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RESTRUCTURING | 9 Months Ended
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Oct. 28, 2023
Restructuring and Related Activities [Abstract] |
RESTRUCTURING | RESTRUCTURING In support of the Company’s ongoing structural transformation from a legacy store operating model to a digital-first retailer, during the second quarter of 2023, the Company voluntarily entered into an early termination of its corporate office lease and implemented a workforce reduction. On May 26, 2023, the Company proactively accelerated the termination of its corporate office lease to capitalize on the prevailing tenant-favorable market conditions. That lease will now expire in May 2024, and the Company is continuing to explore various options for a new lease, including negotiations with the current landlord. During the second quarter of 2023, the Company implemented a plan that encompassed two headcount reductions, which accounted for over 20% of its salaried workforce, the substantial majority of whom were located at the Company’s corporate offices in Secaucus, New Jersey, with the balance at other domestic and international locations. The voluntary lease termination, combined with the workforce reduction, will enable the Company to reduce its current space configuration and capitalize on lower prevailing market rates than would have been applicable under its existing lease, which included escalations in occupancy costs, and did not expire until 2029. The actions associated with the workforce reduction were substantially completed by the end of the Third Quarter 2023. In addition, the lease for the Company’s distribution center in Toronto, Canada (“TODC”) expires in April 2024. The Company expects to move these operations to the United States to its current distribution center in Alabama, which will result in a further headcount reduction at the TODC. The transition out of the TODC is expected to be substantially completed by the end of the first quarter of 2024. As a result of these strategic actions associated with the voluntary early termination of its corporate office lease, the move from the TODC, and workforce reductions, the Company incurred non-operating charges of $1.2 million and $11.8 million in restructuring costs during the Third Quarter 2023 and Year-To-Date 2023, respectively on a pretax basis, summarized in the following table:
|  |  |  | Thirteen Weeks Ended |  | Thirty-nine Weeks Ended
|  |  |  | October 28, 2023 |  | October 29, 2022 |  | October 28, 2023 |  | October 29, 2022
|  |  |  | (in thousands)
Employee-related costs |  |  |  | $ | 674 |  |  | $ | — |  |  | $ | 6,107 |  |  | $ | — |
Lease termination costs (1) |  |  |  | 454 |  |  | — |  |  | 5,401 |  |  | — |
Professional fees |  |  |  | 82 |  |  | — |  |  | 268 |  |  | — |
Total restructuring costs (2) |  |  |  | $ | 1,210 |  |  | $ | — |  |  | $ | 11,776 |  |  | $ | — |
___________________________________________ (1)Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $0.5 million and $1.4 million for the Third Quarter 2023 and Year-To-Date 2023, respectively. The Company expects to record additional accelerated depreciation charges of approximately $1.0 million until the expiration of its corporate office lease. (2)Restructuring costs are recorded within Selling, general and administrative expenses, except accelerated depreciation charges noted above, which are recorded within Depreciation and amortization, and are primarily recorded within The Children’s Place U.S. segment. The following table summarizes the restructuring costs that have been partially settled with cash payments and the remaining related liability as of October 28, 2023. The remaining related liability is expected to be settled with cash payments in the future and these costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:
|  | Employee-Related Costs |  | Lease Termination Costs |  | Professional Fees |  | Total |  |
|  | (in thousands) |  |
Balance at April 29, 2023 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |
Provision |  | 5,433 |  |  | 4,040 |  |  | 186 |  |  | 9,659 |  |  |
Cash payments |  | (2,602) |  |  | (4,040) |  |  | — |  |  | (6,642) |  |  |
Balance at July 29, 2023 |  | 2,831 |  |  | — |  |  | 186 |  |  | 3,017 |  |  |
Provision |  | 674 |  |  | — |  |  | 82 |  |  | 756 |  |  |
Cash payments |  | (2,652) |  |  | — |  |  | (268) |  |  | (2,920) |  |  |
Balance at October 28, 2023 |  | $ | 853 |  |  | $ | — |  |  | $ | — |  |  | $ | 853 |  |  |

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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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