Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 04, 2018 | Aug. 27, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 4, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | AEO | |
Entity Registrant Name | AMERICAN EAGLE OUTFITTERS INC | |
Entity Central Index Key | 919,012 | |
Current Fiscal Year End Date | --02-02 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 177,365,947 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Current assets: | |||
Cash and cash equivalents | $ 323,322,000 | $ 413,613,000 | $ 192,558,000 |
Short-term investments | 40,000,000 | 0 | |
Merchandise inventory | 466,112,000 | 398,213,000 | 433,458,000 |
Accounts receivable, net | 74,153,000 | 78,304,000 | 80,673,000 |
Prepaid expenses and other | 93,493,000 | 78,400,000 | 110,496,000 |
Total current assets | 997,080,000 | 968,530,000 | 817,185,000 |
Property and equipment, at cost, net of accumulated depreciation | 732,350,000 | 724,239,000 | 719,127,000 |
Intangible assets, at cost, net of accumulated amortization | 45,064,000 | 46,666,000 | 47,520,000 |
Goodwill | 14,926,000 | 15,070,000 | 15,069,000 |
Non-current deferred income taxes | 8,558,000 | 9,344,000 | 28,761,000 |
Other assets | 52,771,000 | 52,464,000 | 58,661,000 |
Total assets | 1,850,749,000 | 1,816,313,000 | 1,686,323,000 |
Current liabilities: | |||
Accounts payable | 264,247,000 | 236,703,000 | 275,479,000 |
Accrued compensation and payroll taxes | 51,903,000 | 54,324,000 | 22,708,000 |
Accrued rent | 85,416,000 | 83,312,000 | 78,697,000 |
Accrued income and other taxes | 18,332,000 | 12,781,000 | 13,289,000 |
Unredeemed gift cards and gift certificates | 33,185,000 | 52,347,000 | 32,573,000 |
Current portion of deferred lease credits | 10,822,000 | 11,203,000 | 12,838,000 |
Other liabilities and accrued expenses | 44,115,000 | 34,551,000 | 36,398,000 |
Total current liabilities | 508,020,000 | 485,221,000 | 471,982,000 |
Non-current liabilities: | |||
Deferred lease credits | 49,569,000 | 47,977,000 | 53,620,000 |
Non-current accrued income taxes | 7,164,000 | 7,269,000 | 4,786,000 |
Other non-current liabilities | 25,419,000 | 29,055,000 | 31,636,000 |
Total non-current liabilities | 82,152,000 | 84,301,000 | 90,042,000 |
Commitments and contingencies | |||
Stockholders’ equity: | |||
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding | |||
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 177,366, 177,316 and 176,965 shares outstanding, respectively | 2,496,000 | 2,496,000 | 2,496,000 |
Contributed capital | 560,349,000 | 593,770,000 | 586,844,000 |
Accumulated other comprehensive loss | (32,646,000) | (30,795,000) | (30,121,000) |
Retained earnings | 1,941,536,000 | 1,883,592,000 | 1,772,233,000 |
Treasury stock, at cost, 72,200, 72,250 and 72,601 shares, respectively | (1,211,158,000) | (1,202,272,000) | (1,207,153,000) |
Total stockholders’ equity | 1,260,577,000 | 1,246,791,000 | 1,124,299,000 |
Total liabilities and stockholders’ equity | $ 1,850,749,000 | $ 1,816,313,000 | $ 1,686,323,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Statement Of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 | 0 |
Preferred stock, outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 |
Common stock, shares issued | 249,566,000 | 249,566,000 | 249,566,000 |
Common stock, shares outstanding | 177,366,000 | 177,316,000 | 176,965,000 |
Treasury stock, shares | 72,200,000 | 72,250,000 | 72,601,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | ||
Total net revenue | $ 964,853 | $ 844,557 | $ 1,787,814 | $ 1,606,393 | |
Cost of sales, including certain buying, occupancy and warehousing expenses | 611,752 | 551,908 | 1,130,271 | 1,035,922 | |
Gross profit | 353,101 | 292,649 | 657,543 | 570,471 | |
Selling, general and administrative expenses | 233,971 | 203,717 | 444,205 | 398,696 | |
Restructuring charges | [1] | 9,746 | 1,568 | 15,193 | |
Depreciation and amortization expense | 42,739 | 40,283 | 84,674 | 80,730 | |
Operating income | 76,391 | 38,903 | 127,096 | 75,852 | |
Other income (expense), net | 860 | (6,734) | 1,362 | (6,330) | |
Income before income taxes | 77,251 | 32,169 | 128,458 | 69,522 | |
Provision for income taxes | 16,918 | 10,933 | 28,196 | 23,050 | |
Net income | $ 60,333 | $ 21,236 | $ 100,262 | $ 46,472 | |
Net income per basic share | $ 0.34 | $ 0.12 | $ 0.57 | $ 0.26 | |
Net income per diluted share | 0.34 | 0.12 | 0.56 | 0.26 | |
Cash dividends per common share | $ 0.1375 | $ 0.1250 | $ 0.275 | $ 0.250 | |
Weighted average common shares outstanding - basic | 177,249 | 177,228 | 177,329 | 178,475 | |
Weighted average common shares outstanding - diluted | 178,505 | 178,788 | 178,730 | 180,473 | |
Retained earnings, beginning | $ 1,904,190 | $ 1,774,315 | $ 1,883,592 | $ 1,775,775 | |
Net income | 60,333 | 21,236 | 100,262 | 46,472 | |
Cash dividends and dividend equivalents | (24,919) | (22,783) | (49,580) | (45,385) | |
Reissuance of treasury stock | 1,932 | (535) | 7,110 | (4,629) | |
Retained earnings, ending | $ 1,941,536 | $ 1,772,233 | 1,941,536 | $ 1,772,233 | |
Accounting Standards Update 2014-09 | |||||
Adoption of Accounting Standards Update 2014-09 (see Note 2) | $ 152 | ||||
[1] | Cash charges of $1.6 million for the 26 weeks ended August 4, 2018 consisted primarily of charges for corporate severance costs and $9.7 million and $15.2 million for the 13 and 26 weeks ended July 29, 2017, respectively, for lease termination, store closures and severance were recorded within Restructuring Charges on the Consolidated Statements of Operations and Retained Earnings |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 60,333 | $ 21,236 | $ 100,262 | $ 46,472 |
Other comprehensive income: | ||||
Foreign currency translation income | (2,290) | 2,550 | 1,850 | 6,341 |
Other comprehensive income: | (2,290) | 2,550 | 1,850 | 6,341 |
Comprehensive income | $ 58,043 | $ 23,786 | $ 102,112 | $ 52,813 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 04, 2018 | Jul. 29, 2017 | |
Operating activities: | ||
Net income | $ 100,262 | $ 46,472 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 85,745 | 81,697 |
Share-based compensation | 11,731 | 9,798 |
Deferred income taxes | (2,669) | 20,423 |
Foreign currency transaction loss (gain) | 1,574 | (5,354) |
Changes in assets and liabilities: | ||
Merchandise inventory | (69,570) | (70,979) |
Accounts receivable | 4,188 | 5,979 |
Prepaid expenses and other | (15,457) | (32,409) |
Other assets | (43) | (96) |
Accounts payable | 22,992 | 28,055 |
Unredeemed gift cards and gift certificates | (18,990) | (20,598) |
Deferred lease credits | 1,436 | 8,251 |
Accrued compensation and payroll taxes | (2,946) | (30,387) |
Accrued income and other taxes | 5,804 | 1,884 |
Accrued liabilities | 28,340 | 10,484 |
Total adjustments | 52,135 | 6,748 |
Net cash provided by operating activities | 152,397 | 53,220 |
Investing activities: | ||
Capital expenditures for property and equipment | (101,360) | (86,503) |
Purchase of available-for-sale investments | (40,000) | |
Acquisition of intangible assets | (428) | (188) |
Net cash used for investing activities | (141,788) | (86,691) |
Financing activities: | ||
Payments on capital leases | (4,556) | (7,188) |
Repurchase of common stock as part of publicly announced programs | (44,913) | (87,682) |
Repurchase of common stock from employees | (18,299) | (12,035) |
Net proceeds from stock options exercised | 15,496 | 225 |
Cash dividends paid | (48,612) | (44,251) |
Net cash used for financing activities | (100,884) | (150,931) |
Effect of exchange rates changes on cash | (16) | (1,653) |
Net change in cash and cash equivalents | (90,291) | (186,055) |
Cash and cash equivalents - beginning of period | 413,613 | 378,613 |
Cash and cash equivalents - end of period | 323,322 | 192,558 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for income taxes | 30,012 | 32,786 |
Cash paid during the period for interest | $ 550 | $ 539 |
Interim Financial Statements
