (14,823) | ||||||
Cash dividends declared and dividend equivalents | (22,305) | 532 | (22,837) | |||||
Ending Balance at Aug. 01, 2020 | $ 997,900 | $ 2,496 | 647,284 | 1,807,687 | (1,411,576) | (47,991) | ||
Ending Balance (in shares) at Aug. 01, 2020 | 166,090,000 | 166,090,000 | ||||||
Beginning Balance at May. 02, 2020 | $ 996,983 | $ 2,496 | 646,350 | 1,826,413 | (1,423,226) | (55,050) | ||
Beginning Balance (in shares) at May. 02, 2020 | 165,500,000 | |||||||
Stock awards | 11,436 | 11,436 | ||||||
Repurchase of common stock from employees | (3,785) | (3,785) | ||||||
Repurchase of common stock from employees (in shares) | (322,000) | |||||||
Reissuance of treasury stock | (82) | (10,624) | (4,893) | 15,435 | ||||
Reissuance of treasury stock (in shares) | 912,000 | |||||||
Net (loss) income | (13,752) | (13,752) | ||||||
Other comprehensive income (loss) | 7,059 | 7,059 | ||||||
Cash dividends declared and dividend equivalents | 41 | 122 | (81) | |||||
Ending Balance at Aug. 01, 2020 | $ 997,900 | $ 2,496 | $ 647,284 | $ 1,807,687 | $ (1,411,576) | $ (47,991) | ||
Ending Balance (in shares) at Aug. 01, 2020 | 166,090,000 | 166,090,000 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Statement Of Stockholders Equity [Abstract] | ||||
Cash dividends declared and dividend equivalents, Per share | $ 0.1375 | $ 0.1375 | $ 0.1375 | $ 0.275 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | ||
Operating activities: | |||
Net (loss) income | $ (270,915,000) | $ 105,734,000 | |
Adjustments to reconcile net income to net cash from operating activities: | |||
Depreciation and amortization | 83,305,000 | 90,787,000 | |
Share-based compensation | 15,654,000 | 14,298,000 | |
Deferred income taxes | (5,437,000) | 11,823,000 | |
Loss on impairment of assets | [1] | 153,617,000 | |
Changes in assets and liabilities: | |||
Merchandise inventory | 22,119,000 | (110,768,000) | |
Operating lease assets | 142,564,000 | 120,241,000 | |
Operating lease liabilities | (70,831,000) | (132,279,000) | |
Other assets | (94,433,000) | (27,368,000) | |
Accounts payable | 8,591,000 | 76,326,000 | |
Accrued compensation and payroll taxes | 22,797,000 | (27,436,000) | |
Accrued and other liabilities | (43,450,000) | (3,761,000) | |
Net cash (used for) provided by operating activities | (36,419,000) | 117,597,000 | |
Investing activities: | |||
Capital expenditures for property and equipment | (61,402,000) | (91,793,000) | |
Purchase of available-for-sale investments | (14,956,000) | (50,000,000) | |
Sale of available-for-sale investments | 69,956,000 | 92,135,000 | |
Other investing activities | (372,000) | (1,201,000) | |
Net cash (used for) provided by investing activities | (6,774,000) | (50,859,000) | |
Financing activities: | |||
Repurchase of common stock as part of publicly announced programs | (20,000,000) | (80,000,000) | |
Repurchase of common stock from employees | (5,215,000) | (7,921,000) | |
Proceeds from revolving line of credit and convertible notes | 736,108,000 | ||
Principal payments on revolving line of credit | (130,000,000) | ||
Net proceeds from stock options exercised | 0 | 2,119,000 | |
Cash dividends paid | (46,865,000) | ||
Other financing activities | (682,000) | (108,000) | |
Net cash (used for) provided by financing activities | 580,211,000 | (132,775,000) | |
Effect of exchange rates changes on cash | (161,000) | (127,000) | |
Net change in cash and cash equivalents | 536,857,000 | (66,164,000) | |
Cash and cash equivalents - beginning of period | 361,930,000 | 333,330,000 | |
Cash and cash equivalents - end of period | $ 898,787,000 | $ 267,166,000 | |
[1] | There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. |
Interim Financial Statements
Interim Financial Statements | 6 Months Ended |
Aug. 01, 2020 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | 1. Interim Financial Statements The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company, “we” and “our”) at August 1, 2020 and August 3, 2019 and for the 13 and 26 week periods ended August 1, 2020 and August 3, 2019 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Fiscal 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2020 (the “Fiscal 2019 Form 10-K”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the footnotes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly Report on Form 10-Q. American Eagle Outfitters, Inc., a Delaware corporation, operates under the American Eagle ® ® Founded in 1977, the Company is a leading multi-brand specialty retailer that operates more than 1,000 retail stores in the U.S. and internationally, online at www.ae.com and www.aerie.com Our business is affected by the pattern of seasonality common to most retail apparel businesses. Historically, a large portion of total net revenue and operating income occurs in the third and fourth fiscal quarters, reflecting the increased demand during the back-to-school and year-end holiday selling seasons, respectively. The results for the current and prior periods are not necessarily indicative of future financial results. COVID-19 Pandemic In March 2020, a novel strain of coronavirus (“COVID-19”) was declared a global pandemic by the World Health Organization. National, state and local governments have responded to the COVID-19 pandemic in a variety of ways, including, but not limited to, by declaring states of emergency, restricting people from gathering in groups or interacting within a certain physical distance (i.e., social distancing), requiring individuals to stay at home, and in most cases, ordering non-essential businesses to close or limit operations. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to address the COVID-19 pandemic. The income tax related impacts of the CARES Act are discussed within Note 10 to the Consolidated Financial Statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Aug. 01, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 1, 2020, and in all periods presented, the Company operated in one reportable segment. Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2020” refers to the 52-week period that will end on January 30, 2021. “Fiscal 2019” refers to the 52-week period ended February 1, 2020. “Fiscal 2018” refers to the 52-week period ended February 2, 2019. Estimates The preparation of financial statements in conformity with GAAP requires the Company’s 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 reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) established Accounting Standards Codification (“ASC”) Topic 842, Leases Land Easement Practical Expedient for Transition to Topic 842 Codification Improvements to Topic 842, Leases Targeted Improvements The standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as financing or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted ASU 2016-02 and its subsequent amendments effective February 3, 2019. The Company elected this standard’s package of practical expedients, which permits the Company to maintain prior conclusions about lease identification, lease classification, and initial direct costs. The Company elected to use the go-forward practical expedient to not separate lease and non-lease components for all of our leases. The Company also elected to use the short-term lease recognition exemption for all leases that qualify. Upon adoption, the Company: • Recognized operating lease liabilities and operating lease ROU assets of $1.6 billion , for the present value of the remaining minimum rental payments on existing operating leases (including consideration related to non-lease components due to the related practical expedient). • Recognized a transition adjustment of $44.4 million (net of tax effects of $15.0 million) to beginning retained earnings related to the impairment of newly recognized operating lease ROU assets related to store assets that were impaired prior to the date of adoption. • Reclassified $82.9 million of straight-line deferred rent, $55.0 million of deferred lease credits, and $40.4 million of prepaid rent to the operating lease ROU asset. Combined with the impairment discussed above, these reclassifications reduced the net operating lease ROU asset to $1.4 billion. Corresponding amounts were not reclassified in prior periods as those prior periods are presented under ASC 840, Leases . In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 32 6) (“ASU 2016-13”) , which modifies the measurement of expected credit losses of certain financial in struments. The Company adopt ed ASU 2016-13 on February 2 , 2020 . The adoption did no t have a material impact on the Company’s Consolidated Financial Statements. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters Comprehensive Income We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended August 1, 2020, an unrealized gain of $7.1 million is included in accumulated other comprehensive income, which is primarily related to the rise of the US dollar to Mexican peso and US dollar to Canadian dollar exchange rates. During the 26 weeks ended August 1, 2020, an unrealized loss of $14.8 million is included in accumulated other comprehensive income. This is primarily related to the decline in the US dollar to Mexican peso and US dollar to Canadian dollar exchange rates during the 13 weeks ended May 2, 2020, partially offset by the strengthening of the US dollar during the 13 weeks ended August 1, 2020. Cash and Cash Equivalents and Short-Term Investments The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with a maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. Revenue Recognition The Company recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to the Customer Loyalty Program caption below for additional information. The following table sets forth the approximate consolidated percentage of total net revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019 Men’s apparel and accessories 23 % 28 % 23 % 28 % Women’s apparel and accessories (excluding Aerie) 49 % 53 % 48 % 54 % Aerie 28 % 19 % 29 % 18 % Total 100 % 100 % 100 % 100 % The following table disaggregates the Company’s total net revenue by geography for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended (In thousands) August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019 Total Net Revenue: United States $ 780,028 $ 869,001 $ 1,268,904 $ 1,642,482 Foreign (1) 103,482 171,878 166,298 284,687 Total Net Revenue $ 883,510 $ 1,040,879 $ 1,435,202 $ 1,927,169 (1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed and/or shipped to foreign countries, and international franchise royalty revenue. Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”) and buying, occupancy and warehousing costs. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. Other Income (expense), Net Other income (expense), net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses. Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Five years Information technology Three - five years As of August 1, 2020, the weighted average remaining useful life of our assets was approximately 7.5 years. In accordance with ASC 360, Property, Plant, and Equipment There were no long-lived asset impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment of property and equipment of $51.5 million. Refer to Note 12 to the Consolidated Financial Statements for additional information regarding the impairment of these assets. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. Intangible Assets, including Goodwill The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business and Tailgate brand. In accordance with ASC 350, Intangibles – Goodwill and Other Definite-lived intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 15 to 25 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended August 1, 2020 and August 3, 2019. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets. Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded approximately $1.6 million and $1.8 million of revenue related to gift card breakage during the 13 weeks ended August 1, 2020 and August 3, 2019, respectively. During the 26 weeks ending August 1, 2020 and August 3, 2019, the Company recorded $3.3 million and $3.9 million, respectively of revenue related to gift card breakage. Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. Leases The Company leases all store premises, some of its office space and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s discretion and is not reasonably certain at lease commencement. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. No operating lease ROU asset impairment charges were recorded during the 13 weeks ended August 1, 2020. Deferred lease credits represent the unamortized portion of construction allowances received from lessors related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its lessor as part of the negotiated lease terms. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. Lease Modifications and COVID-19 The FASB staff issued a Q&A document in April 2020 providing guidance on how to apply the lease modification guidance in ASC 842 to rent concessions arising from COVID-19, allowing companies to elect accounting for the concessions as if enforceable rights and obligations existed, regardless of whether they are explicitly stated in the lease contract. Per the FASB staff Q&A guidance, entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. • For concessions in the form of rent forgiveness, the Company invoked the accounting elections provided by the FASB staff; savings were recorded as a credit to variable rent in the period the amendments became fully executed. • For concessions in the form of deferred payments, the Company did not apply the FASB accounting elections; rent expense was recorded in accordance with ASC 842 and the unpaid amount remained accrued as part of the current operating lease liability. • All other forms of rent concessions followed our normal accounting policy for lease modifications, adhering to the guidance set forth in ASC 842. Co-branded Credit Card The Company offers a co-branded credit card and a private label credit card under the AE and Aerie brands. These credit cards are issued by a third party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. Customer Loyalty Program In June of 2020, the Company launched a highly-digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Prior to this launch in June 2020, under our previous program, AEO Connected TM , we also offered additional rewards for key items such as jeans and bras. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606. The portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and other and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets. Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. Segment Information In accordance with ASC 280, Segment Reporting |
Cash and Cash Equivalents and S
Cash and Cash Equivalents and Short-Term Investments | 6 Months Ended |
Aug. 01, 2020 | |
Cash And Cash Equivalents [Abstract] | |
Cash and Cash Equivalents and Short-Term Investments | 3. Cash and Cash Equivalents and Short-Term Investments The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded on the Consolidated Balance Sheets: (In thousands) August 1, 2020 February 1, 2020 August 3, 2019 Cash and cash equivalents: Cash $ 124,648 $ 126,087 $ 144,241 Money market securities 280,098 — — Interest bearing deposits 494,041 235,843 122,925 Total cash and cash equivalents $ 898,787 $ 361,930 $ 267,166 Short-term investments Certificates of deposit — 55,000 50,000 Total short-term investments — 55,000 50,000 Total $ 898,787 $ 416,930 $ 317,166 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Aug. 01, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments. Long-Term Debt As of August 1, 2020, the fair value of the Company's $200.0 million in outstanding borrowings under its revolving credit facilities approximated the carrying value. The fair value of the Company's convertible notes is not required to be measured at fair value on a recurring basis. Upon issuance, the fair value of these convertible notes was measured using a secondary market quoted price, which considers market related conditions, and is therefore within Level 2 of the fair value hierarchy. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements. Non-Financial Assets The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value. Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. There were no asset impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded asset impairment charges of $135.6 million on the assets of 272 retail stores and certain other corporate assets. Of the total, $84.1 million related to the impairment of operating lease ROU assets and $51.5 million related to the impairment of store and corporate property and equipment. The fair value of the impaired assets was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest and a real estate market participant discount rate for the ROU assets. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Aug. 01, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 5. Earnings per Share The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Weighted average common shares outstanding: Basic number of common shares outstanding 166,315 170,756 166,461 172,291 Dilutive effect of stock options and non-vested restricted stock * — 1,025 — 1,410 Diluted number of common shares outstanding 166,315 171,781 166,461 173,701 Anti-Dilutive Shares* 8,235 768 4,670 434 *For each of the 13 and 26 weeks ended August 1, 2020, there were 1.2 million potentially dilutive equity awards that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. For each of the 13 and 26 weeks ended August 1, 2020, there were 7.0 million and 3.5 million potentially dilutive shares from the Company’s convertible notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. The Company has the right to settle its convertible notes in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the notes in cash and any conversion value above the principal in stock. Because of this repayment policy, only the conversion spread portion of the amount owed is reflected as dilutive in our weighted average diluted shares outstanding. The Company uses the average of the closing prices of its common stock (NYSE: AEO) as reported on the New York Stock Exchange to calculate the conversion spread. For the 13 weeks ended August 1, 2020, the average closing price of our stock was above the conversion price per share of $8.75, but due to the Company’s net loss, the convertible notes did not have a dilutive effect. Additionally, for the 26 weeks ended August 1, 2020, the convertible notes did not have a dilutive effect due to the company’s net loss for this period. These convertible notes could have a potential dilutive effect in future periods. Dilutive and anti-dilutive shares relate to share based compensation. Refer to Note 8 and 9 to the Consolidated Financial Statements for additional information regarding our convertible notes and share-based compensation, respectively. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Aug. 01, 2020 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment consists of the following: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Property and equipment, at cost $ 2,225,579 $ 2,314,428 $ 2,271,371 Less: Accumulated depreciation and impairment (1,566,228 ) (1,579,308 ) (1,517,340 ) Property and equipment, net $ 659,351 $ 735,120 $ 754,031 |
Intangible Assets, including Go
Intangible Assets, including Goodwill | 6 Months Ended |
Aug. 01, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets, including Goodwill | 7. Intangible Assets, including Goodwill Intangible assets consist of the following: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Goodwill, gross $ 17,310 $ 17,353 $ 17,359 Accumulated impairment (1) (4,196 ) (4,196 ) (2,484 ) Goodwill, net $ 13,114 $ 13,157 $ 14,875 Trademarks, at cost 72,057 71,685 71,226 Accumulated amortization (33,739 ) (31,838 ) (29,775 ) Trademarks, net $ 38,318 $ 39,847 $ 41,451 Intangible assets, net, including goodwill $ 51,432 $ 53,004 $ 56,326 (1) Accumulated impairment includes $2.5 million recorded in Fiscal 2016 and $1.7 million in Fiscal 2019. |
Long-Term Debt, Net
Long-Term Debt, Net | 6 Months Ended |
Aug. 01, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | 8. Long-Term Debt, Net Our long-term debt consisted of the following at each of August 1, 2020, February 1, 2020, and August 3, 2019: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Convertible notes principal $ 415,025 $ - $ - Less: unamortized discount (98,072 ) - - Convertible notes, net $ 316,953 $ - $ - Revolving credit facility borrowings 200,000 - - Total long-term debt, net $ 516,953 $ - $ - Convertible Notes- Equity portion, net of tax 68,330 - - Convertible notes In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due in 2025 (the “Notes”). The Notes have a stated interest rate of 3.75%, payable semi-annually. The Company may redeem the notes, in whole or in part, at any time beginning April 2023. The Company intends to use the net proceeds from the offering for general corporate purposes. Beginning January 2025, noteholders may convert their notes for approximately 114.3 shares of common stock per $1,000 principal amount. The Company has the right to settle conversions in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the notes in cash and any conversion value above the principal in stock. Because of this repayment policy, only the conversion spread portion of the amount owed is reflected as dilutive in earning per share. The effective interest rate for the notes is 10.0% and we calculated the effective yield using a market approach. The remaining amortization period of the discount is 4.75 years. Interest expense for the convertible notes was: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Accrued interest for interest payments $ 3,903 $ - $ 4,118 $ - Amortization of discount 3,982 - 4,195 - Total interest expense $ 7,885 $ - $ 8,313 $ - The following table discloses conversion amounts if the notes were all converted as of the end of the period: (In thousands, except per share amounts) August 1, 2020 Number of shares convertible 47,437 Conversion price per share $ 8.75 Value in excess of principal if converted $ 7,024,842 Revolving credit facilities In January 2019, the Company entered into an amended and restated Credit Agreement (the “Credit Agreement”) for five-year All obligations under the Credit Facilities are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by a first-priority security interest in certain working capital assets of the borrowers and guarantors, consisting primarily of cash, receivables, inventory, and certain other assets and have been further secured by first-priority mortgages on certain real property. As of August 1, 2020, the Company was in compliance with the terms of the Credit Agreement and has $200.0 million in borrowings and $7.9 million outstanding in stand-by letters of credit. The current interest rate for borrowings under the Credit Facilities is the one month LIBOR, plus an adjusted spread based on leverage as reflected in the Credit Facilities. The weighted average interest rate for the 13 and 26 weeks ended August 1, 2020 is 1.95% and 2.15%, respectively. The total interest expense for the 13 and 26 weeks ended August 1, 2020 was $1.3 million and $2.4 million, respectively. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Aug. 01, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | 9. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 and 26 weeks ended August 1, 2020 was $11.6 million ($7.0 million, net of tax) and $15.7 million ($9.5 million, net of tax), respectively, and for the 13 and 26 weeks ended August 3, 2019 was $9.3 million ($7.0 million, net of tax) and $14.3 million ($10.9 million, net of tax), respectively. Stock Option Grants The Company grants both time-based and performance-based stock options. A summary of the Company’s stock option activity for the 26 weeks ended August 1, 2020 follows: Weighted- Average Weighted- Average Remaining Contractual Aggregate Options Exercise Price Term Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 1, 2020 2,584 $ 18.18 Granted 1,705 $ 10.30 Cancelled (26 ) $ 20.79 Outstanding - August 1, 2020 4,263 $ 15.02 5.3 $ 1,286 Vested and expected to vest - August 1, 2020 3,195 $ 15.62 3.7 $ 1,123 Exercisable - August 1, 2020 (1) 1,807 $ 17.08 1.7 $ — (1) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 1, 2020. There was no cash received from the exercise of stock options for the 26 weeks ended August 1, 2020. Cash received from the exercise of stock options was As of August 1, 2020, there was $7.4 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.2 years. The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 26 Weeks Ended 26 Weeks Ended August 1, August 3, Black-Scholes Option Valuation Assumptions 2020 2019 Risk-free interest rate (1) 0.3 - 0.6% 2.2 % Dividend yield 3.5 - 6.0 % 2.4 % Volatility factor (2) 43.1 - 48.7% 38.2 % Weighted-average expected term (3) 4.4 years 4.4 years (1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. Restricted Stock Grants Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three-year The grant date fair value of some restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant. A monte-carlo simulation was utilized for the remaining awards. A summary of the Company’s restricted stock activity is presented in the following tables: Time-Based Restricted Stock Units Performance-Based Restricted Stock Units 26 Weeks Ended 26 Weeks Ended August 1, 2020 August 1, 2020 (Shares in thousands) Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Nonvested - February 1, 2020 2,196 $ 18.56 2,138 $ 18.38 Granted 2,613 $ 9.06 503 $ 15.83 Vested (920 ) $ 16.67 (319 ) $ 14.50 Cancelled (123 ) $ 15.62 (359 ) $ 20.45 Nonvested - August 1, 2020 3,766 $ 12.51 1,963 $ 19.66 As of August 1, 2020, there was $36.3 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.3 years. Based on current probable performance, there is $7.2 million of unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of performance goals is probable over a one- to two- year period. As of August 1, 2020, the Company had 9.1 million shares available for all equity grants. |
