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Restructuring
 12 Months Ended
Jun. 30, 2022
Restructuring and Related Activities [Abstract]  
Restructuring Restructuring
During fiscal years 2022, 2021, and 2020, we recognized $10.5 million, $10.7 million and $8.5 million, respectively of pre-tax restructuring expense.
We utilized available market prices and management estimates to determine the fair value of impaired assets. Restructuring is included in the Restructuring Expense line item on our Consolidated Statements of Operations.
Transformation Restructuring Plan Phase 1:
In June 2019, we announced a transformation restructuring plan to optimize resources for future growth, improve efficiency, and build capabilities across our organization. Restructuring activities included a reduction of our manufacturing facility footprint, closure of select showrooms and reorganization of selling resources, and centralization of administrative functions, We believe phase 1 of our transformation restructuring plan has established a more cost-efficient structure to better align our operations with our long-term strategic goals. Phase 1 of our transformation restructuring plan was substantially complete as of June 30, 2021.
A summary of the charges recorded in connection with phase 1 of the transformation restructuring plan is as follows:
Year Ended June 30Total Charges Incurred
(Amounts in Thousands)20212020
Cash-related restructuring charges:
Severance and other employee related costs$62 $2,159 $2,884 
Facility exit costs and other cash charges998 1,837 3,038 
Total cash-related restructuring charges$1,060 $3,996 $5,922 
Non-cash charges:
Transition stock compensation— 654 725 
Impairment of assets770 3,690 4,460 
Other non-cash charges72 149 221 
Total non-cash charges$842 $4,493 $5,406 
Total charges$1,902 $8,489 $11,328 
A summary of the current period activity in accrued restructuring related to phase 1 of the transformation restructuring plan is as follows:
(Amounts in Thousands)Severance and other employee related costsOther costsTotal
Balance at June 30, 2020$167 $65 $232 
Additions charged to expense62 — 62 
Cash payments charged against reserve(229)(60)(289)
Non-cash adjustments— (5)(5)
Balance at June 30, 2021$— $— $— 
Transformation Restructuring Plan Phase 2:
In August 2020, we announced a second phase of our transformation restructuring plan which includes alignment of our business units to a new market-centric orientation to yield additional cost savings aiding in effectively managing through the downturn caused by the COVID-19 pandemic. Phase 2 of the transformation restructuring plan builds on the initial strategy and the transformation restructuring plan announced in June 2019. The following is a summary of the Phase 2 activities:
•To consolidate manufacturing of all brands into one world-class global operations group, we are streamlining our manufacturing facilities by leveraging production capabilities across all facilities, establishing centers of excellence, and setting up processes to facilitate flexing of product between facilities in response to volume fluctuations. We are also reviewing our overall facility footprint to identify opportunities to reduce capacity and gain efficiencies, and consolidated our Baltimore, Maryland facility into other manufacturing facilities.
•We streamlined our workforce to align with the new organizational structure and the temporary lower volumes created by the COVID-19 pandemic, creating a more efficient organization to deliver on our Connect 2.0 strategy.
•In the third quarter of fiscal 2021, we offered two voluntary retirement incentive programs to eligible employees. Employees electing to participate were paid special termination benefits, including a severance benefit and cash payment that could be used to pay for a period of healthcare coverage or for any other purpose.
•Starting in fiscal year 2022, many of our showrooms now feature multiple brands thus eliminating the need for more than one showroom in the same city. Showroom locations are being reviewed and select leased showroom locations closed.
•During the fourth quarter of fiscal year 2022, we announced a plan to close our Tijuana, Mexico Hospitality manufacturing facility and Chula Vista, California warehouse during our first quarter of fiscal year 2023 as we plan to primarily outsource the D’Style product. During fiscal year 2022 we recognized impairment in the D’Style brand asset group, including a $3.8 million impairment of a D’Style customer relationship intangible because the carrying value exceeded projected cash flows.
Phase 2 of the transformation restructuring plan began in the first quarter of our fiscal year 2021, and we expect a substantial majority of the Phase 2 restructuring actions to be completed by the end of fiscal year 2023.
In addition to the savings already generated from phase 1 of the transformation restructuring plan, the efforts of the phase 2 transformation restructuring plan are expected to generate annualized pre-tax savings of approximately $19.0 million when it is fully implemented. We currently estimate the phase 2 transformation restructuring plan will incur total pre-tax restructuring charges of approximately $21.0 million to $22.0 million, with the majority recorded in fiscal 2021 and 2022 and approximately $2.7 million expected to be recorded in fiscal year 2023. The restructuring charges are expected to consist of approximately $6.7 million to $6.9 million for severance and other employee-related costs, $5.3 million to $5.6 million for facility costs, and $9.0 million to $9.5 million for lease and other asset impairment. Approximately 55% of the total cost estimate is expected to be cash expense.
A summary of the charges recorded in connection with phase 2 of the transformation restructuring plan is as follows:
Year Ended June 30Charges Incurred to Date
(Amounts in Thousands)20222021
Cash-related restructuring charges:
Severance and other employee related costs$1,753 $5,082 $6,835 
Facility exit costs and other cash charges2,361 1,587 3,948 
Total cash-related restructuring charges$4,114 $6,669 $10,783 
Non-cash charges:
Impairment of assets and accelerated depreciation6,375 2,156 8,531 
Total charges$10,489 $8,825 $19,314 
A summary of the current period activity in accrued restructuring related to phase 2 of the transformation restructuring plan is as follows:
(Amounts in Thousands)Severance and other employee related costs
Balance at June 30, 2020$— 
Additions charged to expense5,716 
Cash payments charged against reserve(3,696)
Non-cash adjustments(634)
Balance at June 30, 2021$1,386 
Additions charged to expense1,740 
Cash payments charged against reserve(2,128)
Non-cash adjustments(24)
Balance at June 30, 2022$974