Interim Financial Statements | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | 1. Interim Financial Statements The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company”) at August 4, 2018 and July 29, 2017 and As used in this report, all references to “we,” “our” and the “Company” refer to American Eagle Outfitters, Inc. and its wholly owned subsidiaries. “American Eagle Outfitters,” “American Eagle,” “AEO” and the “AE Brand” refer to our American Eagle Outfitters stores. “Aerie” refers to our Aerie ® ® www.ae.com www.aerie.com Our business is affected by the pattern of seasonality common to most retail apparel businesses. Historically, a large portion of total net revenue and operating income occurs in the third and fourth fiscal quarters, reflecting the increased demand during the back-to-school and year-end holiday selling seasons, respectively. The results for the current and prior periods are not necessarily indicative of future financial results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Aug. 04, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 4, 2018, the Company operated in one reportable segment. Fiscal Year The Company’s financial year is a 52 or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2018” refers to the 52-week period ending February 2, 2019. “Fiscal 2017” refers to the 53-week period ended February 3, 2018. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of our contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews the Company’s estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases Leases In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters Comprehensive Income Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers The Company adopted ASU 2014-09 on February 4, 2018 using the modified retrospective method applied to all contracts as of February 4, 2018. Results for reporting periods beginning on or after February 4, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. The Company recorded a net increase to opening retained earnings of $0.2 million as of February 4, 2018 due to the cumulative impact of adoption. The impact was the result of accounting for customer loyalty programs using a relative stand-alone selling price method vs. incremental cost method. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASU 2014-09. Refer to the Customer Loyalty Program caption below for additional information. Additionally, ASU 2014-09 changes the balance sheet presentation of the Company’s sales return reserve. Presentation on a gross basis is now required, consisting of a separate right of return asset and liability. These amounts are recorded within (i) Prepaid Expenses and Other and (ii) Other Liabilities and Accrued Expenses, respectively, on the Consolidated Balance Sheets. Historically, the Company presented the net sales return liability within Other Liabilities and Accrued Expenses on the Consolidated Balance Sheets. Refer to the Sales Return Reserve caption below for additional information. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned. The following table sets forth the approximate consolidated percentage of Total Net Revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended August 4, July 29, 2018 2017 Men’s apparel and accessories 30 % 32 % Women’s apparel and accessories (excluding Aerie) 54 % 55 % Aerie 16 % 13 % Total 100 % 100 % The following table disaggregates the Company’s Total Net Revenue by geography: 13 Weeks Ended (In thousands) August 4, 2018 July 29, 2017 Total Net Revenue: United States $ 835,692 $ 730,284 Foreign (1) 129,161 114,273 Total Net Revenue $ 964,853 $ 844,557 (1) Amounts represent sales from American Eagle and Aerie international retail stores, and e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively “merchandise costs”) and buying, occupancy and warehousing costs. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations. Other Income (Expense), Net Other income, net consists primarily of allowances for uncollectible receivables, foreign currency transaction gain/loss and interest income/expense. Cash and Cash Equivalents and Short-term Investments The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. As of August 4, 2018, short-term investments include certificates of deposit with a maturity of greater than three months, but less than one year. As of July 29, 2017, the Company held no short or long-term investments. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. Property and Equipment Property and equipment is recorded on the basis of cost, including costs to prepare the asset for use, with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology 5 years 3-5 years As of August 4, 2018, the weighted average remaining useful life of our assets is approximately 8 years. In accordance with ASC 360, Property, Plant, and Equipment Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. Goodwill The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business and Tailgate and Todd Snyder brands. In accordance with ASC 350, Intangibles – Goodwill and Other Intangible Assets Intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s intangible assets, which consists primarily of trademark assets, are generally amortized over 15 to 25 years. The Company evaluates intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No intangible asset impairment charges were recorded during the 13 or 26 weeks ended August 4, 2018 or July 29, 2017. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets. Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The adoption of ASU 2014-09 did not have an impact of the Company’s accounting for gift card breakage. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded $2.1 million and $2.0 million of revenue related to gift card breakage during the 13 weeks ended August 4, 2018 and July 29, 2017, respectively. During the 26 weeks ended August 4, 2018 and July 29, 2017, the Company recorded $4.6 million and $4.5 million, respectively, of revenue related to gift card breakage. Deferred Lease Credits Deferred lease credits represent the unamortized portion of construction allowances received from landlords related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its landlords as part of the negotiated lease terms. The Company records a receivable and a deferred lease credit liability at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized on a straight-line basis as a reduction of rent expense over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the landlord. Co-branded Credit Card The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”) under the AEO and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding when the amounts are fixed or determinable and collectability is reasonably assured. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations and Retained Earnings. The adoption of ASU 2014-09 did not have an impact of the Company’s accounting for the co-branded credit card. For further information on the Company’s loyalty program, refer to the Customer Loyalty Program caption below. Customer Loyalty Program The Company recently launched a new, digitized loyalty program called AEO Connected TM Ò Points earned under the Program on purchases at AE and Aerie are accounted for in accordance with ASU 2014-09. The portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AEO or Aerie purchases are accounted for in accordance with ASU 2014-09. As the points are earned, a current liability is recorded for the estimated cost of the award, and the impact of adjustments is recorded in cost of sales. The Company recorded a net increase to opening retained earnings of $0.2 million as of February 4, 2018 due to the cumulative impact of adoption. Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The Sales Return Reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. As of August 4, 2018, the Company recorded a Right of Return Asset of $5.4 million within Prepaid Expenses and Other on the Consolidated Balance Sheet, offset by a Sales Return Reserve Liability of $12.3 million within Other Liabilities and Accrued Expenses on the Consolidated Balance Sheet. The Sales Return Reserve Liability was $4.9 million, recorded within Other Liabilities and Accrued Expenses, at July 29, 2017. Segment Information In accordance with ASC 280, Segment Reporting |