Income Taxes
Income Taxes | 6 Months Ended |
Aug. 01, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes On March 27, 2020, the U.S. government enacted the CARES Act to address the COVID-19 pandemic. One of the provisions of the CARES Act allows net operating losses generated within tax years 2018 through 2020 to be carried back up to five years, including years in which the U.S. federal corporate income tax rate was 35%, as opposed to the current U.S federal corporate income tax rate of 21%. The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended August 1, 2020 was 28.5% compared to 24.4% for the 13 weeks ended August 3, 2019. The effective income tax rate for the 26 weeks ended August 1, 2020 was 28.8% compared to 23.3% for the 26 weeks ended August 3, 2019. The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended August 1, 2020. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $0.6 million due to settlements, expiration of statute of limitations or other changes in unrecognized tax benefits. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Aug. 01, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | 11. Legal Proceedings The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies |
Impairment, Restructuring and C
Impairment, Restructuring and COVID-19 Related Charges | 6 Months Ended |
Aug. 01, 2020 | |
Restructuring And Related Activities [Abstract] | |
Impairment, Restructuring and COVID-19 Related Charges | 12. Impairment, Restructuring and COVID-19 Related Charges The following table represents impairment and restructuring charges for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019. All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations. 13 weeks ended 26 weeks ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Impairment charges (1) $ — $ — $ 153,617 $ — Incremental COVID-19 related expenses (2) 13,885 — 13,885 — Severance and related employee costs 726 2,728 2,729 4,272 Total impairment, restructuring and COVID-19 related charges $ 14,611 $ 2,728 $ 170,231 $ 4,272 (1) There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. (2) Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers. A roll-forward of restructuring liabilities recognized in accrued compensation and other current liabilities and accrued expenses in the Consolidated Balance Sheet is as follows: 26 Weeks Ended August 1, (In thousands) 2020 Accrued liability as of February 1, 2020 $ 4,187 Add: Costs incurred, excluding non-cash charges 16,613 Less: Cash payments and adjustments (16,622 ) Accrued liability as of August 1, 2020 $ 4,178 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Aug. 01, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | 13. Subsequent Event Subsequent to August 1, 2020, the Company repaid the remaining $200 million outstanding balance of its revolving Credit Facility. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 01, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 1, 2020, and in all periods presented, the Company operated in one reportable segment. |
Fiscal Year | Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2020” refers to the 52-week period that will end on January 30, 2021. “Fiscal 2019” refers to the 52-week period ended February 1, 2020. “Fiscal 2018” refers to the 52-week period ended February 2, 2019. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires the Company’s 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 reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) established Accounting Standards Codification (“ASC”) Topic 842, Leases Land Easement Practical Expedient for Transition to Topic 842 Codification Improvements to Topic 842, Leases Targeted Improvements The standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as financing or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted ASU 2016-02 and its subsequent amendments effective February 3, 2019. The Company elected this standard’s package of practical expedients, which permits the Company to maintain prior conclusions about lease identification, lease classification, and initial direct costs. The Company elected to use the go-forward practical expedient to not separate lease and non-lease components for all of our leases. The Company also elected to use the short-term lease recognition exemption for all leases that qualify. Upon adoption, the Company: • Recognized operating lease liabilities and operating lease ROU assets of $1.6 billion , for the present value of the remaining minimum rental payments on existing operating leases (including consideration related to non-lease components due to the related practical expedient). • Recognized a transition adjustment of $44.4 million (net of tax effects of $15.0 million) to beginning retained earnings related to the impairment of newly recognized operating lease ROU assets related to store assets that were impaired prior to the date of adoption. • Reclassified $82.9 million of straight-line deferred rent, $55.0 million of deferred lease credits, and $40.4 million of prepaid rent to the operating lease ROU asset. Combined with the impairment discussed above, these reclassifications reduced the net operating lease ROU asset to $1.4 billion. Corresponding amounts were not reclassified in prior periods as those prior periods are presented under ASC 840, Leases . In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 32 6) (“ASU 2016-13”) , which modifies the measurement of expected credit losses of certain financial in struments. The Company adopt ed ASU 2016-13 on February 2 , 2020 . The adoption did no t have a material impact on the Company’s Consolidated Financial Statements. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options |
Foreign Currency Translation | Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters Comprehensive Income We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended August 1, 2020, an unrealized gain of $7.1 million is included in accumulated other comprehensive income, which is primarily related to the rise of the US dollar to Mexican peso and US dollar to Canadian dollar exchange rates. During the 26 weeks ended August 1, 2020, an unrealized loss of $14.8 million is included in accumulated other comprehensive income. This is primarily related to the decline in the US dollar to Mexican peso and US dollar to Canadian dollar exchange rates during the 13 weeks ended May 2, 2020, partially offset by the strengthening of the US dollar during the 13 weeks ended August 1, 2020. |
Cash and Cash Equivalents and Short-Term Investments | Cash and Cash Equivalents and Short-Term Investments The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with a maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. |
Merchandise Inventory | Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to the Customer Loyalty Program caption below for additional information. The following table sets forth the approximate consolidated percentage of total net revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019 Men’s apparel and accessories 23 % 28 % 23 % 28 % Women’s apparel and accessories (excluding Aerie) 49 % 53 % 48 % 54 % Aerie 28 % 19 % 29 % 18 % Total 100 % 100 % 100 % 100 % The following table disaggregates the Company’s total net revenue by geography for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended (In thousands) August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019 Total Net Revenue: United States $ 780,028 $ 869,001 $ 1,268,904 $ 1,642,482 Foreign (1) 103,482 171,878 166,298 284,687 Total Net Revenue $ 883,510 $ 1,040,879 $ 1,435,202 $ 1,927,169 (1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed and/or shipped to foreign countries, and international franchise royalty revenue. |
Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses | Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”) and buying, occupancy and warehousing costs. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. |
Other Income (Expenses), Net | Other Income (expense), Net Other income (expense), net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses. |
Property and Equipment | Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Five years Information technology Three - five years As of August 1, 2020, the weighted average remaining useful life of our assets was approximately 7.5 years. In accordance with ASC 360, Property, Plant, and Equipment There were no long-lived asset impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment of property and equipment of $51.5 million. Refer to Note 12 to the Consolidated Financial Statements for additional information regarding the impairment of these assets. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. |
Intangible Assets Including Goodwill | Intangible Assets, including Goodwill The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business and Tailgate brand. In accordance with ASC 350, Intangibles – Goodwill and Other Definite-lived intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 15 to 25 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended August 1, 2020 and August 3, 2019. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets. |
Gift Cards | Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded approximately $1.6 million and $1.8 million of revenue related to gift card breakage during the 13 weeks ended August 1, 2020 and August 3, 2019, respectively. During the 26 weeks ending August 1, 2020 and August 3, 2019, the Company recorded $3.3 million and $3.9 million, respectively of revenue related to gift card breakage. |
Construction Allowances | Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. |
Self-Insurance Liability | Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. |
Leases | Leases The Company leases all store premises, some of its office space and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s discretion and is not reasonably certain at lease commencement. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. No operating lease ROU asset impairment charges were recorded during the 13 weeks ended August 1, 2020. Deferred lease credits represent the unamortized portion of construction allowances received from lessors related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its lessor as part of the negotiated lease terms. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. Lease Modifications and COVID-19 The FASB staff issued a Q&A document in April 2020 providing guidance on how to apply the lease modification guidance in ASC 842 to rent concessions arising from COVID-19, allowing companies to elect accounting for the concessions as if enforceable rights and obligations existed, regardless of whether they are explicitly stated in the lease contract. Per the FASB staff Q&A guidance, entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. • For concessions in the form of rent forgiveness, the Company invoked the accounting elections provided by the FASB staff; savings were recorded as a credit to variable rent in the period the amendments became fully executed. • For concessions in the form of deferred payments, the Company did not apply the FASB accounting elections; rent expense was recorded in accordance with ASC 842 and the unpaid amount remained accrued as part of the current operating lease liability. • All other forms of rent concessions followed our normal accounting policy for lease modifications, adhering to the guidance set forth in ASC 842. |
Co-branded Credit Card | Co-branded Credit Card The Company offers a co-branded credit card and a private label credit card under the AE and Aerie brands. These credit cards are issued by a third party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. |
Customer Loyalty Program | Customer Loyalty Program In June of 2020, the Company launched a highly-digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Prior to this launch in June 2020, under our previous program, AEO Connected TM , we also offered additional rewards for key items such as jeans and bras. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606. The portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. |
Sales Return Reserve | Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and other and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets. |
Income Taxes | Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. |
Segment Information | Segment Information In accordance with ASC 280, Segment Reporting |
Fair Value Measurements | ASC 820, Fair Value Measurement Disclosures Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Share-Based Compensation | The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation |
Legal Proceedings | The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Accounting Policies [Abstract] | |
Consolidated Percentage of Total Net Revenue Attributable to Each Merchandise Group | The following table sets forth the approximate consolidated percentage of total net revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019 Men’s apparel and accessories 23 % 28 % 23 % 28 % Women’s apparel and accessories (excluding Aerie) 49 % 53 % 48 % 54 % Aerie 28 % 19 % 29 % 18 % Total 100 % 100 % 100 % 100 % |
Summary of Disaggregation of Company's Total Net Revenue by Geography | The following table disaggregates the Company’s total net revenue by geography for each of the periods indicated: 13 Weeks Ended 26 Weeks Ended (In thousands) August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019 Total Net Revenue: United States $ 780,028 $ 869,001 $ 1,268,904 $ 1,642,482 Foreign (1) 103,482 171,878 166,298 284,687 Total Net Revenue $ 883,510 $ 1,040,879 $ 1,435,202 $ 1,927,169 (1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed and/or shipped to foreign countries, and international franchise royalty revenue. |
Useful Lives of Major Classes of Assets | The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Five years Information technology Three - five years |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Cash And Cash Equivalents [Abstract] | |
Fair Market Values for Cash and Short-term Investments | The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded on the Consolidated Balance Sheets: (In thousands) August 1, 2020 February 1, 2020 August 3, 2019 Cash and cash equivalents: Cash $ 124,648 $ 126,087 $ 144,241 Money market securities 280,098 — — Interest bearing deposits 494,041 235,843 122,925 Total cash and cash equivalents $ 898,787 $ 361,930 $ 267,166 Short-term investments Certificates of deposit — 55,000 50,000 Total short-term investments — 55,000 50,000 Total $ 898,787 $ 416,930 $ 317,166 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding | The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Weighted average common shares outstanding: Basic number of common shares outstanding 166,315 170,756 166,461 172,291 Dilutive effect of stock options and non-vested restricted stock * — 1,025 — 1,410 Diluted number of common shares outstanding 166,315 171,781 166,461 173,701 Anti-Dilutive Shares* 8,235 768 4,670 434 *For each of the 13 and 26 weeks ended August 1, 2020, there were 1.2 million potentially dilutive equity awards that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. For each of the 13 and 26 weeks ended August 1, 2020, there were 7.0 million and 3.5 million potentially dilutive shares from the Company’s convertible notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Property and equipment consists of the following: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Property and equipment, at cost $ 2,225,579 $ 2,314,428 $ 2,271,371 Less: Accumulated depreciation and impairment (1,566,228 ) (1,579,308 ) (1,517,340 ) Property and equipment, net $ 659,351 $ 735,120 $ 754,031 |
Intangible Assets, including _2
Intangible Assets, including Goodwill (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Including Goodwill | Intangible assets consist of the following: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Goodwill, gross $ 17,310 $ 17,353 $ 17,359 Accumulated impairment (1) (4,196 ) (4,196 ) (2,484 ) Goodwill, net $ 13,114 $ 13,157 $ 14,875 Trademarks, at cost 72,057 71,685 71,226 Accumulated amortization (33,739 ) (31,838 ) (29,775 ) Trademarks, net $ 38,318 $ 39,847 $ 41,451 Intangible assets, net, including goodwill $ 51,432 $ 53,004 $ 56,326 (1) Accumulated impairment includes $2.5 million recorded in Fiscal 2016 and $1.7 million in Fiscal 2019. |
