Lanier Apparel Exit	3 Months Ended
May 01, 2021
Lanier Apparel Exit
Restructuring	7. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, a business which has been primarily focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic. In connection with the exit of the Lanier Apparel business, which is expected to be completed in the second half of Fiscal 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the second half of Fiscal 2020. These charges consist of (1) $6 million of inventory markdowns, the substantial majority of which were reversed in Corporate and Other as part of LIFO accounting as the inventory had not been sold as of January 30, 2021, (2) $3 million of employee charges, including severance and employee retention costs, (3) $3 million of operating lease asset impairment charges for leased office space, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in Fiscal 2020. The inventory markdowns and manufacturing facility charges are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments are included in SG&A in Lanier Apparel. As of January 30, 2021, $1 million of the accrued charges for employee charges and charges related to the Merida manufacturing facility had been paid. As of January 30, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet. During the First Quarter of Fiscal 2021, we recognized an additional $1 million of charges related to the Lanier Apparel exit primarily consisting of severance and employee retention costs. As of May 1, 2021, $3 million of the cumulative accrued employee charges and charges related to the Merida manufacturing facility had been paid. As of May 1, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet and are expected to be paid during Fiscal 2021. In addition to the charges incurred through the First Quarter of Fiscal 2021, we currently expect to incur incremental Lanier Apparel exit charges totaling approximately $3 million, which are expected to consist of additional employee charges for employees retained during the exit and the acceleration of certain post-exit contractual commitments.

Lanier Apparel Exit

3 Months Ended

May 01, 2021

7. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, a business which has been primarily focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic.

In connection with the exit of the Lanier Apparel business, which is expected to be completed in the second half of Fiscal 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the second half of Fiscal 2020. These charges consist of (1) $6 million of inventory markdowns, the substantial majority of which were reversed in Corporate and Other as part of LIFO accounting as the inventory had not been sold as of January 30, 2021, (2) $3 million of employee charges, including severance and employee retention costs, (3) $3 million of operating lease asset impairment charges for leased office space, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in Fiscal 2020. The inventory markdowns and manufacturing facility charges are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments are included in SG&A in Lanier Apparel. As of January 30, 2021, $1 million of the accrued charges for employee charges and charges related to the Merida manufacturing facility had been paid. As of January 30, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet.

During the First Quarter of Fiscal 2021, we recognized an additional $1 million of charges related to the Lanier Apparel exit primarily consisting of severance and employee retention costs. As of May 1, 2021, $3 million of the cumulative accrued employee charges and charges related to the Merida manufacturing facility had been paid. As of May 1, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet and are expected to be paid during Fiscal 2021.

In addition to the charges incurred through the First Quarter of Fiscal 2021, we currently expect to incur incremental Lanier Apparel exit charges totaling approximately $3 million, which are expected to consist of additional employee charges for employees retained during the exit and the acceleration of certain post-exit contractual commitments.