Cash and Cash Equivalents and S
Cash and Cash Equivalents and Short-term Investments | 6 Months Ended |
Aug. 04, 2018 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
Cash and Cash Equivalents and Short-term Investments | 3. Cash and Cash Equivalents and Short-term Investments The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded on the Consolidated Balance Sheets: (In thousands) August 4, 2018 February 3, 2018 July 29, 2017 Cash and cash equivalents: Cash $ 184,280 $ 184,107 $ 162,763 Interest bearing deposits 72,886 174,577 29,795 Commercial paper 66,156 54,929 — Total cash and cash equivalents $ 323,322 $ 413,613 $ 192,558 Short-term investments Certificates of Deposit 40,000 — — Total short-term investments 40,000 — — Total $ 363,322 $ 413,613 $ 192,558 Purchases of investments were $40.0 million for the 26 weeks ended August 4, 2018. There were no sales or purchases of investments for the 26 weeks ended July 29, 2017. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Aug. 04, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In accordance with ASC 820, the following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis at August 4, 2018 and July 29, 2017: Fair Value Measurements at August 4, 2018 (In thousands) Carrying Amount Quoted Market Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents: Cash $ 184,280 $ 184,280 — — Interest bearing deposits 72,886 72,886 — — Commercial paper 66,156 66,156 — — Total cash and cash equivalents $ 323,322 $ 323,322 — — Short-term investments Certificates of Deposit 40,000 40,000 — — Total short-term investments 40,000 40,000 Total $ 363,322 $ 363,322 — — Fair Value Measurements at July 29, 2017 (In thousands) Carrying Amount Quoted Market Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents: Cash $ 162,763 $ 162,763 — — Interest bearing deposits 29,795 29,795 — — Total cash and cash equivalents $ 192,558 $ 192,558 $ — $ — In the event the Company holds Level 3 investments, a discounted cash flow model is used to value those investments. There were no Level 3 investments at August 4, 2018 or July 29, 2017. Non-Financial Assets The Company’s non-financial assets, which include goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required, and the Company is required to evaluate the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the estimated fair value. During the 13 and 26 weeks ended for August 4, 2018, the Company did not impair any non-financial assets. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Aug. 04, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 5. Earnings per Share The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended 26 Weeks Ended August 4, July 29, August 4, July 29, (In thousands) 2018 2017 2018 2017 Weighted average common shares outstanding: Basic number of common shares outstanding 177,249 177,228 177,329 178,475 Dilutive effect of stock options and non-vested restricted stock 1,256 1,560 1,401 1,998 Diluted number of common shares outstanding 178,505 178,788 178,730 180,473 Equity awards to purchase approximately 0.7 million shares of common stock during both the 13 and 26 weeks ended August 4, 2018, respectively, and approximately 3.3 million shares of common stock during both the 13 and 26 weeks ended July 29, 2017 were outstanding, but were not included in the computation of weighted average diluted common share amounts as the effect of doing so would be anti-dilutive. Additionally, Refer to Note 9 to the Consolidated Financial Statements for additional information regarding share-based compensation. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Aug. 04, 2018 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment consists of the following: August 4, February 3, July 29, (In thousands) 2018 2018 2017 Property and equipment, at cost $ 2,096,940 $ 2,023,875 $ 1,955,756 Less: Accumulated depreciation and impairment (1,364,590 ) (1,299,636 ) (1,236,629 ) Property and equipment, net $ 732,350 $ 724,239 $ 719,127 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Aug. 04, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7. Intangible Assets Intangible assets consist of the following: August 4, February 3, July 29, (In thousands) 2018 2018 2017 Trademarks, at cost $ 70,750 $ 70,322 $ 69,166 Less: Accumulated amortization (25,686 ) (23,656 ) (21,646 ) Intangible assets, net $ 45,064 $ 46,666 $ 47,520 |
Other Credit Arrangements
Other Credit Arrangements | 6 Months Ended |
Aug. 04, 2018 | |
Debt Disclosure [Abstract] | |
Other Credit Arrangements | 8. Other Credit Arrangements In Fiscal 2014, the Company entered into a Credit Agreement (“Credit Agreement”) for five-year, syndicated, asset-based revolving credit facilities (the “Credit Facilities”). The Credit Agreement provides senior secured revolving credit for loans and letters of credit up to $400 million, subject to customary borrowing base limitations. The Credit Facilities provide increased financial flexibility and take advantage of a favorable credit environment. All obligations under the Credit Facilities are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by a first-priority security interest in certain working capital assets of the borrowers and guarantors, consisting primarily of cash, receivables, inventory and certain other assets and have been further secured by first-priority mortgages on certain real property. As of August 4, 2018, the Company was in compliance with the terms of the Credit Agreement and had $8.1 million outstanding in stand-by letters of credit. No loans were outstanding under the Credit Agreement as of August 4, 2018. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Aug. 04, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | 9. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation Compensation—Stock Compensation Total share-based compensation expense included in the Consolidated Statements of Operations and Retained Earnings for the 13 weeks and 26 weeks ended August 4, 2018 was $6.0 million ($4.7 million, net of tax) and $11.7 million ($9.0 million, net of tax), respectively, and for the 13 weeks and 26 weeks ended July 29, 2017 was $5.0 million ($3.3 million, net of tax) and $9.8 million ($6.5 million, net of tax), respectively. Stock Option Grants The Company grants both time-based and performance-based stock options. A summary of the Company’s stock option activity for the 26 weeks ended August 4, 2018 follows: Weighted- Average Weighted- Average Remaining Contractual Aggregate Options Exercise Price Term Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 3, 2018 2,190 $ 14.59 Granted 715 $ 19.60 Exercised (1) (991 ) $ 15.59 Cancelled — $ — Outstanding - August 4, 2018 1,914 $ 16.76 5.8 $ 16,831 Vested and expected to vest - August 4, 2018 1,681 $ 17.06 5.8 $ 13,628 Exercisable - August 4, 2018 (2) 174 $ 15.00 5.2 $ 1,836 (1) Options exercised during the 26 weeks ended August 4, 2018 had exercise prices ranging from $13.70 to $15.89. (2) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 4, 2018. Cash received from the exercise of stock options was $15.5 million for the 26 weeks ended August 4, 2018 and $0.2 million for the 26 weeks ended July 29, 2017. As of August 4, 2018, there was $6.7 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.0 years. The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 26 Weeks Ended 26 Weeks Ended August 4, July 29, Black-Scholes Option Valuation Assumptions 2018 2017 Risk-free interest rate (1) 2.6 % 2.1 % Dividend yield 2.5 % 3.1 % Volatility factor (2) 39.5 % 38.5 % Weighted-average expected term (3) 4.5 years 4.5 years (1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on a combination of historical volatility of the Company’s common stock and implied volatility. (3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. Restricted Stock Grants Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of all restricted stock awards is based on the closing market price per share of the Company’s common stock on the date of grant. A summary of the Company’s restricted stock activity is presented in the following tables: Time-Based Restricted Stock Units Performance-Based Restricted Stock Units 26 Weeks Ended 26 Weeks Ended August 4, 2018 August 4, 2018 (Shares in thousands) Shares Weighted -Average Grant Date Fair Value Shares Weighted -Average Grant Date Fair Value Nonvested - February 3, 2018 2,189 $ 13.27 2,138 $ 15.16 Granted 713 $ 24.14 508 $ 19.63 Vested (948 ) $ 13.67 (901 ) $ 14.87 Cancelled (83 ) $ 13.29 (18 ) $ 15.42 Nonvested - August 4, 2018 1,871 $ 17.21 1,727 $ 16.62 As of August 4, 2018, there was $28.2 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.3 years. Based on current probable performance, there is $5.0 million of unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of performance goals is probable over a one to three -year period. As of August 4, 2018, the Company had 8.2 million shares available for all equity grants. |
