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DISCONTINUED OPERATIONS | 12 Months Ended
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Aug. 01, 2020
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | NOTE 19—DISCONTINUED OPERATIONS In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu. Since the acquisition, the Company sold Hornbacher’s, and sold and exited the retail operations of certain Shoppers locations, Shop ‘n Save St. Louis and Shop ‘n Save East. As discussed further in Note 1—Significant Accounting Policies, in the fourth quarter of fiscal 2020, the Company determined Retail no longer qualified for held for sale presentation and the results of operations, financial position and cash flows of Retail have been revised in order to present Retail within continuing operations. Subsequent to the presentation changes in the fourth quarter of fiscal 2020, discontinued operations contains the historical results of operations, financial position and cash flows of Hornbacher’s, certain Shoppers locations, Shop ‘n Save St. Louis and Shop ‘n Save East. As of August 1, 2020, only certain Shoppers locations are contained in remaining disposal groups that continue to be classified as operations held for sale as discontinued operations. In the second quarter of fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations. During fiscal 2020, within discontinued operations the Company incurred approximately $31.1 million in pre-tax aggregate costs and charges related to Shoppers stores that remain within discontinued operations, consisting of $24.6 million of operating losses, severance costs and transaction costs during the period of wind-down and $6.5 million of property and equipment impairment charges related to impairment reviews. In the second, third and fourth quarters of fiscal 2020, the Company reviewed the recoverability of the remaining assets held for sale and assessed the remaining composition of the Shoppers disposal group based on updated fair values. In fiscal 2019, the Company closed three of its eight Shop ‘n Save East stores and sold the remaining five Shop ‘n Save East stores to GIANT Food Store, LLC, and did not incur a gain or loss on the sale of this disposal group. The Company closed the remaining Shop ‘n Save St. Louis retail stores and the distribution center that were not sold prior to the Supervalu acquisition date. In fiscal 2019, the Company completed the sale of seven of its eight Hornbacher's locations, as well as a Hornbacher’s store that was previously being developed in West Fargo, North Dakota, to Coborn's Inc. (“Coborn’s”). The Company did not incur a gain or loss on the sale of this disposal group. The Hornbacher’s store in Grand Forks, North Dakota was not included in the sale to Coborn’s and has closed pursuant to the terms of the definitive agreement. As part of the sale, Coborn's entered into a long-term agreement for the Company to serve as the primary supplier of the Hornbacher's locations and expand its existing supply arrangements for other Coborn’s locations. In the fourth quarter of fiscal 2019, the Company completed the sale of the pharmacy prescription files and inventory of the Shoppers disposal group. Operating results of discontinued operations are summarized below:
(in thousands) |  | 2020 |  | 2019(1) (41 weeks)
Net sales |  | $ | 228,523 |  |  | $ | 440,450 |
Cost of sales |  | 162,099 |  |  | 312,200 |
Gross profit |  | 66,424 |  |  | 128,250 |
Operating expenses |  | 52,625 |  |  | 105,981 |
Restructuring expenses and charges |  | 33,470 |  |  | 24,944 |
Operating loss |  | (19,671 | ) |  | (2,675 | )
Other (income) expense, net |  | (4 | ) |  | 150 |
Loss from discontinued operations before income taxes |  | (19,667 | ) |  | (2,825 | )
Benefit for income taxes |  | (4,465 | ) |  | (3,723 | )
(Loss) income from discontinued operations, net of tax |  | $ | (15,202 | ) |  | $ | 898 |
(1) | These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to August 3, 2019.
The Company recorded $0.0 million and $12.4 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in fiscal 2020 and 2019, respectively, related to retail disposal groups, which were sold with a supply agreement and were classified within discontinued operations prior to their disposal. These amounts were recorded at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business. No net sales were recorded within continuing operations for retail banners that the Company disposed of and expects to dispose of without a supply agreement, as they have been eliminated upon consolidation within continuing operations and amounted to $125.0 million and $221.4 million in fiscal 2020 and 2019, respectively. The carrying amounts (in thousands) of major classes of assets and liabilities that were classified as held-for-sale on the Consolidated Balance Sheets follows in the table below.
(in thousands) |  | August 1, 2020 |  | August 3, 2019
Current assets |  |  |  |
Cash and cash equivalents |  | $ | 119 |  |  | $ | 799 |
Receivables, net |  | 350 |  |  | 158 |
Inventories |  | 4,233 |  |  | 18,885 |
Other current assets |  | 365 |  |  | 1,152 |
Total current assets of discontinued operations |  | 5,067 |  |  | 20,994 |
Long-term assets |  |  |  |
Property and equipment |  | 3,450 |  |  | 44,489 |
Other assets |  | 465 |  |  | 468 |
Total long-term assets of discontinued operations |  | 3,915 |  |  | 44,957 |
Total assets of discontinued operations |  | $ | 8,982 |  |  | $ | 65,951 |
Current liabilities |  |  |  |
Accounts payable |  | $ | 3,613 |  |  | $ | 6,181 |
Accrued compensation and benefits |  | 4,501 |  |  | 3,637 |
Other current liabilities |  | 3,324 |  |  | 5,699 |
Total current liabilities of discontinued operations |  | 11,438 |  |  | 15,517 |
Long-term liabilities |  |  |  |
Other long-term liabilities |  | 1,738 |  |  | 770 |
Total liabilities of discontinued operations |  | 13,176 |  |  | 16,287 |
Net (liabilities) assets of discontinued operations |  | $ | (4,194 | ) |  | $ | 49,664 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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