AMERICAN EAGLE OUTFITTERS INC, 10-Q filed on 5/27/2015
Quarterly Report
Document and Entity Information
3 Months Ended
May 2, 2015
May 22, 2015
Document Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
May 02, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
AEO 
 
Entity Registrant Name
AMERICAN EAGLE OUTFITTERS INC 
 
Entity Central Index Key
0000919012 
 
Current Fiscal Year End Date
--01-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
195,420,953 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
May 2, 2015
Jan. 31, 2015
May 3, 2014
Current assets:
 
 
 
Cash and cash equivalents
$ 326,907 
$ 410,697 
$ 327,699 
Merchandise inventory
332,645 
278,972 
329,249 
Accounts receivable
64,010 
67,894 
67,720 
Prepaid expenses and other
77,503 
73,848 
90,227 
Deferred income taxes
58,574 
59,102 
46,057 
Total current assets
859,639 
890,513 
860,952 
Property and equipment, at cost, net of accumulated depreciation
706,885 
694,856 
680,378 
Intangible assets, at cost, net of accumulated amortization
47,419 
47,206 
49,087 
Goodwill
13,243 
13,096 
13,598 
Non-current deferred income taxes
9,129 
14,035 
11,663 
Other assets
36,445 
37,202 
36,199 
Total assets
1,672,760 
1,696,908 
1,651,877 
Current liabilities:
 
 
 
Accounts payable
203,239 
191,146 
195,703 
Accrued compensation and payroll taxes
40,379 
44,884 
31,219 
Accrued rent
78,741 
78,567 
74,023 
Accrued income and other taxes
6,504 
33,110 
7,756 
Unredeemed gift cards and gift certificates
37,385 
47,888 
35,578 
Current portion of deferred lease credits
13,125 
12,969 
13,155 
Other liabilities and accrued expenses
49,415 
50,529 
38,303 
Total current liabilities
428,788 
459,093 
395,737 
Non-current liabilities:
 
 
 
Deferred lease credits
57,162 
54,516 
61,562 
Non-current accrued income taxes
10,884 
10,456 
11,063 
Other non-current liabilities
30,521 
33,097 
34,357 
Total non-current liabilities
98,567 
98,069 
106,982 
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; 195,061, 194,516 and 194,409 shares outstanding, respectively
2,496 
2,496 
2,496 
Contributed capital
563,709 
569,675 
556,054 
Accumulated other comprehensive income
(11,044)
(9,944)
16,093 
Retained earnings
1,545,674 
1,543,085 
1,542,106 
Treasury stock, 54,500, 55,050 and 55,157 shares, respectively
(955,430)
(965,566)
(967,591)
Total stockholders' equity
1,145,405 
1,139,746 
1,149,158 
Total liabilities and stockholders' equity
$ 1,672,760 
$ 1,696,908 
$ 1,651,877 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
May 2, 2015
Jan. 31, 2015
May 3, 2014
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
Preferred stock, outstanding
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
195,061,000 
194,516,000 
194,409,000 
Treasury stock, shares
54,500,000 
55,050,000 
55,157,000 
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Total net revenue
$ 699,520 
$ 646,129 
Cost of sales, including certain buying, occupancy and warehousing expenses
437,308 
420,284 
Gross profit
262,212 
225,845 
Selling, general and administrative expenses
185,091 
185,058 
Depreciation and amortization expense
35,127 
32,362 
Operating income
41,994 
8,425 
Other income, net
5,970 
686 
Income before income taxes
47,964 
9,111 
Provision for income taxes
18,909 
5,245 
Net income
29,055 
3,866 
Net income per basic share
$ 0.15 
$ 0.02 
Net income per diluted share
$ 0.15 
$ 0.02 
Cash dividends per common share
$ 0.125 
$ 0.125 
Weighted average common shares outstanding - basic
194,975 
194,060 
Weighted average common shares outstanding - diluted
195,880 
194,702 
Retained earnings, beginning
1,543,085 
1,569,851 
Net income
29,055 
3,866 
Cash dividends and dividend equivalents
(24,989)
(24,877)
Reissuance of treasury stock
(1,477)
(6,734)
Retained earnings, ending
$ 1,545,674 
$ 1,542,106 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Net income
$ 29,055 
$ 3,866 
Other comprehensive (loss) gain:
 