Income Taxes
Income Taxes | 6 Months Ended |
Aug. 04, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended August 4, 2018 was 21.9% compared to 34.0% for the 13 weeks ended July 29, 2017. The effective income tax rate for the 26 weeks ended August 4, 2018 was 21.9% compared to 33.2% for the 26 weeks ended July 29, 2017. The decrease in the effective income tax rate for the 13 weeks and 26 weeks ended August 4, 2018 was primarily due to the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the enactment of the Tax Cut and Jobs Act (the “Tax Act”) in December 2017, and excess tax benefits from share-based payments in accordance with ASU 2016-09 Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”) The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available . The Tax Act reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Company is applying the guidance in Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Aug. 04, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | 11. Legal Proceedings The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Aug. 04, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring Charges | 12. Restructuring Charges During the 26 weeks ended August 4, 2018, the Company recorded pre-tax restructuring charges of $1.6 million. These amounts consist primarily of charges for corporate severance costs. The Company may incur additional charges for corporate and international restructuring in Fiscal 2018. The magnitude is dependent on a number of factors, including negotiating third-party agreements, adherence to notification requirements and local laws. During the 13 and 26 weeks ended July 29, 2017, the Company recorded pre-tax restructuring related charges of $20.7 million and $26.2 million, respectively. These amounts consist of costs related to the planned exit of a joint business venture; charges for home office restructuring; and the previously announced initiative to explore the closure or conversion of Company owned and operated stores in Hong Kong, China, and the United Kingdom to licensed partnerships. The closure of Company owned and operated stores in the United Kingdom was completed in the 13 weeks ended July 29, 2017. 26 Weeks Ended 13 Weeks Ended 26 Weeks Ended August 4, July 29, July 29, (In thousands) 2018 2017 2017 Lease termination and store closure costs $ — $ 7,860 $ 8,032 Severance and related employee costs 1,568 1,886 7,161 Total cash restructuring charges (1) 1,568 9,746 15,193 Joint business venture charges (2) — 9,311 9,311 Inventory charges (3) — 1,669 1,669 Total restructuring charges $ 1,568 $ 20,726 $ 26,173 (1) Cash charges of $1.6 million for the 26 weeks ended August 4, 2018 consisted primarily of charges for corporate severance costs and $9.7 million and $15.2 million for the 13 and 26 weeks ended July 29, 2017, respectively, for lease termination, store closures and severance were recorded within Restructuring Charges on the Consolidated Statements of Operations and Retained Earnings (2) $9.3 million ($5.1 million cash and $4.2 million non-cash) of charges related to the planned exit of a joint business venture were recorded within Other (Expense) Income, Net on the Consolidated Statements of Operations and Retained Earnings (3) Non-cash inventory charges of $1.7 million related to restructuring activities for our United Kingdom and Asia markets recorded as a reduction in Gross Profit on the Consolidated Statements of Operations and Retained Earnings. A rollforward of the liabilities recognized in the Consolidated Balance Sheet is as follows. The accrued liability as of February 3, 2018 relates to previous restructuring activities disclosed in the Company’s Fiscal 2017 Form 10-K, which remained unpaid at the beginning of Fiscal 2018. 26 Weeks Ended August 4, (In thousands) 2018 Accrued liability as of February 3, 2018 $ 7,650 Add: Costs incurred, excluding non-cash charges 1,568 Less: Cash payments and adjustments (4,577 ) Accrued liability as of August 4, 2018 $ 4,641 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 4, 2018, the Company operated in one reportable segment. |
Fiscal Year | Fiscal Year The Company’s financial year is a 52 or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2018” refers to the 52-week period ending February 2, 2019. “Fiscal 2017” refers to the 53-week period ended February 3, 2018. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of our contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews the Company’s estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases Leases In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income |
Foreign Currency Translation | Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters Comprehensive Income |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers The Company adopted ASU 2014-09 on February 4, 2018 using the modified retrospective method applied to all contracts as of February 4, 2018. Results for reporting periods beginning on or after February 4, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. The Company recorded a net increase to opening retained earnings of $0.2 million as of February 4, 2018 due to the cumulative impact of adoption. The impact was the result of accounting for customer loyalty programs using a relative stand-alone selling price method vs. incremental cost method. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASU 2014-09. Refer to the Customer Loyalty Program caption below for additional information. Additionally, ASU 2014-09 changes the balance sheet presentation of the Company’s sales return reserve. Presentation on a gross basis is now required, consisting of a separate right of return asset and liability. These amounts are recorded within (i) Prepaid Expenses and Other and (ii) Other Liabilities and Accrued Expenses, respectively, on the Consolidated Balance Sheets. Historically, the Company presented the net sales return liability within Other Liabilities and Accrued Expenses on the Consolidated Balance Sheets. Refer to the Sales Return Reserve caption below for additional information. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned. The following table sets forth the approximate consolidated percentage of Total Net Revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended August 4, July 29, 2018 2017 Men’s apparel and accessories 30 % 32 % Women’s apparel and accessories (excluding Aerie) 54 % 55 % Aerie 16 % 13 % Total 100 % 100 % The following table disaggregates the Company’s Total Net Revenue by geography: 13 Weeks Ended (In thousands) August 4, 2018 July 29, 2017 Total Net Revenue: United States $ 835,692 $ 730,284 Foreign (1) 129,161 114,273 Total Net Revenue $ 964,853 $ 844,557 (1) Amounts represent sales from American Eagle and Aerie international retail stores, and e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses | Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively “merchandise costs”) and buying, occupancy and warehousing costs. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations. |
