PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:



	December 31,
	2017			2016
	(in thousands)
Machinery and equipment	$	33,109		$	33,163
Leasehold improvements	72,961			73,363
Furniture, fixtures, and other	19,776			19,358
Construction-in-progress	992			6,809
Property and equipment	126,838			132,693
Less: Accumulated depreciation and amortization	(91,806		)	(88,603		)
Property and equipment, net	$	35,032		$	44,090

Asset Retirement Obligations

The Company is contractually obligated under certain of its lease agreements to restore certain retail and office facilities back to their original condition. At lease inception, the estimated fair value of these liabilities is recorded along with a related asset. At December 31, 2017 and 2016, liabilities for asset retirement obligations were $3.1 million and $2.8 million, respectively, and are reported in ‘Other liabilities’ in the consolidated balance sheets.

Depreciation and Amortization Expense

Depreciation and amortization expense related to property and equipment, reported in ‘Cost of sales’ and ‘Selling, general and administrative expenses’ was:



	Year Ended December 31,
	2017		2016		2015
	(in thousands)
Cost of sales	$	2,278	$	1,755	$	1,764
Selling, general and administrative expenses	12,723		13,312		14,533
Total depreciation and amortization expense	$	15,001	$	15,067	$	16,297

Gains/Losses on Disposals

The Company recognized net gains on disposals of property and equipment of $0.8 million for the year ended December 31, 2017 and net losses on disposals of property of $0.5 million, and $1.4 million, respectively, for the years ended December 31, 2016 and 2015, which are included in ‘Selling, general and administrative expenses’ in the consolidated statement of operations.

Asset Impairments

During the years ended December 31, 2017, 2016, and 2015, the Company recorded impairments of $0.5 million, $2.7 million, and $9.6 million, respectively, for underperforming retail stores. During the year ended December 31, 2015, an additional impairment of $5.7 million related to the disposal of the Company's business in South Africa was recorded. Long-lived asset impairments by reportable operating segment, were:



	Year Ended December 31,
	2017			2016			2015
	Asset Impairment		Number of Stores	Asset Impairment		Number of Stores	Asset Impairment		Number of Stores
	(in thousands, except store count data)
Americas	$	455	3	$	1,703	12	$	7,237	27
Asia Pacific⁽¹⁾	—		—	672		21	6,450		36
Europe	75		1	338		9	1,584		21
Total	$	530	4	$	2,713	42	$	15,271	84

⁽¹⁾ In 2015, the Company recorded impairment of nine retail stores in South Africa of $5.7 million.