 
Foreign currency translation (loss) gain
(1,100)
3,936 
Other comprehensive (loss) gain:
(1,100)
3,936 
Comprehensive income
$ 27,955 
$ 7,802 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Operating activities:
 
 
Net income
$ 29,055 
$ 3,866 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
35,302 
32,786 
Share-based compensation
8,102 
3,188 
Deferred income taxes
4,654 
3,833 
Foreign currency transaction (gain) loss
(3,692)
96 
Changes in assets and liabilities:
 
 
Merchandise inventory
(52,806)
(37,057)
Accounts receivable
3,522 
5,709 
Prepaid expenses and other
(27)
(2,949)
Other assets
11,334 
(4,354)
Accounts payable
5,070 
2,112 
Unredeemed gift cards and gift certificates
(10,665)
(11,690)
Deferred lease credits
2,517 
1,782 
Accrued compensation and payroll taxes
(3,670)
7,872 
Accrued income and other taxes
(24,175)
1,590 
Accrued liabilities
(17,252)
(11,128)
Total adjustments
(41,786)
(8,210)
Net cash used for operating activities
(12,731)
(4,344)
Investing activities:
 
 
Capital expenditures for property and equipment
(41,743)
(72,015)
Acquisition of intangible assets
(1,078)
(640)
Sale of available-for-sale securities
10,002 
Net cash used for investing activities
(42,821)
(62,653)
Financing activities:
 
 
Payments on capital leases and other
(1,542)
(1,391)
Repurchase of common stock from employees
(4,991)
(7,389)
Net proceeds from stock options exercised
1,028 
6,755 
Excess tax benefit from share-based payments
594 
696 
Cash dividends paid
(24,381)
(24,299)
Net cash used for financing activities
(29,292)
(25,628)
Effect of exchange rates changes on cash
1,054 
1,391 
Net decrease in cash and cash equivalents
(83,790)
(91,234)
Cash and cash equivalents - beginning of period
410,697 
418,933 
Cash and cash equivalents - end of period
326,907 
327,699 
Supplemental disclosure of cash flow information:
 
 
Cash paid during the period for income taxes
43,282 
7,995 
Cash paid during the period for interest
$ 333 
$ 200 
Interim Financial Statements
Interim Financial Statements

1. Interim Financial Statements

The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company”) at May 2, 2015 and May 3, 2014 and for the 13 week period ended May 2, 2015 and May 3, 2014 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Fiscal 2014 Annual Report. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the footnotes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly Report on Form 10-Q.

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® by American Eagle® stores. “AEO Direct” refers to our e-commerce operations, ae.com and aerie.com.

The Company’s business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.

Summary of Significant Accounting Policies
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 May 2, 2015, the Company operated in one reportable segment.

Fiscal Year

The Company’s financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2015” refers to the 52 week period ending January 30, 2016. “Fiscal 2014” refers to the 52 week period ended January 31, 2015.

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 May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model that expands disclosure requirements and requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt ASU 2014-09 on January 29, 2017. The Company does not expect a material impact of the adoption of this guidance on the Company’s consolidated financial condition, results of operations and cash flows.

 

Foreign Currency Translation

In accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, assets and liabilities denominated in foreign currencies were translated into United States dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas related translation adjustments are reported as an element of other comprehensive income in accordance with ASC 220, Comprehensive Income.

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the estimated 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 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.

Revenue is not recorded on the purchase of gift cards. A current liability is recorded upon purchase, 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 agreements based on a percentage of merchandise sales by the licensee. This revenue is recorded as a component of total net revenue when earned.

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, 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 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.

Other Income, Net

Other income, net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses.