Other Income (Expense), Net | Other Income (Expense), Net Other income, net consists primarily of allowances for uncollectible receivables, foreign currency transaction gain/loss and interest income/expense. |
Cash and Cash Equivalents and Short-term Investments | Cash and Cash Equivalents and Short-term Investments The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. As of August 4, 2018, short-term investments include certificates of deposit with a maturity of greater than three months, but less than one year. As of July 29, 2017, the Company held no short or long-term investments. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. |
Merchandise Inventory | Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. |
Income Taxes | Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. |
Property and Equipment | Property and Equipment Property and equipment is recorded on the basis of cost, including costs to prepare the asset for use, with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology 5 years 3-5 years As of August 4, 2018, the weighted average remaining useful life of our assets is approximately 8 years. In accordance with ASC 360, Property, Plant, and Equipment Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. |
Goodwill | Goodwill The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business and Tailgate and Todd Snyder brands. In accordance with ASC 350, Intangibles – Goodwill and Other |
Intangible Assets | Intangible Assets Intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s intangible assets, which consists primarily of trademark assets, are generally amortized over 15 to 25 years. The Company evaluates intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No intangible asset impairment charges were recorded during the 13 or 26 weeks ended August 4, 2018 or July 29, 2017. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets. |
Gift Cards | Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The adoption of ASU 2014-09 did not have an impact of the Company’s accounting for gift card breakage. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded $2.1 million and $2.0 million of revenue related to gift card breakage during the 13 weeks ended August 4, 2018 and July 29, 2017, respectively. During the 26 weeks ended August 4, 2018 and July 29, 2017, the Company recorded $4.6 million and $4.5 million, respectively, of revenue related to gift card breakage. |
Deferred Lease Credits | Deferred Lease Credits Deferred lease credits represent the unamortized portion of construction allowances received from landlords related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its landlords as part of the negotiated lease terms. The Company records a receivable and a deferred lease credit liability at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized on a straight-line basis as a reduction of rent expense over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the landlord. |
Co-branded Credit Card | Co-branded Credit Card The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”) under the AEO and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding when the amounts are fixed or determinable and collectability is reasonably assured. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations and Retained Earnings. The adoption of ASU 2014-09 did not have an impact of the Company’s accounting for the co-branded credit card. For further information on the Company’s loyalty program, refer to the Customer Loyalty Program caption below. |
Customer Loyalty Program | Customer Loyalty Program The Company recently launched a new, digitized loyalty program called AEO Connected TM Ò Points earned under the Program on purchases at AE and Aerie are accounted for in accordance with ASU 2014-09. The portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AEO or Aerie purchases are accounted for in accordance with ASU 2014-09. As the points are earned, a current liability is recorded for the estimated cost of the award, and the impact of adjustments is recorded in cost of sales. The Company recorded a net increase to opening retained earnings of $0.2 million as of February 4, 2018 due to the cumulative impact of adoption. |
Sales Return Reserve | Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The Sales Return Reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. As of August 4, 2018, the Company recorded a Right of Return Asset of $5.4 million within Prepaid Expenses and Other on the Consolidated Balance Sheet, offset by a Sales Return Reserve Liability of $12.3 million within Other Liabilities and Accrued Expenses on the Consolidated Balance Sheet. The Sales Return Reserve Liability was $4.9 million, recorded within Other Liabilities and Accrued Expenses, at July 29, 2017. |
Segment Information | Segment Information In accordance with ASC 280, Segment Reporting |
Fair Value Measurements | ASC 820, Fair Value Measurement Disclosures Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Share-Based Compensation | The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation Compensation—Stock Compensation |
Legal Proceedings | The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Policies [Abstract] | |
Consolidated Percentage of Total Net Revenue Attributable to Each Merchandise Group | The following table sets forth the approximate consolidated percentage of Total Net Revenue attributable to each merchandise group for each of the periods indicated: 13 Weeks Ended August 4, July 29, 2018 2017 Men’s apparel and accessories 30 % 32 % Women’s apparel and accessories (excluding Aerie) 54 % 55 % Aerie 16 % 13 % Total 100 % 100 % |
Summary of Disaggregation of Company's Total Net Revenue by Geography | The following table disaggregates the Company’s Total Net Revenue by geography: 13 Weeks Ended (In thousands) August 4, 2018 July 29, 2017 Total Net Revenue: United States $ 835,692 $ 730,284 Foreign (1) 129,161 114,273 Total Net Revenue $ 964,853 $ 844,557 (1) Amounts represent sales from American Eagle and Aerie international retail stores, and e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Useful Lives of Major Classes of Assets | The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology 5 years 3-5 years |
Cash and Cash Equivalents and21
Cash and Cash Equivalents and Short-term Investments (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
Fair Market Values for Cash and Short-term Investments | The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded on the Consolidated Balance Sheets: (In thousands) August 4, 2018 February 3, 2018 July 29, 2017 Cash and cash equivalents: Cash $ 184,280 $ 184,107 $ 162,763 Interest bearing deposits 72,886 174,577 29,795 Commercial paper 66,156 54,929 — Total cash and cash equivalents $ 323,322 $ 413,613 $ 192,558 Short-term investments Certificates of Deposit 40,000 — — Total short-term investments 40,000 — — Total $ 363,322 $ 413,613 $ 192,558 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) Measured at Fair Value on Recurring Basis | In accordance with ASC 820, the following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis at August 4, 2018 and July 29, 2017: Fair Value Measurements at August 4, 2018 (In thousands) Carrying Amount Quoted Market Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents: Cash $ 184,280 $ 184,280 — — Interest bearing deposits 72,886 72,886 — — Commercial paper 66,156 66,156 — — Total cash and cash equivalents $ 323,322 $ 323,322 — — Short-term investments Certificates of Deposit 40,000 40,000 — — Total short-term investments 40,000 40,000 Total $ 363,322 $ 363,322 — — Fair Value Measurements at July 29, 2017 (In thousands) Carrying Amount Quoted Market Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents: Cash $ 162,763 $ 162,763 — — Interest bearing