PROPERTY AND EQUIPMENT, NET

‘Property and equipment, net’ consists of the following:



	December 31,
	2018			2017
	(in thousands)
Leasehold improvements	$	63,702		$	72,961
Machinery and equipment	20,054			33,109
Furniture, fixtures, and other	16,779			19,776
Construction-in-progress	2,632			992
Property and equipment	103,167			126,838
Less: Accumulated depreciation and amortization	(80,956		)	(91,806		)
Property and equipment, net	$	22,211		$	35,032

Asset Retirement Obligations

The Company is contractually obligated under certain of its lease agreements to restore certain retail and office facilities back to their original condition. At lease inception, the estimated fair value of these liabilities is recorded along with a related asset. At December 31, 2018 and 2017, liabilities for asset retirement obligations were $2.0 million and $3.1 million, respectively, and are reported in ‘Accrued expenses and other liabilities’ in the consolidated balance sheets.

Depreciation and Amortization Expense

Depreciation and amortization expense related to property and equipment, reported in ‘Cost of sales’ and ‘Selling, general and administrative expenses’ was:



	Year Ended December 31,
	2018		2017		2016
	(in thousands)
Cost of sales	$	1,422	$	2,278	$	1,755
Selling, general and administrative expenses	11,180		12,723		13,312
Total depreciation and amortization expense	$	12,602	$	15,001	$	15,067

Asset Impairments

During the years ended December 31, 2018, 2017, and 2016, the Company recorded impairments of $0.9 million, $0.5 million, and $2.7 million, respectively, for underperforming retail stores. During the year ended December 31, 2018, the Company recorded impairment expenses of $1.3 million to reduce the carrying values of certain supply chain assets related to the closure of our Mexico and Italy manufacturing and distribution facilities, included in ‘Other businesses,’ to their estimated fair values. Impairments for retail stores by reportable operating segment, were:



	Year Ended December 31,
	2018			2017			2016
	Asset Impairment		Number of Stores	Asset Impairment		Number of Stores	Asset Impairment		Number of Stores
	(in thousands, except store count data)
Americas	$	138	1	$	455	3	$	1,703	12
Asia Pacific ⁽¹⁾	760		12	—		—	573		19
EMEA ⁽¹⁾	—		—	75		1	437		11
Total	$	898	13	$	530	4	$	2,713	42

⁽¹⁾In the third quarter of 2018, certain revenues and expenses previously reported within the ‘Asia Pacific’ segment were shifted to the ‘EMEA’ segment. The previously reported amounts for asset impairment for retail stores for the years ended December 31, 2016 have also been revised to conform to the current period presentation. See ‘Impacts of segment composition change’ table below for more information.

Impacts of segment composition change:



	Year Ended December 31, 2016
	Increase (Decrease)
Impacts on retail store asset impairment:
Asia Pacific	$	(99	)
EMEA	99

Impacts on number of retail stores impaired:
Asia Pacific	(2		)
EMEA	2