 

Other-than-Temporary Impairment

The Company evaluates its investments for impairment in accordance with ASC 320, Investments — Debt and Equity Securities (“ASC 320”). ASC 320 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the Consolidated Statement of Operations equal to the difference between the investment’s cost and its fair value. There was no net impairment loss for investment securities recognized in earnings during the 13 weeks ended May 2, 2015 or May 3, 2014.

Cash and Cash Equivalents, Short-term Investments and Long-term Investments

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

As of May 2, 2015 and May 3, 2014, the Company held no short-term or long-term investments.

Unrealized gains and losses on the Company’s available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity, within accumulated other comprehensive income, until realized. When available-for-sale securities are sold, the cost of the securities is specifically identified and is used to determine any realized gain or loss.

Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents, short-term investments and long-term investments.

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or market, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when both title and risk of loss for the merchandise have 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 (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits may materially impact the Company’s effective income tax rate.

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 the 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 require management to make estimates and assumptions. The Company believes that its assumptions and estimates 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 assets’ estimated useful lives. 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     5 years

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified, for stores that have been open for a period of time sufficient to reach maturity. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded.

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, Canadian business and businesses in Hong Kong and China. In accordance with ASC 350, Intangibles — Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment on at least an annual basis and last performed an annual impairment test as of January 31, 2015. As a result of the Company’s annual goodwill impairment test, the Company concluded that its goodwill was not impaired.

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 primarily include 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 are 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 weeks ended May 2, 2015 and May 3, 2014.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets.

Gift Cards

The value of a gift card is recorded as a current liability upon purchase, 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 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 $1.7 million and $1.6 million of revenue related to gift card breakage during the 13 weeks ended May 2, 2015 and May 3, 2014, respectively.

 

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 and Customer Loyalty Program

The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”). These credit cards are issued by a third-party bank (the “Bank”), and the Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. Once a customer is approved to receive the AEO Visa Card or the AEO Credit Card and the card is activated, the customer is eligible to participate in the credit card rewards program. Customers who make purchases earn discounts in the form of savings certificates when certain purchase levels are reached. Also, AEO Visa Card customers who make purchases at other retailers where the card is accepted earn additional discounts. Savings certificates are valid for 90 days from issuance.

Points earned under the credit card rewards program on purchases are accounted for by analogy to ASC 605-25, Revenue Recognition, Multiple Element Arrangements (“ASC 605-25”). The Company believes that points earned under its point and loyalty programs represent deliverables in a multiple element arrangement rather than a rebate or refund of cash. Accordingly, 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. Additionally, credit card reward points earned on non-AE or aerie purchases are accounted for in accordance with ASC 605-25. 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 offers its customers the AEREWARD$sm loyalty program (the “Program”). Under the Program, customers accumulate points based on purchase activity and earn rewards by reaching certain point thresholds during three-month earning periods. Rewards earned during these periods are valid through the stated expiration date, which is approximately one month from the mailing date of the reward. These rewards can be redeemed for a discount on a purchase of merchandise. Rewards not redeemed during the one-month redemption period are forfeited. The Company determined that rewards earned using the Program should be accounted for in accordance with ASC 605-25. Accordingly, the portion of the sales revenue attributed to the award credits is deferred and recognized when the awards are redeemed or expire.

Segment Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified three operating segments (American Eagle Brand retail stores, aerie retail stores and AEO Direct) that reflect the basis used internally to review performance and allocate resources. All of the operating segments have been aggregated and are presented as one reportable segment, as permitted by ASC 280.

Reclassification

Certain reclassifications have been made to the Consolidated Financial Statements for prior periods in order to conform to the current period presentation.

