XML 22 R10.htm IDEA: XBRL DOCUMENT

Restructuring Charges

9 Months Ended

Oct. 31, 2020

2. Restructuring Charges

Restructuring charges were as follows ($ in millions):


	Three Months Ended				Nine Months Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Mexico Exit and Corporate Reorganization⁽¹⁾	$	148	$	-	$	148	$	-
Fiscal 2020 U.S. Retail Operating Model Changes		(1)		(7)		-		41
Total	$	147	$	(7)	$	148	$	41

(1)Includes $36 million related to inventory markdowns recorded in Cost of sales on our Condensed Consolidated Statements of Earnings for the three and nine months ended October 31, 2020.

Mexico Exit and Corporate Reorganization

The novel coronavirus disease ("COVID-19") has had significant impacts on, for example, the economic conditions of the markets in which we operate, customer shopping behaviors, the role of technology in peoples’ lives and the way we meet these needs. In light of these changes, we have re-examined our Building the New Blue Strategy and adjusted our plans to ensure that our focus and resources are closely aligned with the opportunities we see in front of us. As a result, during the third quarter of fiscal 2021, we made the decision to exit our operations in Mexico later this fiscal year and took other actions within our Domestic segment to more broadly align our corporate organizational structure in support of our strategy.

Charges incurred in our International segment related to our decision to exit our operations in Mexico. We expect to incur additional pre-tax restructuring charges, primarily related to foreign currency translation adjustments, of approximately $50 million to $75 million. We expect operations in Mexico to be substantially complete during the fourth quarter of fiscal 2021 or early fiscal 2022.

Charges incurred in our Domestic segment primarily related to termination benefits associated with corporate organizational changes as well as impairments of technology assets held in service of our Mexico operations.

As we continue to evolve our Building the New Blue Strategy, it is possible that we will incur material future restructuring costs in both our Domestic and International segments, but we are unable to forecast the timing and magnitude of such costs.

All charges incurred related to this plan are from continuing operations and are presented on our Condensed Consolidated Statements of Earnings as follows ($ in millions):


	Statement of	Three and Nine Months Ended October 31, 2020
	Earnings Location	Domestic		International		Total
Inventory markdowns	Cost of sales	$	-	$	36	$	36
Asset impairments	Restructuring charges		10		48		58
Termination benefits	Restructuring charges		36		18		54
		$	46	$	102	$	148

As of October 31, 2020, our termination benefits liability was $47 million, which included $7 million of cash payments related to our Domestic segment.

Fiscal 2020 U.S. Retail Operating Model Changes

In the second quarter of fiscal 2020, we made changes primarily related to our U.S. retail operating model to increase organization effectiveness and create a more seamless customer experience across all channels. All charges incurred, including $10 million related to a voluntary early retirement offer, related to termination benefits within our Domestic segment and are presented within Restructuring charges from continuing operations on our Condensed Consolidated Statements of Earnings. As of October 31, 2020, the cumulative amount of charges incurred was $41 million and no material liability remains.