Restructuring

12 Months Ended

Jan. 28, 2023

Restructuring [Abstract]

Restructuring

3.   Restructuring

Restructuring charges were as follows ($ in millions):

	2023		2022		2021
Fiscal 2023 Resource Optimization Initiative	$	145	$	-	$	-
Mexico Exit and Strategic Realignment(1)		2		(41)		277
Fiscal 2020 U.S. Retail Operating Model Changes		-		1		-
Total	$	147	$	(40)	$	277

(1)Includes ($6) million and $23 million related to inventory markdowns recorded in Cost of sales on our Consolidated Statements of Earnings in fiscal 2022 and fiscal 2021, respectively.

Fiscal 2023 Resource Optimization Initiative

In light of ongoing changes in business trends, during the second quarter of fiscal 2023, we commenced an enterprise-wide initiative to better align our spending with critical strategies and operations, as well as to optimize our cost structure. Charges incurred relate to employee termination benefits within our Domestic and International segments of $140 million and $5 million, respectively. We currently do not expect the remaining charges in fiscal 2024 related to this initiative to be material to the results of our operations.

All charges incurred related to this initiative were from continuing operations and were presented within Restructuring charges on our Consolidated Statements of Earnings.

Restructuring accrual activity related to the fiscal 2023 resource optimization initiative described above was as follows ($ in millions):

	Termination Benefits
	Domestic		International		Total
Balances as of January 29, 2022	$	-	$	-	$	-
Charges		145		5		150
Cash payments		(38)		-		(38)
Adjustments(1)		(5)		-		(5)
Balances as of January 28, 2023	$	102	$	5	$	107

(1)Represents adjustments to previously planned organizational changes and higher-than-expected employee retention.

Mexico Exit and Strategic Realignment

In the third quarter of fiscal 2021, we made the decision to exit our operations in Mexico and began taking other actions to more broadly align our organizational structure in support of our strategy. Charges incurred in our International segment primarily related to our decision to exit our operations in Mexico. All of our former stores in Mexico were closed as of the end of the first quarter of fiscal 2022. Charges incurred in our Domestic segment primarily related to actions taken to align our organizational structure in support of our strategy. We do not expect to incur material future restructuring charges related to this initiative and no material liability remains as of January 28, 2023.

All charges incurred related to the exit from Mexico and strategic realignment described above were from continuing operations and were presented as follows ($ in millions):

	Statement of	2022						2021
	Earnings Location	Domestic		International		Total		Domestic		International		Total
Inventory markdowns	Cost of sales	$	-	$	(6)	$	(6)	$	-	$	23	$	23
Asset impairments(1)	Restructuring charges		-		6		6		10		57		67
Termination benefits	Restructuring charges		(40)		(1)		(41)		123		20		143
Currency translation adjustment	Restructuring charges		-		-		-		-		39		39
Other(2)	Restructuring charges		-		-		-		-		5		5
		$	(40)	$	(1)	$	(41)	$	133	$	144	$	277

		Cumulative Amount as of January 28, 2023
	Statement of Earnings Location	Domestic		International		Total
Inventory markdowns	Cost of sales	$	-	$	17	$	17
Asset impairments(1)	Restructuring charges		10		63		73
Termination benefits	Restructuring charges		83		20		103
Currency translation adjustment	Restructuring charges		-		39		39
Other(2)	Restructuring charges		-		6		6
		$	93	$	145	$	238

(1)Remaining net carrying value of asset impairments approximates fair value and was immaterial as of January 28, 2023.

(2)Other charges are primarily comprised of contract termination costs.

No material restructuring accrual activity occurred in fiscal 2023 related to the exit from Mexico and strategic realignment described above. Restructuring accrual activity in fiscal 2022 related to this initiative was as follows ($ in millions):

	Termination Benefits
	Domestic		International		Total
Balances as of January 30, 2021	$	104	$	20	$	124
Charges		4		-		4
Cash payments		(57)		(18)		(75)
Adjustments(1)		(44)		(1)		(45)
Changes in foreign currency exchange rates		-		(1)		(1)
Balances as of January 29, 2022	$	7	$	-	$	7

(1)Represents adjustments to previously planned organizational changes in our Domestic segment and higher-than-expected employee retention in both our Domestic and International segments.