Cash and Cash Equivalents, Short-term Investments and Long-term Investments
Cash and Cash Equivalents, Short-term Investments and Long-term Investments

3. Cash and Cash Equivalents, Short-term Investments and Long-term Investments

The following table summarizes the fair market values for the Company’s cash and marketable securities, which are recorded on the Consolidated Balance Sheets:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Cash and cash equivalents:

        

Cash

   $ 234,190       $ 370,692       $ 217,117   

Money-market

     92,717         40,005         88,535   

Treasury bills

     —           —           22,047   
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 326,907    $ 410,697    $ 327,699   
  

 

 

    

 

 

    

 

 

 

Total

$ 326,907    $ 410,697    $ 327,699   
  

 

 

    

 

 

    

 

 

 

There were no proceeds from the sale of investments for the 13 weeks ended May 2, 2015. Proceeds from the sale of investments were $10.0 million for the 13 weeks ended May 3, 2014. There were no purchases of investments for the 13 weeks ended May 2, 2015 and May 3, 2014.

There were no unrecognized gains or losses for the Company’s available-for-sale securities for the 13 weeks ended May 2, 2015 or May 3, 2014.

Fair Value Measurements
Fair Value Measurements

4. Fair Value Measurements

ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.

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 for identical assets or liabilities.

 

    Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

    Level 3 — Unobservable inputs (i.e., projections, estimates, interpretations, etc.) that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of May 2, 2015 and May 3, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. These include cash and cash equivalents.

 

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 May 2, 2015 and May 3, 2014:

 

     Fair Value Measurements at May 2, 2015  
(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

   $ 234,190       $ 234,190       $ —         $ —     

Money-market

     92,717         92,717         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 326,907    $ 326,907      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 326,907    $ 326,907      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements at May 3, 2014  
(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

   $ 217,117       $ 217,117       $ —         $ —     

Money-market

     88,535         88,535         —           —     

Treasury bills

     22,047         22,047         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 327,699    $ 327,699    $ —      $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 327,699    $ 327,699    $ —      $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

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 May 2, 2015 or May 3, 2014.

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 instrument for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the estimated fair value. As a result of the Company’s annual goodwill impairment test performed as of January 31, 2015, the Company concluded that its goodwill was not impaired.

 

Earnings per Share
Earnings per Share

5. Earnings per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding:

 

     13 Weeks Ended  
(In thousands)    May 2,
2015
     May 3,
2014
 

Weighted average common shares outstanding:

     

Basic number of common shares outstanding

     194,975         194,060   

Dilutive effect of stock options and non-vested restricted stock

     905         642   
  

 

 

    

 

 

 

Diluted number of common shares outstanding

  195,880      194,702   
  

 

 

    

 

 

 

Equity awards to purchase approximately 40,000 shares of common stock during the 13 weeks ended May 2, 2015 and approximately 2.5 million shares of common stock during the 13 weeks ended May 3, 2014, respectively, 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.

There were 12,000 shares for the 13 weeks ended May 2, 2015, and 1.7 million shares for the 13 weeks ended May 3, 2014 of restricted stock units that were outstanding but not included in the computation of weighted average diluted common share amounts as the effect of doing so would be anti-dilutive. Additionally, approximately 1.9 million shares of restricted stock units for the 13 weeks ended May 2, 2015 were not included in the computation of weighted average diluted common share amounts because the number of shares ultimately issued is contingent on the Company’s performance compared to pre-established annual performance goals.

Refer to Note 9 to the Consolidated Financial Statements for additional information regarding share-based compensation.

Property and Equipment
Property and Equipment

6. Property and Equipment

Property and equipment consists of the following:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Property and equipment, at cost

   $ 1,720,740       $ 1,684,709       $ 1,655,322   

Less: Accumulated depreciation

     (1,013,855      (989,853      (974,944
  

 

 

    

 

 

    

 

 

 

Property and equipment, net

$ 706,885    $ 694,856    $ 680,378   
  

 

 

    

 

 

    

 

 

 
Intangible Assets
Intangible Assets

7. Intangible Assets

Intangible assets consist of the following:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Trademarks and other intangibles, at cost

   $ 60,462       $ 59,385       $ 58,761   

Less: Accumulated amortization

     (13,043      (12,179      (9,674
  

 

 

    

 

 

    

 

 

 

Intangible assets, net

$ 47,419    $ 47,206    $ 49,087   
  

 

 

    

 

 

    

 

 

 
Other Credit Arrangements
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 will be further secured by first-priority mortgages on certain real property.

