Restructuring Charges

In late 2014, the Company launched a comprehensive Supply Chain assessment, which is focused on enhancing the efficiency and effectiveness of its sourcing capabilities and identifying opportunities to improve profitability with an emphasis on speed, flexibility, improved product sell-through and reduced cost of goods sold. In addition, during the first quarter of Fiscal 2015, the Company initiated an SG&A Optimization program, a broad-based productivity initiative designed to reduce its overall cost structure and enhance operating efficiency and organizational effectiveness. Based on actions taken during the first quarter of Fiscal 2015 in connection with these two initiatives, the Company recorded a $6.4 million restructuring charge (the “2015 Restructuring”) for severance associated with the elimination of approximately 600 full-time field associates, consulting services and other related costs. The Company expects to incur incremental restructuring costs related to these initiatives during the remainder of Fiscal 2015 as it continues its assessment of the opportunities identified; the extent of those costs will vary based on the opportunities it chooses to pursue.


2.	Restructuring Charges (Continued)

The following table presents a reconciliation of the reserve established in connection with the 2015 Restructuring for the quarter ended May 2, 2015:



	Quarter Ended May 2, 2015
	Severance and Related Costs		Other Restructuring Costs			Total
	(in thousands)
Balance at January 31, 2015	$	—	$	—		$	—
Restructuring charge	3,434		2,941			6,375
Cash payments	—		(1,223		)	(1,223		)
Balance at May 2, 2015	$	3,434	$	1,718		$	5,152

Approximately $3.4 million and $1.7 million of the reserve related to the 2015 Restructuring is included in “Accrued salaries and bonus” and “Accrued expenses and other current liabilities,” respectively, on the Company’s Condensed Consolidated Balance Sheet at May 2, 2015.

During the first quarter of Fiscal 2014, the Company executed an organizational restructuring in support of its omni-channel retail strategy and its strategic growth initiatives (the “2014 Restructuring”). As part of the restructuring, the Company realigned certain functions within its corporate workforce, including its marketing, merchandise planning, procurement and allocation functions, to eliminate redundancy and integrate processes to better support its brands and serve its clients. These actions resulted in the separation of approximately 100 full-time associates. In connection with this effort, the Company recorded a pre-tax restructuring charge of approximately $17.3 million for severance and other costs during the first quarter of Fiscal 2014. No additional charges related to the 2014 Restructuring were recorded during the first quarter of Fiscal 2015. The Company expects to pay all amounts accrued in connection with the 2014 Restructuring by 2017.

The following tables present a reconciliation of the reserve established in connection with the 2014 Restructuring for the quarters ended May 2, 2015 and May 3, 2014:



	Quarter Ended May 2, 2015
	Severance and Related Costs			Other Restructuring Costs		Total
	(in thousands)
Balance at January 31, 2015	$	8,326		$	—	$	8,326
Restructuring charge	—			—		—
Cash payments	(2,028		)	—		(2,028		)
Balance at May 2, 2015	$	6,298		$	—	$	6,298



	Quarter Ended May 3, 2014
	Severance and Related Costs			Other Restructuring Costs			Total
	(in thousands)
Balance at February 1, 2014	$	—		$	—		$	—
Restructuring charge	16,742			561			17,303
Cash payments	(1,251		)	(561		)	(1,812		)
Reclassification to restructuring reserve (1)	1,867			—			1,867
Balance at May 3, 2014	$	17,358		$	—		$	17,358


(1)	Prior compensation accruals related to associates separated in connection with the restructuring were reclassified to the restructuring reserve.


2.	Restructuring Charges (Continued)

As of May 2, 2015 and May 3, 2014, approximately $2.6 million and $11.5 million of the reserve related to the 2014 Restructuring, respectively, is included in “Accrued salaries and bonus” and approximately $3.7 million and $5.9 million, respectively, is included in “Other liabilities” on the Company’s Condensed Consolidated Balance Sheets, based upon the expected timing of the payments.