Long-Term Debt, Net (Tables)
Long-Term Debt, Net (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Debt Disclosure [Abstract] | |
Components of Long-Term Debt | Our long-term debt consisted of the following at each of August 1, 2020, February 1, 2020, and August 3, 2019: August 1, February 1, August 3, (In thousands) 2020 2020 2019 Convertible notes principal $ 415,025 $ - $ - Less: unamortized discount (98,072 ) - - Convertible notes, net $ 316,953 $ - $ - Revolving credit facility borrowings 200,000 - - Total long-term debt, net $ 516,953 $ - $ - Convertible Notes- Equity portion, net of tax 68,330 - - |
Schedule of Interest Expense for Convertible Notes | Interest expense for the convertible notes was: 13 Weeks Ended 26 Weeks Ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Accrued interest for interest payments $ 3,903 $ - $ 4,118 $ - Amortization of discount 3,982 - 4,195 - Total interest expense $ 7,885 $ - $ 8,313 $ - |
Schedule of Notes Conversion Amounts | The following table discloses conversion amounts if the notes were all converted as of the end of the period: (In thousands, except per share amounts) August 1, 2020 Number of shares convertible 47,437 Conversion price per share $ 8.75 Value in excess of principal if converted $ 7,024,842 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Option Activity | A summary of the Company’s stock option activity for the 26 weeks ended August 1, 2020 follows: Weighted- Average Weighted- Average Remaining Contractual Aggregate Options Exercise Price Term Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 1, 2020 2,584 $ 18.18 Granted 1,705 $ 10.30 Cancelled (26 ) $ 20.79 Outstanding - August 1, 2020 4,263 $ 15.02 5.3 $ 1,286 Vested and expected to vest - August 1, 2020 3,195 $ 15.62 3.7 $ 1,123 Exercisable - August 1, 2020 (1) 1,807 $ 17.08 1.7 $ — (1) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 1, 2020. |
Black-Scholes Option Valuation Assumptions | The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 26 Weeks Ended 26 Weeks Ended August 1, August 3, Black-Scholes Option Valuation Assumptions 2020 2019 Risk-free interest rate (1) 0.3 - 0.6% 2.2 % Dividend yield 3.5 - 6.0 % 2.4 % Volatility factor (2) 43.1 - 48.7% 38.2 % Weighted-average expected term (3) 4.4 years 4.4 years (1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. |
Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity is presented in the following tables: Time-Based Restricted Stock Units Performance-Based Restricted Stock Units 26 Weeks Ended 26 Weeks Ended August 1, 2020 August 1, 2020 (Shares in thousands) Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Nonvested - February 1, 2020 2,196 $ 18.56 2,138 $ 18.38 Granted 2,613 $ 9.06 503 $ 15.83 Vested (920 ) $ 16.67 (319 ) $ 14.50 Cancelled (123 ) $ 15.62 (359 ) $ 20.45 Nonvested - August 1, 2020 3,766 $ 12.51 1,963 $ 19.66 |
Impairment, Restructuring and_2
Impairment, Restructuring and COVID-19 Related Charges (Tables) | 6 Months Ended |
Aug. 01, 2020 | |
Restructuring And Related Activities [Abstract] | |
Summary of Restructuring and COVID-19 Related Charges | The following table represents impairment and restructuring charges for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019. All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations. 13 weeks ended 26 weeks ended August 1, August 3, August 1, August 3, (In thousands) 2020 2019 2020 2019 Impairment charges (1) $ — $ — $ 153,617 $ — Incremental COVID-19 related expenses (2) 13,885 — 13,885 — Severance and related employee costs 726 2,728 2,729 4,272 Total impairment, restructuring and COVID-19 related charges $ 14,611 $ 2,728 $ 170,231 $ 4,272 (1) There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. (2) Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers. |
Rollforward of Restructuring Liabilities Recognized in Accrued Compensation and Other Current Liabilities and Accrued Expense in Consolidated Balance Sheets | A roll-forward of restructuring liabilities recognized in accrued compensation and other current liabilities and accrued expenses in the Consolidated Balance Sheet is as follows: 26 Weeks Ended August 1, (In thousands) 2020 Accrued liability as of February 1, 2020 $ 4,187 Add: Costs incurred, excluding non-cash charges 16,613 Less: Cash payments and adjustments (16,622 ) Accrued liability as of August 1, 2020 $ 4,178 |
Interim Financial Statements -
Interim Financial Statements - Additional Information (Detail) | Aug. 01, 2020Store |
Accounting Policies [Abstract] | |
Number of retail stores | 1,000 |
Number of international store locations | 200 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) | Feb. 03, 2019USD ($) | Aug. 01, 2020USD ($)Segment | Aug. 03, 2019USD ($)Segment | Aug. 01, 2020USD ($)Segment | Aug. 03, 2019USD ($)Segment | Feb. 01, 2020USD ($) |
Significant Accounting Policies [Line Items] | ||||||
Number of reportable segments | Segment | 1 | 1 | 1 | 1 | ||
Operating lease right-of-use assets | $ 1,271,491,000 | $ 1,462,544,000 | $ 1,271,491,000 | $ 1,462,544,000 | $ 1,418,916,000 | |
Net increase (decrease) to opening retained earnings due to cumulative impact of adoption | 1,807,687,000 | 2,070,077,000 | 1,807,687,000 | 2,070,077,000 | $ 2,108,292,000 | |
Unrealized gain (loss) included in accumulated other comprehensive income | 7,059,000 | (1,276,000) | $ (14,823,000) | (1,798,000) | ||
Weighted average remaining useful life, assets | 7 years 6 months | |||||
Long-lived asset impairment charges | 0 | 0 | $ 51,500,000 | 0 | ||
Goodwill impairment charge | 0 | |||||
Definite-lived impairment charges | 0 | 0 | 0 | 0 | ||
Revenue related to gift card breakage | 1,600,000 | 1,800,000 | 3,300,000 | 3,900,000 | ||
Impairment of operating lease ROU assets | $ 0 | $ 0 | $ 84,100,000 | $ 0 | ||
Number of operating segments | Segment | 2 | |||||
Minimum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Definite-lived intangibles, useful life | 15 years | |||||
Maximum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Definite-lived intangibles, useful life | 25 years | |||||
Accounting Standards Update 2016-02 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Operating lease right-of-use assets | $ 1,600,000,000 | |||||
Operating lease, liability | 1,600,000,000 | |||||
Tax effects to retained earnings | 15,000,000 | |||||
Deferred rent | 82,900,000 | |||||
Deferred lease credits | 55,000,000 | |||||
Prepaid rent to the operating lease right-of-use asset | 40,400,000 | |||||
Reduction in net operating lease right-of-use asset | 1,400,000,000 | |||||
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | ||||||
Significant Accounting Policies [Line Items] | ||||||
Net increase (decrease) to opening retained earnings due to cumulative impact of adoption | $ (44,400,000) |
Consolidated Percentage of Tota
Consolidated Percentage of Total Net Revenue Attributable to Each Merchandise Group (Detail) | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Product Information [Line Items] | ||||
Percentage of total net revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Men’s apparel and accessories | ||||
Product Information [Line Items] | ||||
Percentage of total net revenue | 23.00% | 28.00% | 23.00% | 28.00% |
Women’s apparel and accessories (excluding Aerie) | ||||
Product Information [Line Items] | ||||
Percentage of total net revenue | 49.00% | 53.00% | 48.00% | 54.00% |
Aerie | ||||
Product Information [Line Items] | ||||
Percentage of total net revenue | 28.00% | 19.00% | 29.00% | 18.00% |
Summary of Disaggregation of Co
Summary of Disaggregation of Company's Total Net Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | ||
Product Information [Line Items] | |||||
Total net revenue | $ 883,510 | $ 1,040,879 | $ 1,435,202 | $ 1,927,169 | |
United States | |||||
Product Information [Line Items] | |||||
Total net revenue | 780,028 | 869,001 | 1,268,904 | 1,642,482 | |
Foreign | |||||
Product Information [Line Items] | |||||
Total net revenue | [1] | $ 103,482 | $ 171,878 | $ 166,298 | $ 284,687 |
[1] | Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed and/or shipped to foreign countries, and international franchise royalty revenue. |
Useful Lives of Major Classes o
Useful Lives of Major Classes of Assets (Detail) | 6 Months Ended |
Aug. 01, 2020 | |
Buildings | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 25 years |
Leasehold Improvements | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | Lesser of 10 years or the term of the lease |