 

As of May 2, 2015, 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 on May 2, 2015.

Additionally, the Company has borrowing agreements with two separate financial institutions under which it may borrow an aggregate of $155.0 million USD for the purposes of trade letter of credit issuances. The availability of any future borrowings under the trade letter of credit facilities is subject to acceptance by the respective financial institutions.

As of May 2, 2015, the Company had outstanding trade letters of credit of $17.5 million.

Share-Based Compensation
Share-Based Compensation

9. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires companies to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 weeks ended May 2, 2015 and May 3, 2014 was $8.1 million ($4.9 million, net of tax) and $3.2 million ($2.0 million, net of tax), respectively.

Stock Option Grants

The Company grants both time-based and performance-based stock options. Time-based stock option awards vest over the requisite service period of the award or to an employee’s eligible retirement date, if earlier. Performance-based stock option awards vest over one year and are earned if the Company meets pre-established performance goals.

A summary of the Company’s stock option activity for the 13 weeks ended May 2, 2015 follows:

 

     Options      Weighted-
Average
Exercise Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic Value
 
     (In thousands)             (In years)      (In thousands)  

Outstanding — January 31, 2015

     2,390       $ 16.28         

Granted

     —           —           

Exercised (1)

     (72    $ 14.36         

Cancelled

     (696    $ 19.28         
  

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding — May 2, 2015

  1,623    $ 15.08      2.3      1,674   
  

 

 

    

 

 

    

 

 

    

 

 

 

Vested and expected to vest — May 2, 2015

  1,616    $ 15.08      2.3      1,664   
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable — May 2, 2015 (2)

  1,170    $ 14.62      2.6      1,552   

 

(1) Options exercised during the 13 weeks ended May 2, 2015 had exercise prices ranging from $8.09 to $16.49.
(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 at May 2, 2015.

The weighted-average grant date fair value of stock options granted during the 13 weeks ended May 3, 2014 was $3.99. The aggregate intrinsic value of options exercised during the 13 weeks ended May 2, 2015 and May 3, 2014 was $0.2 million and $1.0 million, respectively.

Cash received from the exercise of stock options was $1.0 million for the 13 weeks ended May 2, 2015 and $6.8 million for the 13 weeks ended May 3, 2014. The actual tax benefit realized from stock option exercises totaled ($0.2) million for the 13 weeks ended May 2, 2015 and ($0.7) million for the 13 weeks ended May 3, 2014.

 

The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

     13 Weeks Ended  

Black-Scholes Option Valuation Assumptions

   May 3, 2014  

Risk-free interest rate (1)

     1.5

Dividend yield

     3.1

Volatility factor (2)

     41.2

Weighted-average expected term (3)

     4.5 years   

Expected forfeiture rate (4)

     8.0

 

(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, based on historical experience.
(4) Based upon historical experience.

As of May 2, 2015, there was $0.3 million of unrecognized compensation expense related to non-vested time-based stock option awards that is expected to be recognized over a weighted average period of 1.9 years.

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over one to 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 one to 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 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  
     13 Weeks Ended
May 2, 2015
     13 Weeks Ended
May 2, 2015
 
(Shares in thousands)    Shares     Weighted-Average Grant
Date Fair Value
     Shares     Weighted-Average Grant
Date Fair Value
 

Nonvested — January 31, 2015

     1,596      $ 15.95         2,435      $ 16.02   

Granted

     1,060        14.85         1,120        14.82   

Vested

     (569     16.97         (166     14.77   

Cancelled

     (17     16.82         (731     14.72   
  

 

 

   

 

 

    

 

 

   

 

 

 

Nonvested — May 2, 2015

  2,070    $ 15.10      2,658    $ 15.95   

As of May 2, 2015, there was $27.0 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 2.2 years. Based on current probable performance, there was $12.2 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 May 2, 2015, the Company had 6.9 million shares available for all equity grants.