deposits 29,795 29,795 — — Total cash and cash equivalents $ 192,558 $ 192,558 $ — $ — |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding | The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended 26 Weeks Ended August 4, July 29, August 4, July 29, (In thousands) 2018 2017 2018 2017 Weighted average common shares outstanding: Basic number of common shares outstanding 177,249 177,228 177,329 178,475 Dilutive effect of stock options and non-vested restricted stock 1,256 1,560 1,401 1,998 Diluted number of common shares outstanding 178,505 178,788 178,730 180,473 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Property and equipment consists of the following: August 4, February 3, July 29, (In thousands) 2018 2018 2017 Property and equipment, at cost $ 2,096,940 $ 2,023,875 $ 1,955,756 Less: Accumulated depreciation and impairment (1,364,590 ) (1,299,636 ) (1,236,629 ) Property and equipment, net $ 732,350 $ 724,239 $ 719,127 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets consist of the following: August 4, February 3, July 29, (In thousands) 2018 2018 2017 Trademarks, at cost $ 70,750 $ 70,322 $ 69,166 Less: Accumulated amortization (25,686 ) (23,656 ) (21,646 ) Intangible assets, net $ 45,064 $ 46,666 $ 47,520 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Option Activity | A summary of the Company’s stock option activity for the 26 weeks ended August 4, 2018 follows: Weighted- Average Weighted- Average Remaining Contractual Aggregate Options Exercise Price Term Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 3, 2018 2,190 $ 14.59 Granted 715 $ 19.60 Exercised (1) (991 ) $ 15.59 Cancelled — $ — Outstanding - August 4, 2018 1,914 $ 16.76 5.8 $ 16,831 Vested and expected to vest - August 4, 2018 1,681 $ 17.06 5.8 $ 13,628 Exercisable - August 4, 2018 (2) 174 $ 15.00 5.2 $ 1,836 (1) Options exercised during the 26 weeks ended August 4, 2018 had exercise prices ranging from $13.70 to $15.89. (2) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 4, 2018. |
Black-Scholes Option Valuation Assumptions | The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 26 Weeks Ended 26 Weeks Ended August 4, July 29, Black-Scholes Option Valuation Assumptions 2018 2017 Risk-free interest rate (1) 2.6 % 2.1 % Dividend yield 2.5 % 3.1 % Volatility factor (2) 39.5 % 38.5 % Weighted-average expected term (3) 4.5 years 4.5 years (1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on a combination of historical volatility of the Company’s common stock and implied volatility. (3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. |
Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity is presented in the following tables: Time-Based Restricted Stock Units Performance-Based Restricted Stock Units 26 Weeks Ended 26 Weeks Ended August 4, 2018 August 4, 2018 (Shares in thousands) Shares Weighted -Average Grant Date Fair Value Shares Weighted -Average Grant Date Fair Value Nonvested - February 3, 2018 2,189 $ 13.27 2,138 $ 15.16 Granted 713 $ 24.14 508 $ 19.63 Vested (948 ) $ 13.67 (901 ) $ 14.87 Cancelled (83 ) $ 13.29 (18 ) $ 15.42 Nonvested - August 4, 2018 1,871 $ 17.21 1,727 $ 16.62 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Restructuring And Related Activities [Abstract] | |
Summary of Restructuring Related Charges | 26 Weeks Ended 13 Weeks Ended 26 Weeks Ended August 4, July 29, July 29, (In thousands) 2018 2017 2017 Lease termination and store closure costs $ — $ 7,860 $ 8,032 Severance and related employee costs 1,568 1,886 7,161 Total cash restructuring charges (1) 1,568 9,746 15,193 Joint business venture charges (2) — 9,311 9,311 Inventory charges (3) — 1,669 1,669 Total restructuring charges $ 1,568 $ 20,726 $ 26,173 (1) Cash charges of $1.6 million for the 26 weeks ended August 4, 2018 consisted primarily of charges for corporate severance costs and $9.7 million and $15.2 million for the 13 and 26 weeks ended July 29, 2017, respectively, for lease termination, store closures and severance were recorded within Restructuring Charges on the Consolidated Statements of Operations and Retained Earnings (2) $9.3 million ($5.1 million cash and $4.2 million non-cash) of charges related to the planned exit of a joint business venture were recorded within Other (Expense) Income, Net on the Consolidated Statements of Operations and Retained Earnings (3) Non-cash inventory charges of $1.7 million related to restructuring activities for our United Kingdom and Asia markets recorded as a reduction in Gross Profit on the Consolidated Statements of Operations and Retained Earnings. |
Rollforward of Liabilities Recognized in Consolidated Balance Sheet | A rollforward of the liabilities recognized in the Consolidated Balance Sheet is as follows. The accrued liability as of February 3, 2018 relates to previous restructuring activities disclosed in the Company’s Fiscal 2017 Form 10-K, which remained unpaid at the beginning of Fiscal 2018. 26 Weeks Ended August 4, (In thousands) 2018 Accrued liability as of February 3, 2018 $ 7,650 Add: Costs incurred, excluding non-cash charges 1,568 Less: Cash payments and adjustments (4,577 ) Accrued liability as of August 4, 2018 $ 4,641 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Additional Information (Detail) | Feb. 04, 2018USD ($) | Aug. 04, 2018USD ($) | Jul. 29, 2017USD ($) | Aug. 04, 2018USD ($)Segment | Jul. 29, 2017USD ($) |
Significant Accounting Policies [Line Items] | |||||
Number of reportable segments | Segment | 1 | ||||
Short-term investments | $ 40,000,000 | $ 0 | $ 40,000,000 | $ 0 | |
Long-term investments | 0 | 0 | |||
Weighted average remaining useful life, assets | 8 years | ||||
Long-lived asset impairment charges | 0 | 0 | $ 0 | 0 | |
Finite-lived impairment charges | 0 | 0 | 0 | 0 | |
Revenue related to gift card breakage | 2,100,000 | 2,000,000 | $ 4,600,000 | 4,500,000 | |
Number of operating segments | Segment | 2 | ||||
Prepaid Expenses and Other | |||||
Significant Accounting Policies [Line Items] | |||||
Right of return asset | 5,400,000 | $ 5,400,000 | |||
Other Liabilities and Accrued Expenses | |||||
Significant Accounting Policies [Line Items] | |||||
Sales return reserve liability | 12,300,000 | $ 4,900,000 | $ 12,300,000 | $ 4,900,000 | |
Minimum | |||||
Significant Accounting Policies [Line Items] | |||||
Finite lived intangibles, useful life | 15 years | ||||
Maximum | |||||
Significant Accounting Policies [Line Items] | |||||
Finite lived intangibles, useful life | 25 years | ||||
Accounting Standards Update 2014-09 | |||||
Significant Accounting Policies [Line Items] | |||||
Net increase to opening retained earnings due to cumulative impact of adoption | $ 200,000 | $ 152,000 | |||
Non-cancellable Operating Leases | |||||
Significant Accounting Policies [Line Items] | |||||
Minimum lease commitments | $ 1,600,000,000 | $ 1,600,000,000 |
Consolidated Percentage of Tota
Consolidated Percentage of Total Net Revenue Attributable to Each Merchandise Group (Detail) | 3 Months Ended | |
Aug. 04, 2018 | Jul. 29, 2017 | |
Product Information [Line Items] | ||
Percentage of total net revenue | 100.00% | 100.00% |
Men's apparel and accessories | ||
Product Information [Line Items] | ||
Percentage of total net revenue | 30.00% | 32.00% |
Women's apparel and accessories (excluding Aerie) | ||
Product Information [Line Items] | ||
Percentage of total net revenue | 54.00% | 55.00% |
Aerie | ||
Product Information [Line Items] | ||
Percentage of total net revenue | 16.00% | 13.00% |
Summary of Disaggregation of Co
Summary of Disaggregation of Company's Total Net Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | ||
Product Information [Line Items] | |||||
Total net revenue | $ 964,853 | $ 844,557 | $ 1,787,814 | $ 1,606,393 | |
United States | |||||
Product Information [Line Items] | |||||
Total net revenue | 835,692 | 730,284 | |||
Foreign | |||||
Product Information [Line Items] | |||||
Total net revenue | [1] | $ 129,161 | $ 114,273 | ||
