Restructuring, Asset Impairment and Other Charges

12 Months Ended

Dec. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring, Asset Impairment and Other Charges

Note 5 – Restructuring, Asset Impairment and Other Charges

The following table provides the activity of reserves for closed properties for 2023, 2022 and 2021. Reserves for closed properties recorded in the consolidated balance sheets are included in “Other accrued expenses” in Current liabilities and “Other long-term liabilities” in Long-term liabilities based on when the obligations are expected to be paid.


	Lease and
(In thousands)	Ancillary Costs			Severance			Total
Balance at January 2, 2021	$	3,349		$	114		$	3,463
Provision for closing charges		1,509			—			1,509
Provision for severance		—			362			362
Lease termination adjustments		(220	)		—			(220	)
Changes in estimates		2			—			2
Accretion expense		91			—			91
Payments		(1,607	)		(476	)		(2,083	)
Balance at January 1, 2022		3,124			—			3,124
Provision for closing charges		1,837			—			1,837
Provision for severance		—			9			9
Lease termination adjustments		(86	)		—			(86	)
Changes in estimates		28			—			28
Accretion expense		67			—			67
Payments		(993	)		(9	)		(1,002	)
Balance at December 31, 2022		3,977			—			3,977
Provision for severance		—			21			21
Changes in estimates		(258	)		—			(258	)
Accretion expense		102			—			102
Payments		(844	)		(21	)		(865	)
Balance at December 30, 2023	$	2,977		$	—		$	2,977

Included in the liability are lease-related ancillary costs from the date of site closure to the end of the remaining lease term.

Restructuring, asset impairment and other charges included in the consolidated statements of earnings consisted of the following:


(In thousands)	2023			2022			2021
Asset impairment charges (a)	$	11,749		$	5,086		$	3,783
Provision for closing charges		—			1,837			1,509
Gain on sales of assets related to closed facilities (b)		(2,614	)		(6,324	)		(2,607	)
Provision for severance (c)		21			9			362
Other costs associated with site closures (d)		584			271			636
Lease termination adjustments (e)		—			(102	)		(799	)
Changes in estimates (f)		(550	)		28			2
Total	$	9,190		$	805		$	2,886

(a)

In the current year, asset impairment charges of $8.0 million were incurred in the Wholesale segment related to the Company's continued supply chain network optimization in response to customer demand changes. Additional charges in the current year were incurred related to two store closures in the Retail segment and impairment losses related to a distribution location that sustained storm damage in the Wholesale segment. Asset impairment charges in 2022 were incurred primarily in the Retail segment and relate to restructuring of the Retail segment's e-commerce delivery model and a store closure. In 2021, asset impairment charges were incurred primarily in the Retail segment and relate to store closures, as well as site closures in connection with the Company’s supply chain transformation initiatives within the Wholesale segment.

(b)

Gain on sales of assets in the current year primarily relate to the sale of a store within the Retail segment. In 2022, gain on sales of assets primarily relates to the sales of real property of previously closed locations within both the Wholesale and Retail segments. Gain on sales of assets in 2021 primarily relate to sales of pharmacy customer lists, equipment, and real estate associated with the store closings in the Retail segment, in addition to gains on sale of vacant land in the Wholesale segment.

(c)

Severance charges relate to closures in the Wholesale segment as well as Retail store closings.

(d)

Other costs net activity in the current year primarily relates to Retail store closings. In the prior year, activity primarily relates to restructuring activity within the Wholesale segment and Retail store closings.

(e)

Lease termination adjustments represent the benefits recognized in connection with early lease buyouts for previously closed sites. Payments made in connection with lease buyouts were applied to reserves for closed properties and lease liabilities, as applicable.

(f)

Changes in estimates primarily relate to revised estimates for turnover and other lease ancillary costs associated with previously closed locations. The current year also included a $0.3 million gain for additional insurance proceeds received related to a distribution location that sustained significant storm damage within the Wholesale segment.

Long-lived assets which are not recoverable are measured at fair value on a nonrecurring basis using Level 3 inputs under the fair value hierarchy, as further described in Note 7. In the current year, long-lived assets with a book value of $20.6 million were measured at a fair value of $8.9 million, resulting in impairment charges of $11.7 million. In the prior year, long-lived assets with a book value of $5.2 million were measured at a fair value of $0.1 million, resulting in impairment charges of $5.1 million. In 2021, long-lived assets consisting of property and equipment with a book value of $27.5 million were measured at a fair value of $23.7 million, resulting in impairment charges of $3.8 million. The fair value of long-lived assets is determined by estimating the amount and timing of net future cash flows, discounted using a risk-adjusted rate of interest. The Company estimates future cash flows based on historical results of operations, external factors expected to impact future performance, experience and knowledge of the geographic area in which the assets are located, and when necessary, consultations with real estate brokers.