Income Taxes
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 based on actual operating results for the 13 weeks ended May 2, 2015 was 39.4% compared to 57.6% for the 13 weeks ended May 3, 2014. The decrease in the effective income tax rate this year is primarily due to reduced valuation allowances on foreign losses as well as increased worldwide earnings.

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 the result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended May 2, 2015 and May 3, 2014. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $5.9 million due to settlements, expiration of statute of limitations or other changes in unrecognized tax benefits.

Legal Proceedings
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 (“ASC 450”), management records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position or results of operations of the Company.

Discontinued Operations
Discontinued Operations

12. Discontinued Operations

In Fiscal 2012, the Company exited the 77kids business. These Consolidated Financial Statements reflect the results of 77kids as a discontinued operation for all periods presented.

In connection with the exit of the 77kids business, the Company became secondarily liable for obligations under lease agreements for 21 store leases assumed by the third party purchaser. In Fiscal 2014, the third party purchaser did not fulfill its obligations under the leases, resulting in the Company becoming primarily liable. The Company was required to make rental and lease termination payments and received reimbursement from the $11.5 million stand-by letter of credit provided by the third party purchaser. The cash outflow for termination costs is expected to be paid in Fiscal 2015.

In accordance with ASC 460, Guarantees (“ASC 460”), as the Company became primarily liable under the leases upon the third party purchaser’s default, the remaining amounts to exit the lease agreements have been accrued in our Consolidated Financial Statements related to these guarantees.

During the 13 weeks ended May 2, 2015 and May 3, 2014, there were no costs associated with discontinued operations incurred on the Consolidated Statement of Operations.

A rollforward of the liabilities recognized in the Consolidated Balance Sheets is as follows:

 

(In thousands)    May 2,
2015
 

Accrued liability as of January 31, 2015

   $ 14,636   

Add: Costs incurred

     —     

Less: Cash payments

     (899
  

 

 

 

Accrued liability as of May 2, 2015

$ 13,737   
  

 

 

 
Restructuring Charges
Restructuring Charges

13. Restructuring Charges

During Fiscal 2014, the Company undertook restructuring aimed at strengthening the store portfolio and reducing corporate overhead, including severance and office space consolidation. These changes are aimed at driving efficiencies and aligning investments in areas that help fuel the business.

Costs associated with restructuring activities are recorded when incurred. During the 13 weeks ended May 2, 2015 and May 3, 2014, there were no costs associated with restructuring incurred on the Consolidated Statement of Operations.

A rollforward of the liabilities recognized in the Consolidated Balance Sheets is as follows:

 

(In thousands)    May 2,
2015
 

Accrued liability as of January 31, 2015

   $ 12,456   

Add: Costs incurred

     —     

Less: Cash payments

     (6,247
  

 

 

 

Accrued liability as of May 2, 2015

$ 6,209   
  

 

 

 

 

Summary of Significant Accounting Policies (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 May 2, 2015, the Company operated in one reportable segment.

Fiscal Year

The Company’s financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2015” refers to the 52 week period ending January 30, 2016. “Fiscal 2014” refers to the 52 week period ended January 31, 2015.

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 May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model that expands disclosure requirements and requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt ASU 2014-09 on January 29, 2017. The Company does not expect a material impact of the adoption of this guidance on the Company’s consolidated financial condition, results of operations and cash flows.

 

Foreign Currency Translation

In accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, assets and liabilities denominated in foreign currencies were translated into United States dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas related translation adjustments are reported as an element of other comprehensive income in accordance with ASC 220, Comprehensive Income.

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the estimated 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 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.

Revenue is not recorded on the purchase of gift cards. A current liability is recorded upon purchase, 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 agreements based on a percentage of merchandise sales by the licensee. This revenue is recorded as a component of total net revenue when earned.

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, 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 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.

Other Income, Net

Other income, net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses.

