XML 86 R20.htm IDEA: XBRL DOCUMENT v3.20.1
Subsequent Events
 12 Months Ended
Feb. 01, 2020
Subsequent Events [Abstract]  
Subsequent Events SUBSEQUENT EVENTS
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States and world. It is impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation is rapidly evolving. The spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus, especially when congregating in heavily populated areas, such as malls and shopping centers. In addition, to date the vast majority of our store locations are closed temporarily to the public as a result of shopping malls closure and government imposed business activity restrictions, although a large portion of these stores are still able to ship merchandise through our e-commerce platform.

In response to the significant ongoing uncertainty around the severity and duration of the COVID-19 pandemic, effective April 13, 2020, the Company has temporarily furloughed the majority of our store employee population.
COVID-19 is having a significant effect on overall economic conditions in the United States. Our top priority is to protect our associates and their families, as well as our customers. We are taking all precautionary measures as directed by health authorities and local and national governments. We continue to monitor the outbreak of COVID-19 and other closures, or closures for a longer period of time, may be required to help ensure the health and safety of our associates and our customers. COVID-19 has, and may continue to have, an effect on ports and trade, as well as global travel. Given the dynamic nature of these circumstances, the duration of business disruption and reduced customer traffic, the impact on our results of operations, financial position and liquidity cannot be reasonably estimated but is expected to materially impact our business for the first quarter and full year of Fiscal 2021.

In March 2020, we borrowed $50.0 million under our credit facilities as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. The proceeds from such borrowings may be used for working capital, capital expenditures and general corporate purposes.
On April 16, 2020, we entered into the Amended Credit Facility that provides for an aggregate amount of credit available to us of $75.0 million. The Amended Credit Facility supersedes the Regions Bank credit agreement dated October 2018, terminates the Bank of America credit agreement dated October 2018, matures on April 19, 2021 and is secured by all assets of the company with the exception of real property.

Simultaneous to the execution of the Amended Credit Facility, the $50.0 million outstanding under our previous unsecured credit agreements with Regions Bank and Bank of America, N.A., were paid in full, the Bank of America, N.A. credit agreement dated October 2018 was terminated and we incurred borrowings under the Amended Credit Facility of $50.0 million.

Borrowings under the Amended Credit Facility bear interest at the one-month LIBOR rate plus 2.5% from April 16, 2020 through October 16, 2020 and the one-month LIBOR rate plus 3.0% from October 17, 2020 through the maturity date. There were no origination fees and we do not pay any commitment fees. The Amended Credit Facility includes a loan fee of $50,000 payable to Regions Bank at the maturity date or if the agreement is terminated prior to the maturity date for any reason including due to an event of default. The loan fee will be waived if the Amended Credit Facility is terminated due to refinancing of the loan with an asset-based loan facility provided by Regions Bank.

The Amended Credit Facility has one financial covenant which requires us to maintain inventory with a minimum value of $150.0 million at all times (measured at the lower of cost or market consistent with generally accepted accounting principles). As of April 16, 2020, we are in compliance with this covenant. The Amended Credit Agreement also restricts us from engaging in certain acquisitions and from incurring indebtedness, other than certain customary permitted indebtedness related to business operations.

The CARES Act was enacted on March 27, 2020. The CARES Act includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. These amendments allow for retroactive accelerated income tax depreciation on certain of our leasehold improvement assets. We are currently assessing the financial impact of these technical amendments on our business, which could be significant.