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Restructuring Plan | 9 Months Ended
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Nov. 30, 2024
Restructuring and Related Activities [Abstract] |
Restructuring Plan | Note 6 - Restructuring Plan During fiscal 2023, we initiated Project Pegasus, a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and effectiveness and reduce costs. Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate and amplify 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. These changes resulted in our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, 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 reduced the size of our global workforce by approximately 10%. 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. During the second quarter of fiscal 2024, we announced plans to geographically consolidate the U.S. Beauty business, located in El Paso, Texas, and Irvine, California, and co-locate it with our Wellness business in the Boston, Massachusetts area. This geographic consolidation and relocation aligns with our initiative to streamline and simplify the organization and was completed during the third quarter of fiscal 2025. We expect these changes to enable a greater opportunity to capture synergies and enhance collaboration and innovation within the Beauty & Wellness segment. As previously disclosed, we continue to have the following expectations regarding Project Pegasus charges: •Total one-time pre-tax restructuring charges of approximately $50 million to $55 million over the duration of the plan, expected to be completed during fiscal 2025. •Pre-tax restructuring charges to be comprised of approximately $15 million to $19 million of severance and employee related costs, $28 million of professional fees, $3 million to $4 million of contract termination costs, and $4 million of other exit and disposal costs. •All of our operating segments and shared services will be impacted by the plan and pre-tax restructuring charges include approximately $16 million to $17 million in Home & Outdoor and $34 million to $38 million in Beauty & Wellness. •Pre-tax restructuring charges represent primarily cash expenditures, which are expected to be substantially paid by the end of fiscal 2025. We also continue to have the following expectations regarding Project Pegasus savings: •Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which began in fiscal 2024 and we expect to be substantially achieved by the end of fiscal 2027. •Estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, which was achieved, approximately 35% in fiscal 2025, approximately 25% in fiscal 2026 and approximately 15% in fiscal 2027. •Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A. During the three and nine month periods ended November 30, 2024, we incurred $3.5 million and $6.9 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statements of income. We recognized $3.9 million and $14.9 million of pre-tax restructuring costs during the three and nine month periods ended November 30, 2023, respectively, in connection with Project Pegasus. The following tables summarize restructuring charges recorded as a result of Project Pegasus for the periods presented:
| Three Months Ended November 30, 2024
(in thousands) | Home & Outdoor |  |  |  |  |  | Beauty & Wellness |  | Total
Severance and employee related costs | $ | 130 |  |  |  |  |  |  | $ | 489 |  |  | $ | 619 |
Professional fees | 59 |  |  |  |  |  |  | 355 |  |  | 414 |
Contract termination | — |  |  |  |  |  |  | 1,747 |  |  | 1,747 |
Other | 581 |  |  |  |  |  |  | 157 |  |  | 738 |
Total restructuring charges | $ | 770 |  |  |  |  |  |  | $ | 2,748 |  |  | $ | 3,518 |
| Three Months Ended November 30, 2023
(in thousands) | Home & Outdoor |  |  |  |  |  | Beauty & Wellness |  | Total
Severance and employee related costs | $ | 109 |  |  |  |  |  |  | $ | 2,498 |  |  | $ | 2,607 |
Professional fees | 464 |  |  |  |  |  |  | 794 |  |  | 1,258 |
Contract termination | — |  |  |  |  |  |  | — |  |  | — |
Other | 10 |  |  |  |  |  |  | 15 |  |  | 25 |
Total restructuring charges | $ | 583 |  |  |  |  |  |  | $ | 3,307 |  |  | $ | 3,890 |
| Nine Months Ended November 30, 2024 |  | Total Incurred Since Inception
(in thousands) | Home & Outdoor |  | Beauty & Wellness |  | Total |
Severance and employee related costs | $ | 820 |  |  | $ | 2,155 |  |  | $ | 2,975 |  |  | $ | 18,251 |
Professional fees | 327 |  |  | 940 |  |  | 1,267 |  |  | 28,144 |
Contract termination | — |  |  | 1,747 |  |  | 1,747 |  |  | 3,078 |
Other | 581 |  |  | 309 |  |  | 890 |  |  | 3,480 |
Total restructuring charges | $ | 1,728 |  |  | $ | 5,151 |  |  | $ | 6,879 |  |  | $ | 52,953 |
| Nine Months Ended November 30, 2023
(in thousands) | Home & Outdoor |  | Beauty & Wellness |  | Total
Severance and employee related costs | $ | 680 |  |  | $ | 3,407 |  |  | $ | 4,087 |
Professional fees | 3,915 |  |  | 5,870 |  |  | 9,785 |
Contract termination | — |  |  | 796 |  |  | 796 |
Other | 49 |  |  | 145 |  |  | 194 |
Total restructuring charges | $ | 4,644 |  |  | $ | 10,218 |  |  | $ | 14,862 |
The tables below present 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 29, 2024 |  | Charges |  | Payments |  | Balance at November 30, 2024
Severance and employee related costs | $ | 4,493 |  |  | $ | 2,975 |  |  | $ | (5,885) |  |  | $ | 1,583 |
Professional fees | 272 |  |  | 1,267 |  |  | (1,303) |  |  | 236 |
Contract termination | — |  |  | 1,747 |  |  | (1,735) |  |  | 12 |
Other | — |  |  | 890 |  |  | (890) |  |  | — |
Total | $ | 4,765 |  |  | $ | 6,879 |  |  | $ | (9,813) |  |  | $ | 1,831 |
(in thousands) | Balance at February 28, 2023 |  | Charges |  | Payments |  | Balance at November 30, 2023
Severance and employee related costs | $ | 3,173 |  |  | $ | 4,087 |  |  | $ | (3,758) |  |  | $ | 3,502 |
Professional fees | 3,201 |  |  | 9,785 |  |  | (12,559) |  |  | 427 |
Contract termination | 160 |  |  | 796 |  |  | (956) |  |  | — |
Other | 34 |  |  | 194 |  |  | (228) |  |  | — |
Total | $ | 6,568 |  |  | $ | 14,862 |  |  | $ | (17,501) |  |  | $ | 3,929 |

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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 S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: 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 3: 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 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: 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 + Details
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