Other-than-Temporary Impairment

The Company evaluates its investments for impairment in accordance with ASC 320, InvestmentsDebt and Equity Securities (“ASC 320”). ASC 320 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the Consolidated Statement of Operations equal to the difference between the investment’s cost and its fair value. There was no net impairment loss for investment securities recognized in earnings during the 13 weeks ended May 2, 2015 or May 3, 2014.

Cash and Cash Equivalents, Short-term Investments and Long-term Investments

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

As of May 2, 2015 and May 3, 2014, the Company held no short-term or long-term investments.

Unrealized gains and losses on the Company’s available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity, within accumulated other comprehensive income, until realized. When available-for-sale securities are sold, the cost of the securities is specifically identified and is used to determine any realized gain or loss.

Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents, short-term investments and long-term investments.

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or market, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when both title and risk of loss for the merchandise have 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 (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits may materially impact the Company’s effective income tax rate.

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 the 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 require management to make estimates and assumptions. The Company believes that its assumptions and estimates 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 assets’ estimated useful lives. 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     5 years

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified, for stores that have been open for a period of time sufficient to reach maturity. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded.

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, Canadian business and businesses in Hong Kong and China. In accordance with ASC 350, Intangibles — Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment on at least an annual basis and last performed an annual impairment test as of January 31, 2015. As a result of the Company’s annual goodwill impairment test, the Company concluded that its goodwill was not impaired.

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 primarily include 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 are 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 weeks ended May 2, 2015 and May 3, 2014.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets.

Gift Cards

The value of a gift card is recorded as a current liability upon purchase, 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 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 $1.7 million and $1.6 million of revenue related to gift card breakage during the 13 weeks ended May 2, 2015 and May 3, 2014, respectively.

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 and Customer Loyalty Program

The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”). These credit cards are issued by a third-party bank (the “Bank”), and the Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. Once a customer is approved to receive the AEO Visa Card or the AEO Credit Card and the card is activated, the customer is eligible to participate in the credit card rewards program. Customers who make purchases earn discounts in the form of savings certificates when certain purchase levels are reached. Also, AEO Visa Card customers who make purchases at other retailers where the card is accepted earn additional discounts. Savings certificates are valid for 90 days from issuance.

Points earned under the credit card rewards program on purchases are accounted for by analogy to ASC 605-25, Revenue Recognition, Multiple Element Arrangements (“ASC 605-25”). The Company believes that points earned under its point and loyalty programs represent deliverables in a multiple element arrangement rather than a rebate or refund of cash. Accordingly, 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. Additionally, credit card reward points earned on non-AE or aerie purchases are accounted for in accordance with ASC 605-25. 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 offers its customers the AEREWARD$sm loyalty program (the “Program”). Under the Program, customers accumulate points based on purchase activity and earn rewards by reaching certain point thresholds during three-month earning periods. Rewards earned during these periods are valid through the stated expiration date, which is approximately one month from the mailing date of the reward. These rewards can be redeemed for a discount on a purchase of merchandise. Rewards not redeemed during the one-month redemption period are forfeited. The Company determined that rewards earned using the Program should be accounted for in accordance with ASC 605-25. Accordingly, the portion of the sales revenue attributed to the award credits is deferred and recognized when the awards are redeemed or expire.

Segment Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified three operating segments (American Eagle Brand retail stores, aerie retail stores and AEO Direct) that reflect the basis used internally to review performance and allocate resources. All of the operating segments have been aggregated and are presented as one reportable segment, as permitted by ASC 280.

Reclassification

Certain reclassifications have been made to the Consolidated Financial Statements for prior periods in order to conform to the current period presentation.

