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Restructuring Plan | 3 Months Ended
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May 31, 2023
Restructuring and Related Activities [Abstract] |
Restructuring Plan | Note 7 - Restructuring PlanDuring the second quarter of fiscal 2023, we focused on developing Project Pegasus, a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs. 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. During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with Project Pegasus that resulted in our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which is referred to herein as “Beauty & Wellness.” In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and how our CEO, our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes. As part of our initiative focused on streamlining and simplifying the organization, we made further changes to the structure of our organization, during the fourth quarter of fiscal 2023, which include the creation of a North America Regional Market Organization (“RMO”) responsible for sales and go to market strategies for all categories and channels in the U.S. and Canada, and further centralization of certain functions under shared services, particularly in operations and finance to better support our business segments and RMOs. This new structure, inclusive of the organizational structure changes described above resulting in the reportable segment change, will reduce the size of our global workforce by approximately 10%. The majority of the role reductions were completed by March 1, 2023, and nearly all of the remaining role reductions are expected to be completed before the end of fiscal year 2024. We believe that these changes better focus business segment resources on brand development, consumer-centric innovation and marketing, the RMOs on sales and go to market strategies, and shared services on their respective areas of expertise while also creating a more efficient and effective organizational structure. We continue to 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 substantially 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 are expected to be substantially completed by the end of fiscal 2024 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 the three month period ended May 31, 2023, we incurred $7.4 million of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statement of income. The following table summarizes restructuring charges recorded as a result of Project Pegasus for the periods presented:
| Three Months Ended May 31, 2023 |  | Total Incurred Since Inception
(in thousands) | Home & Outdoor |  |  |  |  | Beauty & Wellness |  | Total |
Severance and employee related costs | $ | 484 |  |  |  |  |  | $ | 408 |  |  | $ | 892 |  |  | $ | 10,345 |
Professional fees | 2,269 |  |  |  |  |  | 3,357 |  |  | 5,626 |  |  | 22,375 |
Contract termination | — |  |  |  |  |  | 688 |  |  | 688 |  |  | 1,223 |
Other | 37 |  |  |  |  |  | 112 |  |  | 149 |  |  | 774 |
Total restructuring charges | $ | 2,790 |  |  |  |  |  | $ | 4,565 |  |  | $ | 7,355 |  |  | $ | 34,717 |
The table below presents a rollforward of our accruals related to Project Pegasus, which are included in accounts payable and accrued expenses and other current liabilities:
(in thousands) | Balance at February 28, 2023 |  | Charges |  | Payments |  | Balance at May 31, 2023
Severance and employee related costs | $ | 3,173 |  |  | $ | 892 |  |  | $ | (2,316) |  |  | $ | 1,749 |
Professional fees | 3,201 |  |  | 5,626 |  |  | (6,026) |  |  | 2,801 |
Contract termination | 160 |  |  | 688 |  |  | (848) |  |  | — |
Other | 34 |  |  | 149 |  |  | (183) |  |  | — |
Total | $ | 6,568 |  |  | $ | 7,355 |  |  | $ | (9,373) |  |  | $ | 4,550 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//420/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4(e)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479823/420-10-S99-2 + Details
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