Leasehold Improvements | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Fixtures and Equipment | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Information Technology | Minimum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 3 years |
Information Technology | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Useful Lives of Major Classes_2
Useful Lives of Major Classes of Assets (Parenthetical) (Detail) | 6 Months Ended |
Aug. 01, 2020 | |
Maximum | Leasehold Improvements | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Fair Market Values for Cash and
Fair Market Values for Cash and Short-Term Investments (Detail) - USD ($) $ in Thousands | Aug. 01, 2020 | Feb. 01, 2020 | Aug. 03, 2019 |
Cash and cash equivalents: | |||
Cash and cash equivalents | $ 898,787 | $ 361,930 | $ 267,166 |
Short-term investments | |||
Short-term investments | 55,000 | 50,000 | |
Total | 898,787 | 416,930 | 317,166 |
Cash | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 124,648 | 126,087 | 144,241 |
Money Market Securities | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 280,098 | ||
Interest Bearing Deposits | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | $ 494,041 | 235,843 | 122,925 |
Certificates of Deposit | |||
Short-term investments | |||
Short-term investments | $ 55,000 | $ 50,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |||
Aug. 01, 2020USD ($)Store | Aug. 03, 2019USD ($) | Aug. 01, 2020USD ($)Store | Aug. 03, 2019USD ($) | ||
Fair Value Measurements Disclosure [Line Items] | |||||
Asset impairment charges | $ 0 | $ 153,617,000 | [1] | ||
Number of retail stores | Store | 1,000 | 1,000 | |||
Impairment of operating lease ROU assets | $ 0 | $ 0 | $ 84,100,000 | $ 0 | |
Retail Stores | |||||
Fair Value Measurements Disclosure [Line Items] | |||||
Asset impairment charges | $ 0 | $ 0 | $ 135,600,000 | $ 0 | |
Number of retail stores | Store | 272 | 272 | |||
Impairment of operating lease ROU assets | $ 84,100,000 | ||||
Impairment of certain cost and equity method investments | 18,000,000 | ||||
Fair value of impaired asset | $ 163,400,000 | 163,400,000 | |||
Store and Corporate Property and Equipment | Retail Stores | |||||
Fair Value Measurements Disclosure [Line Items] | |||||
Asset impairment charges | 51,500,000 | ||||
Revolving Credit Facility | |||||
Fair Value Measurements Disclosure [Line Items] | |||||
Fair value of outstanding borrowings | $ 200,000,000 | $ 200,000,000 | |||
[1] | There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. |
Reconciliation Between Basic an
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | ||
Weighted average common shares outstanding: | |||||
Basic number of common shares outstanding | 166,315 | 170,756 | 166,461 | 172,291 | |
Dilutive effect of stock options and non-vested restricted stock | [1],[2] | 1,025 | 1,410 | ||
Diluted number of common shares outstanding | 166,315 | 171,781 | 166,461 | 173,701 | |
Anti-Dilutive Shares | [1],[2] | 8,235 | 768 | 4,670 | 434 |
[1] | For each of the 13 and 26 weeks ended August 1, 2020, there were 1.2 million potentially dilutive equity awards that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. | ||||
[2] | For each of the 13 and 26 weeks ended August 1, 2020, there were 7.0 million and 3.5 million potentially dilutive shares from the Company’s convertible notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. |
Reconciliation Between Basic _2
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Parenthetical) (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Awards excluded from diluted earnings per share calculation | [1],[2] | 8,235 | 768 | 4,670 | 434 |
Equity Awards | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Awards excluded from diluted earnings per share calculation | 1,200 | 1,200 | |||
Convertible Notes | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Awards excluded from diluted earnings per share calculation | 7,000 | 3,500 | |||
[1] | For each of the 13 and 26 weeks ended August 1, 2020, there were 1.2 million potentially dilutive equity awards that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. | ||||
[2] | For each of the 13 and 26 weeks ended August 1, 2020, there were 7.0 million and 3.5 million potentially dilutive shares from the Company’s convertible notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. |
Earnings per Share - Additional
Earnings per Share - Additional Information (Detail) | 3 Months Ended | 6 Months Ended |
Aug. 01, 2020$ / sharesshares | Aug. 01, 2020$ / sharesshares | |
Earnings Per Share [Abstract] | ||
Conversion price per share | $ / shares | $ 8.75 | $ 8.75 |
Dilutive effect of convertible notes | shares | 0 | 0 |
Property and Equipment (Detail)
Property and Equipment (Detail) - USD ($) $ in Thousands | Aug. 01, 2020 | Feb. 01, 2020 | Aug. 03, 2019 |
Property Plant And Equipment [Abstract] | |||
Property and equipment, at cost | $ 2,225,579 | $ 2,314,428 | $ 2,271,371 |
Less: Accumulated depreciation and impairment | (1,566,228) | (1,579,308) | (1,517,340) |
Property and equipment, net | $ 659,351 | $ 735,120 | $ 754,031 |
Intangible Assets, Including _3
Intangible Assets, Including Goodwill (Detail) - USD ($) $ in Thousands | Aug. 01, 2020 | Feb. 01, 2020 | Aug. 03, 2019 | |
Intangible Assets Net Including Goodwill [Abstract] | ||||
Goodwill, gross | $ 17,310 | $ 17,353 | $ 17,359 | |
Accumulated impairment | [1] | (4,196) | (4,196) | (2,484) |
Goodwill, net | 13,114 | 13,157 | 14,875 | |
Trademarks, at cost | 72,057 | 71,685 | 71,226 | |
Accumulated amortization | (33,739) | (31,838) | (29,775) | |
Trademarks, net | 38,318 | 39,847 | 41,451 | |
Intangible assets, net, including goodwill | $ 51,432 | $ 53,004 | $ 56,326 | |
[1] | Accumulated impairment includes $2.5 million recorded in Fiscal 2016 and $1.7 million in Fiscal 2019. |
Intangible Assets, Including _4
Intangible Assets, Including Goodwill (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 01, 2020 | Jan. 28, 2017 | |
Intangible Assets Net Including Goodwill [Abstract] | ||
Accumulated impairment | $ 1.7 | $ 2.5 |
Long-Term Debt, Net - Component
Long-Term Debt, Net - Components of Long-Term Debt (Detail) $ in Thousands | Aug. 01, 2020USD ($) |
Debt Instrument [Line Items] | |
Total long-term debt, net | $ 516,953 |
Convertible Notes- Equity portion, net of tax | 68,330 |
Convertible Senior Notes Due 2025 | |
Debt Instrument [Line Items] | |
Convertible notes principal | 415,025 |
Less: unamortized discount | (98,072) |
Convertible notes, net | 316,953 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Revolving credit facility borrowings | $ 200,000 |
Long-Term Debt, Net - Additiona
Long-Term Debt, Net - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Apr. 30, 2020 | Jan. 31, 2019 | Aug. 01, 2020 | Aug. 01, 2020 | |
Line Of Credit Facility [Line Items] | ||||
Weighted average interest rate | 1.95% | 2.15% | ||
Total interest expense for period | $ 1,300,000 | $ 2,400,000 | ||
Credit Agreement | Credit Facilities | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility, expiration period | 5 years | |||
Loans and letters of credit maximum borrowing capacity | $ 400,000,000 | |||
Line of credit facility, expiration date | Jan. 30, 2024 | |||
Credit Agreement | Credit Agreement Loans | ||||
Line Of Credit Facility [Line Items] | ||||
Revolving credit facility borrowings | 200,000,000 | 200,000,000 | ||
Credit Agreement | Stand-by Letters of Credit | ||||
Line Of Credit Facility [Line Items] | ||||
Letters of credit outstanding amount | $ 7,900,000 | $ 7,900,000 | ||
Convertible Senior Notes Due 2025 | ||||
Line Of Credit Facility [Line Items] | ||||
Aggregate principal amount of debt issued | $ 415,000,000 | |||
Debt instrument, stated interest rate | 3.75% | |||
Debt instrument, maturity year | 2025 | |||
Debt instrument, interest terms | The Notes have a stated interest rate of 3.75%, payable semi-annually. | |||
Debt instrument, frequency of periodic payment of interest | payable semi-annually | |||
Debt instrument, redemption period beginning month and year | 2023-04 | |||
Debt instrument, conversion period beginning month and year | 2025-01 | |||
Debt conversion, original debt, principal amount converted | $ 1,000 | |||
Debt instrument, effective interest rate | 10.00% | |||
Debt instrument, remaining amortization period of discount | 4 years 9 months | |||
Convertible Senior Notes Due 2025 | Common Stock | ||||
Line Of Credit Facility [Line Items] | ||||
Debt conversion, converted instruments, shares issued | 114.3 |