[1] | Amounts represent sales from American Eagle and Aerie international retail stores, and e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Useful Lives of Major Classes o
Useful Lives of Major Classes of Assets (Detail) | 6 Months Ended |
Aug. 04, 2018 | |
Buildings | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 25 years |
Leasehold Improvements | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | Lesser of 10 years or the term of the lease |
Leasehold Improvements | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Fixtures and Equipment | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Information Technology | Minimum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 3 years |
Information Technology | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Useful Lives of Major Classes32
Useful Lives of Major Classes of Assets (Parenthetical) (Detail) | 6 Months Ended |
Aug. 04, 2018 | |
Maximum | Leasehold Improvements | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Fair Market Values for Cash and
Fair Market Values for Cash and Short-term Investments (Detail) - USD ($) | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Cash and cash equivalents: | |||
Cash and cash equivalents | $ 323,322,000 | $ 413,613,000 | $ 192,558,000 |
Short-term investments | |||
Short-term investments | 40,000,000 | 0 | |
Total | 363,322,000 | 413,613,000 | 192,558,000 |
Cash | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 184,280,000 | 184,107,000 | 162,763,000 |
Interest Bearing Deposits | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 72,886,000 | 174,577,000 | $ 29,795,000 |
Commercial Paper | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 66,156,000 | $ 54,929,000 | |
Certificates of Deposit | |||
Short-term investments | |||
Short-term investments | $ 40,000,000 |
Cash and Cash Equivalents and34
Cash and Cash Equivalents and Short-term Investments - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Aug. 04, 2018 | Jul. 29, 2017 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | ||
Sale or purchase of available-for-sale securities | $ 0 | |
Purchase of available-for-sale securities | $ 40,000,000 |
Fair Value Hierarchy for Financ
Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) Measured at Fair Value on Recurring Basis (Detail) - USD ($) | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 323,322,000 | $ 413,613,000 | $ 192,558,000 |
Short-term investments | 40,000,000 | 0 | |
Total | 363,322,000 | 413,613,000 | 192,558,000 |
Cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 184,280,000 | 184,107,000 | 162,763,000 |
Interest Bearing Deposits | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 72,886,000 | $ 174,577,000 | 29,795,000 |
Fair Value, Measurements, Recurring | Carrying Amount | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 323,322,000 | 192,558,000 | |
Short-term investments | 40,000,000 | ||
Total | 363,322,000 | ||
Fair Value, Measurements, Recurring | Carrying Amount | Commercial Paper | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 66,156,000 | ||
Fair Value, Measurements, Recurring | Carrying Amount | Certificates of Deposit | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term investments | 40,000,000 | ||
Fair Value, Measurements, Recurring | Carrying Amount | Cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 184,280,000 | 162,763,000 | |
Fair Value, Measurements, Recurring | Carrying Amount | Interest Bearing Deposits | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 72,886,000 | 29,795,000 | |
Fair Value, Measurements, Recurring | Fair Value | Quoted Market Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 323,322,000 | 192,558,000 | |
Short-term investments | 40,000,000 | ||
Total | 363,322,000 | ||
Fair Value, Measurements, Recurring | Fair Value | Commercial Paper | Quoted Market Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 66,156,000 | ||
Fair Value, Measurements, Recurring | Fair Value | Certificates of Deposit | Quoted Market Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term investments | 40,000,000 | ||
Fair Value, Measurements, Recurring | Fair Value | Cash | Quoted Market Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 184,280,000 | 162,763,000 | |
Fair Value, Measurements, Recurring | Fair Value | Interest Bearing Deposits | Quoted Market Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 72,886,000 | $ 29,795,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |
Aug. 04, 2018 | Aug. 04, 2018 | Jul. 29, 2017 | |
Fair Value Measurements Disclosure [Line Items] | |||
Goodwill impairment | $ 0 | $ 0 | |
Significant Unobservable Inputs (Level 3) | |||
Fair Value Measurements Disclosure [Line Items] | |||
Investments | $ 0 | $ 0 | $ 0 |
Reconciliation Between Basic an
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Weighted average common shares outstanding: | ||||
Basic number of common shares outstanding | 177,249 | 177,228 | 177,329 | 178,475 |
Dilutive effect of stock options and non-vested restricted stock | 1,256 | 1,560 | 1,401 | 1,998 |
Diluted number of common shares outstanding | 178,505 | 178,788 | 178,730 | 180,473 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Common stock | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were not included in the computation of weighted average diluted common share amounts as the effect of doing so would have been anti-dilutive | 0.7 | 3.3 | 0.7 | 3.3 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were not included in the computation of weighted average diluted common share amounts as the effect of doing so would have been anti-dilutive | 0.7 | 1.3 | 0.7 | 1.3 |
Restricted Stock Units (RSUs) | Performance shares | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were not included in the computation of weighted average diluted common share amounts as the effect of doing so would have been anti-dilutive | 1.1 | 0.6 | 1.4 | 0.6 |
Property and Equipment (Detail)
Property and Equipment (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Property Plant And Equipment [Abstract] | |||
Property and equipment, at cost | $ 2,096,940 | $ 2,023,875 | $ 1,955,756 |
Less: Accumulated depreciation and impairment | (1,364,590) | (1,299,636) | (1,236,629) |
Property and equipment, net | $ 732,350 | $ 724,239 | $ 719,127 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 | Jul. 29, 2017 |
Finite Lived Intangible Assets Net [Abstract] | |||
Trademarks, at cost | $ 70,750 | $ 70,322 | $ 69,166 |
Less: Accumulated amortization | (25,686) | (23,656) | (21,646) |
Intangible assets, net | $ 45,064 | $ 46,666 | $ 47,520 |
Other Credit Arrangements - Add
Other Credit Arrangements - Additional Information (Detail) - Credit Agreement - USD ($) | 12 Months Ended | |
Jan. 31, 2015 | Aug. 04, 2018 | |
Credit Facilities | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility, expiration period | 5 years | |
Borrowing agreements with financial institutions | $ 400,000,000 | |
Stand-by Letters of Credit | ||
Line Of Credit Facility [Line Items] | ||
Letters of credit outstanding amount | $ 8,100,000 | |
Credit Agreement Loans | ||
Line Of Credit Facility [Line Items] | ||
Outstanding borrowings | $ 0 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 6,000 | $ 5,000 | $ 11,731 | $ 9,798 |
Share-based compensation, net of tax | $ 4,700 | $ 3,300 | 9,000 | 6,500 |
Net proceeds from stock options exercised | 15,496 | 225 | ||
Tax benefit realized from stock option exercises | $ 900 | $ 700 | ||
Shares available for all equity grants | 8.2 | 8.2 | ||
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 6,700 | $ 6,700 | ||
Unrecognized compensation expense, weighted average period | 2 years | |||
Time Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, weighted average period | 2 years 3 months 18 days | |||
Vesting period | 3 years | |||
Unrecognized compensation expense, restricted stock grants | 28,200 | $ 28,200 | ||
Performance-Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Unrecognized compensation expense, restricted stock grants | $ 5,000 | $ 5,000 | ||
