Restructuring Plan

6 Months Ended

Aug. 31, 2022

Restructuring and Related Activities [Abstract]

Note 8 - Restructuring Plan

During the second quarter of fiscal 2023, we focused on developing a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (referred to as “Project Pegasus”). Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency of our supply chain network, optimize our indirect spending, and improve our cash flow and working capital, as well as other activities. We anticipate these initiatives will create operating efficiencies, as well as provide a platform to fund future growth investments.

We have the following expectations regarding Project Pegasus:

•Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which we expect to begin in fiscal 2024 and be substantially achieved by the end of fiscal 2026.

•Estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.

•Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A.

•Total one-time pre-tax restructuring charges of approximately $85 million to $95 million over the duration of the plan, which is expected to be completed during fiscal 2025 and will primarily be comprised of severance and employee related costs, professional fees, contract termination costs, and other exit and disposal costs.

•All of our operating segments and shared services will be impacted by the plan.

During both the three and six month periods ended August 31, 2022, we incurred $4.8 million of pre-tax restructuring costs in connection with Project Pegasus, which are recorded as “Restructuring charges” in the condensed consolidated statements of income. We recognized $0.4 million of pre-tax restructuring costs during both the three and six month periods ended August 31, 2021, under a prior restructuring plan referred to as Project Refuel, which was completed during the fourth quarter of fiscal 2022.

The following tables summarize restructuring charges recorded as a result of Project Pegasus for the periods presented:


	Three Months Ended August 31, 2022
(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Severance and employee related costs	$	472	$	1,926	$	443	$	2,841
Professional fees	—		128		—		128
Contract termination	—		1,500		—		1,500
Other	—		—		307		307
Total restructuring charges	$	472	$	3,554	$	750	$	4,776


	Six Months Ended August 31, 2022								Total Incurred Since Inception
(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Severance and employee related costs	$	472	$	1,926	$	445	$	2,843	$	2,843
Professional fees	—		128		—		128		128
Contract termination	—		1,500		—		1,500		1,500
Other	—		—		307		307		307
Total restructuring charges	$	472	$	3,554	$	752	$	4,778	$	4,778

The table below presents a rollforward of our accruals related to Project Pegasus, which are included in accrued expenses and other current liabilities:


(in thousands)	Balance at February 28, 2022		Charges		Payments		Balance at August 31, 2022
Severance and employee related costs	$	—	$	2,843	$	802	$	2,041
Professional fees	—		128		128		—
Contract termination	—		1,500		—		1,500
Other	—		307		307		—
Total	$	—	$	4,778	$	1,237	$	3,541