Long-Term Debt, Net - Schedule
Long-Term Debt, Net - Schedule of Interest Expense for Convertible Notes (Detail) - Convertible Senior Notes Due 2025 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Aug. 01, 2020 | Aug. 01, 2020 | |
Debt Instrument [Line Items] | ||
Accrued interest for interest payments | $ 3,903 | $ 4,118 |
Amortization of discount | 3,982 | 4,195 |
Total interest expense | $ 7,885 | $ 8,313 |
Long-Term Debt, Net - Schedul_2
Long-Term Debt, Net - Schedule of Notes Conversion Amounts (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended |
Aug. 01, 2020USD ($)$ / sharesshares | |
Debt Instrument [Line Items] | |
Conversion price per share | $ 8.75 |
Convertible Senior Notes Due 2025 | |
Debt Instrument [Line Items] | |
Number of shares convertible | shares | 47,437 |
Conversion price per share | $ 8.75 |
Value in excess of principal if converted | $ | $ 7,024,842 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 11,600,000 | $ 9,300,000 | $ 15,654,000 | $ 14,298,000 |
Share-based compensation, net of tax | $ 7,000,000 | $ 7,000,000 | 9,500,000 | 10,900,000 |
Net proceeds from stock options exercised | $ 0 | 2,119,000 | ||
Tax benefit realized from stock option exercises | $ 100,000 | |||
Shares available for all equity grants | 9.1 | 9.1 | ||
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 7,400,000 | $ 7,400,000 | ||
Unrecognized compensation expense, weighted average period | 2 years 2 months 12 days | |||
Time Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Unrecognized compensation expense, weighted average period | 2 years 3 months 18 days | |||
Unrecognized compensation expense, restricted stock grants | 36,300,000 | $ 36,300,000 | ||
Performance-Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Unrecognized compensation expense, restricted stock grants | $ 7,200,000 | $ 7,200,000 | ||
Performance-Based Restricted Stock Units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, weighted average period | 1 year | |||
Performance-Based Restricted Stock Units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, weighted average period | 2 years |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Aug. 01, 2020USD ($)$ / sharesshares | ||
Options | ||
Outstanding - beginning of period | shares | 2,584 | |
Granted | shares | 1,705 | |
Cancelled | shares | (26) | |
Outstanding - end of period | shares | 4,263 | |
Vested and expected to vest - end of period | shares | 3,195 | |
Exercisable - end of period | shares | 1,807 | [1] |
Weighted-Average Exercise Price | ||
Outstanding - beginning of period | $ / shares | $ 18.18 | |
Granted | $ / shares | 10.30 | |
Cancelled | $ / shares | 20.79 | |
Outstanding - end of period | $ / shares | 15.02 | |
Vested and expected to vest - end of period | $ / shares | 15.62 | |
Exercisable - end of period | $ / shares | $ 17.08 | [1] |
Weighted-Average Remaining Contractual Term (In years) | ||
Outstanding - end of period | 5 years 3 months 18 days | |
Vested and expected to vest - end of period | 3 years 8 months 12 days | |
Exercisable - end of period | 1 year 8 months 12 days | [1] |
Outstanding - end of period | $ | $ 1,286 | |
Vested and expected to vest - end of period | $ | $ 1,123 | |
[1] | Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 1, 2020. |
Black-Scholes Option Valuation
Black-Scholes Option Valuation Assumptions (Detail) | 6 Months Ended | ||
Aug. 01, 2020 | Aug. 03, 2019 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | [1] | 2.20% | |
Risk-free interest rate, minimum | [1] | 0.30% | |
Risk-free interest rate, maximum | [1] | 0.60% | |
Dividend yield | 2.40% | ||
Volatility factor | [2] | 38.20% | |
Volatility factor, minimum | [2] | 43.10% | |
Volatility factor, maximum | [2] | 48.70% | |
Weighted-average expected term | [3] | 4 years 4 months 24 days | 4 years 4 months 24 days |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 3.50% | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 6.00% | ||
[1] | Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. | ||
[2] | Based on historical volatility of the Company’s common stock. | ||
[3] | Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. |
Summary of Restricted Stock Act
Summary of Restricted Stock Activity (Detail) shares in Thousands | 6 Months Ended |
Aug. 01, 2020$ / sharesshares | |
Time Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,196 |
Granted | shares | 2,613 |
Vested | shares | (920) |
Cancelled | shares | (123) |
Nonvested - end of period | shares | 3,766 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 18.56 |
Granted | $ / shares | 9.06 |
Vested | $ / shares | 16.67 |
Cancelled | $ / shares | 15.62 |
Nonvested - end of period | $ / shares | $ 12.51 |
Performance-Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,138 |
Granted | shares | 503 |
Vested | shares | (319) |
Cancelled | shares | (359) |
Nonvested - end of period | shares | 1,963 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 18.38 |
Granted | $ / shares | 15.83 |
Vested | $ / shares | 14.50 |
Cancelled | $ / shares | 20.45 |
Nonvested - end of period | $ / shares | $ 19.66 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | Mar. 27, 2020 | Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | Feb. 03, 2018 |
Income Tax Disclosure [Abstract] | ||||||
U.S. federal corporate tax rate | 21.00% | 35.00% | ||||
CARES act of 2020, net operating loss carryback period | 5 years | |||||
Effective income tax rate | 28.50% | 24.40% | 28.80% | 23.30% | ||
Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months | $ 0.6 | $ 0.6 |
Summary of Restructuring and CO
Summary of Restructuring and COVID-19 Related Charges (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Aug. 01, 2020 | Aug. 03, 2019 | Aug. 01, 2020 | Aug. 03, 2019 | |||
Restructuring And Related Activities [Abstract] | ||||||
Impairment charges | $ 0 | $ 153,617 | [1] | |||
Incremental COVID-19 related expenses | [2] | 13,885 | 13,885 | |||
Severance and related employee costs | 726 | $ 2,728 | 2,729 | $ 4,272 | ||
Total impairment, restructuring and COVID-19 related charges | $ 14,611 | $ 2,728 | $ 170,231 | $ 4,272 | ||
[1] | There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. | |||||
[2] | Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers. |
Summary of Restructuring and _2
Summary of Restructuring and COVID-19 Related Charges (Parenthetical) (Detail) | 3 Months Ended | 6 Months Ended | |||
Aug. 01, 2020USD ($)Store | Aug. 03, 2019USD ($) | Aug. 01, 2020USD ($)Store | Aug. 03, 2019USD ($) | ||
Restructuring Cost And Reserve [Line Items] | |||||
Impairment charges | $ 0 | $ 153,617,000 | [1] | ||
Impairment of operating lease ROU assets | $ 0 | $ 0 | $ 84,100,000 | $ 0 | |
Number of retail stores | Store | 1,000 | 1,000 | |||
Corporate and Store Property and Equipment | |||||
Restructuring Cost And Reserve [Line Items] | |||||
Impairment charges | $ 51,500,000 | ||||
Cost and Equity Method Investments | |||||
Restructuring Cost And Reserve [Line Items] | |||||
Impairment charges | 18,000,000 | ||||
Retail Stores | |||||
Restructuring Cost And Reserve [Line Items] | |||||
Impairment charges | $ 0 | $ 0 | 135,600,000 | $ 0 | |
Impairment of operating lease ROU assets | $ 84,100,000 | ||||
Number of retail stores | Store | 272 | 272 | |||
[1] | There were no impairment charges recorded during the 13 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, the Company recorded impairment charges of $153.6 million. Of the total, $84.1 million related to the impairment of the operating ROU assets of 272 stores. We recorded $51.5 million related to the impairment of certain corporate and store property and equipment. We also recorded $18.0 million of impairment of certain cost and equity method investments. |
Rollforward of Restructuring Li
Rollforward of Restructuring Liabilities Recognized in Accrued Compensation and Other Current Liabilities and Accrued Expenses in Consolidated Balance Sheets (Detail) $ in Thousands | 6 Months Ended |
Aug. 01, 2020USD ($) | |
Restructuring And Related Activities [Abstract] | |
Accrued liability as of February 1, 2020 | $ 4,187 |
Add: Costs incurred, excluding non-cash charges | 16,613 |
Less: Cash payments and adjustments | (16,622) |
Accrued liability as of August 1, 2020 | $ 4,178 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 09, 2020 | Aug. 01, 2020 |
Subsequent Event [Line Items] | ||
Repayment of debt | $ 130,000 | |
Revolving Credit Facility | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Repayment of debt | $ 200,000 |