Performance-Based Restricted Stock Units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, weighted average period | 1 year | |||
Performance-Based Restricted Stock Units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, weighted average period | 3 years |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Aug. 04, 2018USD ($)$ / sharesshares | ||
Options | ||
Outstanding - beginning of period | shares | 2,190 | |
Granted | shares | 715 | |
Exercised | shares | (991) | [1] |
Outstanding- end of period | shares | 1,914 | |
Vested and expected to vest-end of period | shares | 1,681 | |
Exercisable-end of period | shares | 174 | [2] |
Weighted-Average Exercise Price | ||
Outstanding-beginning of period | $ / shares | $ 14.59 | |
Granted | $ / shares | 19.60 | |
Exercised | $ / shares | 15.59 | [1] |
Outstanding-end of period | $ / shares | 16.76 | |
Vested and expected to vest-end of period | $ / shares | 17.06 | |
Exercisable-end of period | $ / shares | $ 15 | [2] |
Weighted-Average Remaining Contractual Term (In years) | ||
Outstanding-end of period | 5 years 9 months 18 days | |
Vested and expected to vest-end of period | 5 years 9 months 18 days | |
Exercisable-end of period | 5 years 2 months 12 days | [2] |
Aggregate Intrinsic Value | ||
Outstanding-end of period | $ | $ 16,831 | |
Vested and expected to vest-end of period | $ | 13,628 | |
Exercisable-end of period | $ | $ 1,836 | [2] |
[1] | Options exercised during the 26 weeks ended August 4, 2018 had exercise prices ranging from $13.70 to $15.89. | |
[2] | Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 4, 2018. |
Summary of Stock Option Activ44
Summary of Stock Option Activity (Parenthetical) (Detail) | 6 Months Ended |
Aug. 04, 2018$ / shares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Options exercised, exercise price range, lower limit | $ 13.70 |
Options exercised, exercise price range, upper limit | $ 15.89 |
Black-Scholes Option Valuation
Black-Scholes Option Valuation Assumptions (Detail) | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | ||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||
Risk-free interest rate | [1] | 2.60% | 2.10% |
Dividend yield | 2.50% | 3.10% | |
Volatility factor | [2] | 39.50% | 38.50% |
Weighted-average expected term | [3] | 4 years 6 months | 4 years 6 months |
[1] | Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. | ||
[2] | Based on a combination of historical volatility of the Company’s common stock and implied volatility. | ||
[3] | Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. |
Summary of Restricted Stock Act
Summary of Restricted Stock Activity (Detail) shares in Thousands | 6 Months Ended |
Aug. 04, 2018$ / sharesshares | |
Time Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,189 |
Granted | shares | 713 |
Vested | shares | (948) |
Cancelled | shares | (83) |
Nonvested - end of period | shares | 1,871 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 13.27 |
Granted | $ / shares | 24.14 |
Vested | $ / shares | 13.67 |
Cancelled | $ / shares | 13.29 |
Nonvested - end of period | $ / shares | $ 17.21 |
Performance-Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,138 |
Granted | shares | 508 |
Vested | shares | (901) |
Cancelled | shares | (18) |
Nonvested - end of period | shares | 1,727 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 15.16 |
Granted | $ / shares | 19.63 |
Vested | $ / shares | 14.87 |
Cancelled | $ / shares | 15.42 |
Nonvested - end of period | $ / shares | $ 16.62 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 11 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 21.90% | 34.00% | 21.90% | 33.20% | |
U.S. federal corporate tax rate | 21.00% | 35.00% | |||
Unrecognized tax benefits, decrease resulting from settlements with taxing authorities | $ 1.7 | ||||
Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months | $ 3.1 | $ 3.1 |
Restructuring Charges - Additio
Restructuring Charges - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Restructuring And Related Activities [Abstract] | |||
Pre-tax restructuring charges | $ 20,726 | $ 1,568 | $ 26,173 |
Summary of Restructuring Relate
Summary of Restructuring Related Charges (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | ||
Restructuring And Related Activities [Abstract] | ||||
Lease termination and store closure costs | $ 7,860 | $ 8,032 | ||
Severance and related employee costs | 1,886 | $ 1,568 | 7,161 | |
Total cash restructuring charges | [1] | 9,746 | 1,568 | 15,193 |
Joint business venture charges | [2] | 9,311 | 9,311 | |
Inventory charges | [3] | 1,669 | 1,669 | |
Total restructuring charges | $ 20,726 | $ 1,568 | $ 26,173 | |
[1] | Cash charges of $1.6 million for the 26 weeks ended August 4, 2018 consisted primarily of charges for corporate severance costs and $9.7 million and $15.2 million for the 13 and 26 weeks ended July 29, 2017, respectively, for lease termination, store closures and severance were recorded within Restructuring Charges on the Consolidated Statements of Operations and Retained Earnings | |||
[2] | $9.3 million ($5.1 million cash and $4.2 million non-cash) of charges related to the planned exit of a joint business venture were recorded within Other (Expense) Income, Net on the Consolidated Statements of Operations and Retained Earnings | |||
[3] | Non-cash inventory charges of $1.7 million related to restructuring activities for our United Kingdom and Asia markets recorded as a reduction in Gross Profit on the Consolidated Statements of Operations and Retained Earnings. |
Summary of Restructuring Rela50
Summary of Restructuring Related Charges (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | ||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | [1] | $ 9,746 | $ 1,568 | $ 15,193 |
Charges related to planned exit of joint business venture | [2] | 9,311 | 9,311 | |
Non-cash restructuring charges | 20,726 | 1,568 | 26,173 | |
Non-cash inventory charges | [3] | 1,669 | 1,669 | |
Other (Expense) Income, Net | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Charges related to planned exit of joint business venture | 9,300 | |||
Reduction in Gross Profit | United Kingdom and Asia Markets | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Non-cash inventory charges | 1,700 | |||
Corporate Severance Cost | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | 1,600 | |||
Lease Termination, Store Closures & Severance | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | $ 9,700 | $ 15,200 | ||
Charges Related To Planned Exit of Joint Business Venture | Other (Expense) Income, Net | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Cash restructuring charges | 5,100 | |||
Non-cash restructuring charges | $ 4,200 | |||
[1] | Cash charges of $1.6 million for the 26 weeks ended August 4, 2018 consisted primarily of charges for corporate severance costs and $9.7 million and $15.2 million for the 13 and 26 weeks ended July 29, 2017, respectively, for lease termination, store closures and severance were recorded within Restructuring Charges on the Consolidated Statements of Operations and Retained Earnings | |||
[2] | $9.3 million ($5.1 million cash and $4.2 million non-cash) of charges related to the planned exit of a joint business venture were recorded within Other (Expense) Income, Net on the Consolidated Statements of Operations and Retained Earnings | |||
[3] | Non-cash inventory charges of $1.7 million related to restructuring activities for our United Kingdom and Asia markets recorded as a reduction in Gross Profit on the Consolidated Statements of Operations and Retained Earnings. |
Rollforward of Liabilities Reco
Rollforward of Liabilities Recognized in Consolidated Balance Sheets (Detail) $ in Thousands | 6 Months Ended |
Aug. 04, 2018USD ($) | |
Restructuring And Related Activities [Abstract] | |
Accrued liability as of February 3, 2018 | $ 7,650 |
Add: Costs incurred, excluding non-cash charges | 1,568 |
Less: Cash payments and adjustments | (4,577) |
Accrued liability as of August 4, 2018 | $ 4,641 |