RESTRUCTURING

6 Months Ended

Jul. 04, 2020

Restructuring and Related Activities [Abstract]

The Company implemented a multi-year restructuring program that began in fiscal year 2016 called New World Fossil ("NWF 1.0") and concluded in fiscal year 2019. The remaining liability under NWF 1.0 is no longer material.

In fiscal year 2019, the Company launched New World Fossil 2.0 - Transform to Grow Program (“NWF 2.0”), which is focused on optimizing the Company’s operating structure to be more efficient, with faster decision-making and a more customer-centric focus. In addition to optimizing the way the Company goes to market, the Company is also pursuing additional gross margin expansion opportunities. The Company is taking a zero-based budgeting approach to adjust its business model to enable more investment in digital capabilities and marketing, move closer to the consumer and react more quickly to the ever-evolving consumer shopping patterns. The Company also plans to change overall business processes and resources, creating a more centrally directed operating model, reducing complexity and redundancy, and operating at a lower cost base.

The following table shows a rollforward of the accrued liability related to the Company’s NWF 2.0 restructuring plan (in thousands):



	For the 13 Weeks Ended July 4, 2020
	Liabilities								Liabilities
	April 4, 2020		Charges		Cash Payments		Non-cash Items		July 4, 2020
Store closures	$	28	$	1,961	$	681	$	725	$	583
Professional services	2,050		1,473		3,200		—		323
Severance and employee-related benefits	3,910		7,098		4,660		—		6,348
Total	$	5,988	$	10,532	$	8,541	$	725	$	7,254



	For the 13 Weeks Ended June 29, 2019
	Liabilities						Liabilities
	March 30, 2019		Charges		Cash Payments		June 29, 2019
Professional services	$	426	$	1,798	$	1,494	$	730
Severance and employee-related benefits	—		4,061		289		3,772
Total	$	426	$	5,859	$	1,783	$	4,502



	For the 27 Weeks Ended July 4, 2020
	Liabilities								Liabilities
	December 28, 2019		Charges		Cash Payments		Non-cash Items		July 4, 2020
Store closures	$	22	$	2,693	$	723	$	1,409	$	583
Professional services and other	2,824		4,662		7,163		—		323
Severance and employee-related benefits	4,238		12,552		10,442		—		6,348
Total	$	7,084	$	19,907	$	18,328	$	1,409	$	7,254



	For the 26 Weeks Ended June 29, 2019
	Liabilities						Liabilities
	December 29, 2018		Charges		Cash Payments		June 29, 2019
Professional services and other	$	—	$	2,638	$	1,908	$	730
Severance and employee-related benefits	—		4,061		289		3,772
Total	$	—	$	6,699	$	2,197	$	4,502

NWF 2.0 restructuring charges by operating segment were as follows (in thousands):



	For the 13 Weeks Ended July 4, 2020		For the 13 Weeks Ended June 29, 2019		For the 27 Weeks Ended July 4, 2020		For the 26 Weeks Ended June 29, 2019
Americas	$	2,821	$	—	$	3,957	$	—
Europe	2,916		4,554		3,682		5,394
Asia	2,822		—		4,445		—
Corporate	1,973		1,305		7,823		1,305
Consolidated	$	10,532	$	5,859	$	19,907	$	6,699

Additionally, the NWF 2.0 restructuring program is being expanded to address additional challenges posed by COVID-19. The program will include a number of cost saving measures including previously announced store closures. In addition, effective March 30, 2020, the Company implemented base salary reductions for a substantial number of its global employees, including each of its executive officers. Further, the cash fees for all non-employee directors serving on the Company’s Board of Directors were deferred for the first quarter of 2020 until the end of 2020 and the cash fees were reduced by 20% for the Second Quarter of 2020. The Company also implemented weekly work hour reductions (e.g., from 40 hours to 32 or 24 hours) and has implemented work-reduction furloughs for certain other employees. The Company has entered into discussions with most of its retail and corporate office landlords to modify its rent payments, receive other concessions or otherwise reduce its operating costs for these locations. The Company has also extended the payment terms with a number of its vendors and suppliers globally and is in discussions with licensors of certain third party trademarks to reduce the Company’s royalty obligations in 2020. The Company estimates total NWF 2.0 charges of $50 million to $70 million, with approximately $25 million of those charges in fiscal year 2020.