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FAIR VALUE MEASUREMENTS | 12 Months Ended
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Jan. 30, 2021
FAIR VALUE MEASUREMENTS |
FAIR VALUE MEASUREMENTS | 15. FAIR VALUE MEASUREMENTS ​ Fair Value Hierarchy Fair value measurement disclosure requirements specify a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (“observable inputs”) or reflect the Company’s own assumptions of market participant valuation (“unobservable inputs”). In accordance with the fair value guidance, the inputs to valuation techniques used to measure fair value are categorized into three levels based on the reliability of the inputs as follows:
| ● | Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
| ● | Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and
| ● | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
In determining fair value, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value. Classification of the financial or non-financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Measurement of Fair Value The Company measures fair value as an exit price, the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date, using the procedures described below for all financial and non-financial assets and liabilities measured at fair value. Money Market Funds The Company has cash equivalents primarily consisting of short-term money market funds backed by U.S. Treasury securities. The primary objective of these investing activities is to preserve the Company’s capital for the purpose of funding operations and it does not enter into money market funds for trading or speculative purposes. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1). Deferred Compensation Plan Assets and Liabilities The Company maintains a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for the benefit of certain management employees. The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan, and the account balance fluctuates with the investment returns on those funds. The Deferred Compensation Plan permits the deferral of up to 50% of base salary and 100% of compensation received under the Company’s annual incentive plan. The deferrals are held in a separate trust, which has been established by the Company to administer the Deferred Compensation Plan. The assets of the trust are subject to the claims of the Company’s creditors in the event that the Company becomes insolvent. Consequently, the trust qualifies as a grantor trust for income tax purposes (i.e., a “Rabbi Trust”). The liabilities of the Deferred Compensation Plan are presented in other accrued expenses and the assets held by the trust are classified within prepaid expenses and other current assets in the accompanying consolidated balance sheets. Changes in deferred compensation plan assets and liabilities are charged to selling and administrative expenses. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1). Deferred Compensation Plan for Non-Employee Directors Non-employee directors are eligible to participate in a deferred compensation plan with deferred amounts valued as if invested in the Company’s common stock through the use of phantom stock units (“PSUs”). Under the plan, each participating director’s account is credited with the number of PSUs equal to the number of shares of the Company’s common stock that the participant could purchase or receive with the amount of the deferred compensation, based upon the average of the high and low prices of the Company’s common stock on the last trading day of the fiscal quarter when the cash compensation was earned. Dividend equivalents are paid on PSUs at the same rate as dividends on the Company’s common stock and are re-invested in additional PSUs at the next fiscal quarter-end. The liabilities of the plan are based on the fair value of the outstanding PSUs and are presented in other accrued expenses (current portion) or other liabilities in the accompanying consolidated balance sheets. Gains and losses resulting from changes in the fair value of the PSUs are presented in selling and administrative expenses in the Company’s consolidated statements of earnings (loss). The fair value of each PSU is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1). Restricted Stock Units for Non-Employee Directors Under the Company’s incentive compensation plans, cash-equivalent restricted stock units (“RSUs”) of the Company were previously granted at no cost to non-employee directors. These cash-equivalent RSUs are subject to a vesting requirement (usually one year), earn dividend-equivalent units and are settled in cash on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock. The fair value of each cash-equivalent RSU payable is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1). Additional information related to RSUs for non-employee directors is disclosed in Note 17 to the consolidated financial statements. Derivative Financial Instruments The Company may use derivative financial instruments, primarily foreign exchange contracts, to reduce its exposure to market risks from changes in foreign exchange rates. These foreign exchange contracts are measured at fair value using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2). Additional information related to the Company’s derivative financial instruments is disclosed in Note 1 and Note 14 to the consolidated financial statements. Mandatory Purchase Obligation The Company recorded a mandatory purchase obligation of the noncontrolling interest in conjunction with the acquisition of Blowfish Malibu in July 2018 as further discussed in Note 2 in the consolidated financials. The fair value of the mandatory purchase obligation is based on the earnings formula specified in the Purchase Agreement (Level 3). The mandatory purchase obligation and any fair value adjustments are recorded as interest expense. The Company recorded fair value adjustments of $23.9 million during 2020 and $6.0 million during 2019. From the acquisition date of July 6, 2018 through February 2, 2019, an immaterial amount of accretion was recorded on the mandatory purchase obligation. The earnings projections and discount rate utilized in the initial estimate of the fair value of the mandatory purchase obligation required management judgment and are the assumptions to which the fair value calculation was the most sensitive. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at January 30, 2021 and February 1, 2020. The Company did not have any transfers between Level 1, Level 2 or Level 3 during 2020, 2019 or 2018. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Fair Value Measurements
($ thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Asset (Liability) | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |
January 30, 2021: | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |
Cash equivalents – money market funds | ​ | $ | 45,000 | ​ | $ | 45,000 | ​ | $ | — | ​ | $ | —
Non-qualified deferred compensation plan assets | ​ |  | 7,918 | ​ |  | 7,918 | ​ |  | — | ​ | ​ | —
Non-qualified deferred compensation plan liabilities | ​ |  | (7,918) | ​ |  | (7,918) | ​ |  | — | ​ | ​ | —
Deferred compensation plan liabilities for non-employee directors | ​ |  | (989) | ​ |  | (989) | ​ |  | — | ​ | ​ | —
Restricted stock units for non-employee directors | ​ |  | (1,661) | ​ |  | (1,661) | ​ |  | — | ​ | ​ | —
Mandatory purchase obligation - Blowfish Malibu | ​ |  | (39,134) | ​ |  | — | ​ |  | — | ​ | ​ | (39,134)
February 1, 2020: | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |
Cash equivalents – money market funds | ​ | $ | 18,001 | ​ | $ | 18,001 | ​ | $ | — | ​ | $ | —
Non-qualified deferred compensation plan assets | ​ |  | 8,004 | ​ |  | 8,004 | ​ |  | — | ​ | ​ | —
Non-qualified deferred compensation plan liabilities | ​ |  | (8,004) | ​ |  | (8,004) | ​ |  | — | ​ | ​ | —
Deferred compensation plan liabilities for non-employee directors | ​ |  | (1,536) | ​ |  | (1,536) | ​ |  | — | ​ | ​ | —
Restricted stock units for non-employee directors | ​ |  | (2,572) | ​ |  | (2,572) | ​ |  | — | ​ | ​ | —
Derivative financial instruments, net | ​ |  | (103) | ​ |  | — | ​ |  | (103) | ​ | ​ | —
Mandatory purchase obligation - Blowfish Malibu | ​ |  | (15,200) | ​ |  | — | ​ |  | — | ​ | ​ | (15,200)
​ Impairment Charges The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important that could trigger an impairment review include underperformance relative to expected historical or projected future operating results, a significant change in the manner of the use of the asset or a negative industry or economic trend. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC 820, Fair Value Measurement. Long-lived assets held and used with a carrying amount of $615.7 million, $780.2 million and $99.0 million in 2020, 2019 and 2018, respectively, were assessed for indicators of impairment and written down to their fair value. This assessment resulted in the impairment charges presented in the table below, primarily for operating lease right-of-use assets, leasehold improvements, and furniture and fixtures in the Company’s retail stores. Higher impairment charges were recorded in 2020, reflecting adverse economic conditions, driven in part by the COVID-19 pandemic. Adoption of ASC 842 in 2019 has resulted in higher impairment charges for underperforming retail stores as a direct result of including the right-of-use asset in the asset group that is evaluated for impairment. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​
($ thousands) | 2020 |  | 2019 |  | 2018
Long-Lived Asset Impairment Charges | ​ |  |  | ​ |  |  | ​ |
Famous Footwear | $ | 14,900 | ​ | $ | 1,980 | ​ | $ | 800
Brand Portfolio |  | 41,443 | ​ |  | 3,887 | ​ |  | 2,865
Total long-lived asset impairment charges | $ | 56,343 | ​ | $ | 5,867 | ​ | $ | 3,665
​ The Company performed its annual impairment review of indefinite-lived intangible assets, which involves estimating the fair value using significant unobservable inputs (Level 3). As a result of its annual impairment testing, the Company recorded $46.2 million in impairment charges in 2020. The Company did not record any impairment charges in 2019. The Company recorded $60.0 million in impairment charges in 2018 related to the Allen Edmonds trade name, as further discussed in Note 11 to the consolidated financial statements. During 2020, the Company performed an interim impairment test of goodwill, as further discussed in Note 11 to the consolidated financial statements. A quantitative assessment was performed for all reporting units as of May 2, 2020, which involved estimating the fair value of the reporting units using significant unobservable inputs (Level 3). The assessment indicated that the carrying value of the goodwill associated with the Brand Portfolio and Vionic reporting units was impaired, resulting in total goodwill impairment charges of $240.3 million. In addition to the interim assessment, the Company performed an impairment review of the remaining goodwill balance, which is associated with the Blowfish Malibu reporting unit, as of the first day of the fourth fiscal quarter. The review indicated no impairment. The quantitative assessments performed in 2019 resulted no impairment charges. The quantitative and qualitative assessments performed in 2018 resulted in impairment charges of $38.0 million. Refer to Note 1 and Note 11 to the consolidated financial statements for additional information related to the goodwill impairment tests. Fair Value of the Company’s Other Financial Instruments The fair values of cash and cash equivalents (excluding money market funds discussed above), receivables and trade accounts payable approximate their carrying values due to the short-term nature of these instruments. The carrying amounts and fair values of the Company’s other financial instruments subject to fair value disclosures are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | January 30, 2021 |  | February 1, 2020
​ | ​ | Carrying | ​ | ​ | ​ | ​ | Carrying | ​ | ​ | ​
($ thousands) |  | Value (1) |  | Fair Value |  | Value (1) |  | Fair Value
Borrowings under revolving credit agreement | ​ | $ | 250,000 | ​ | $ | 250,000 | ​ | $ | 275,000 | ​ | $ | 275,000
Long-term debt | ​ |  | 200,000 | ​ |  | 201,000 | ​ |  | 200,000 | ​ |  | 205,000
Total debt | ​ | $ | 450,000 | ​ | $ | 451,000 | ​ | $ | 475,000 | ​ | $ | 480,000
(1) | Excludes unamortized debt issuance costs and debt discount
The fair value of the borrowings under revolving credit agreement approximates its carrying value due to its short-term nature (Level 1). The fair value of the Company’s long-term debt was based upon quoted prices in an inactive market as of the end of the respective periods (Level 2).

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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