Summary of Significant Accounting Policies (Tables)
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     5 years
Cash and Cash Equivalents, Short-term Investments and Long-term Investments (Tables)
Fair Market Values for Cash and Marketable Securities

The following table summarizes the fair market values for the Company’s cash and marketable securities, which are recorded on the Consolidated Balance Sheets:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Cash and cash equivalents:

        

Cash

   $ 234,190       $ 370,692       $ 217,117   

Money-market

     92,717         40,005         88,535   

Treasury bills

     —           —           22,047   
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 326,907    $ 410,697    $ 327,699   
  

 

 

    

 

 

    

 

 

 

Total

$ 326,907    $ 410,697    $ 327,699   
  

 

 

    

 

 

    

 

 

 
Fair Value Measurements (Tables)
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 May 2, 2015 and May 3, 2014:

 

     Fair Value Measurements at May 2, 2015  
(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

   $ 234,190       $ 234,190       $ —         $ —     

Money-market

     92,717         92,717         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 326,907    $ 326,907      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 326,907    $ 326,907      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements at May 3, 2014  
(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

   $ 217,117       $ 217,117       $ —         $ —     

Money-market

     88,535         88,535         —           —     

Treasury bills

     22,047         22,047         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

$ 327,699    $ 327,699    $ —      $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 327,699    $ 327,699    $ —      $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
Earnings per Share (Tables)
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  
(In thousands)    May 2,
2015
     May 3,
2014
 

Weighted average common shares outstanding:

     

Basic number of common shares outstanding

     194,975         194,060   

Dilutive effect of stock options and non-vested restricted stock

     905         642   
  

 

 

    

 

 

 

Diluted number of common shares outstanding

  195,880      194,702   
  

 

 

    

 

 

Property and Equipment (Tables)
Property and Equipment

Property and equipment consists of the following:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Property and equipment, at cost

   $ 1,720,740       $ 1,684,709       $ 1,655,322   

Less: Accumulated depreciation

     (1,013,855      (989,853      (974,944
  

 

 

    

 

 

    

 

 

 

Property and equipment, net

$ 706,885    $ 694,856    $ 680,378   
  

 

 

    

 

 

    

 

 

 
Intangible Assets (Tables)
Intangible Assets

Intangible assets consist of the following:

 

(In thousands)    May 2,
2015
     January 31,
2015
     May 3,
2014
 

Trademarks and other intangibles, at cost

   $ 60,462       $ 59,385       $ 58,761   

Less: Accumulated amortization

     (13,043      (12,179      (9,674
  

 

 

    

 

 

    

 

 

 

Intangible assets, net

$ 47,419    $ 47,206    $ 49,087   
  

 

 

    

 

 

    

 

 

 
Share-Based Compensation (Tables)

A summary of the Company’s stock option activity for the 13 weeks ended May 2, 2015 follows:

 

     Options      Weighted-
Average
Exercise Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic Value
 
     (In thousands)             (In years)      (In thousands)  

Outstanding — January 31, 2015

     2,390       $ 16.28         

Granted

     —           —           

Exercised (1)

     (72    $ 14.36         

Cancelled

     (696    $ 19.28         
  

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding — May 2, 2015

  1,623    $ 15.08      2.3      1,674   
  

 

 

    

 

 

    

 

 

    

 

 

 

Vested and expected to vest — May 2, 2015

  1,616    $ 15.08      2.3      1,664   
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable — May 2, 2015 (2)

  1,170    $ 14.62      2.6      1,552   

 

(1) Options exercised during the 13 weeks ended May 2, 2015 had exercise prices ranging from $8.09 to $16.49.
(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 at May 2, 2015.

The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

     13 Weeks Ended  

Black-Scholes Option Valuation Assumptions

   May 3, 2014  

Risk-free interest rate (1)

     1.5

Dividend yield

     3.1

Volatility factor (2)

     41.2

Weighted-average expected term (3)

     4.5 years   

Expected forfeiture rate (4)

     8.0

 

(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, based on historical experience.
(4) Based upon historical experience.

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  
     13 Weeks Ended
May 2, 2015
     13 Weeks Ended
May 2, 2015
 
(Shares in thousands)    Shares     Weighted-Average Grant
Date Fair Value
     Shares     Weighted-Average Grant
Date Fair Value
 

Nonvested — January 31, 2015

     1,596      $ 15.95         2,435      $ 16.02   

Granted

     1,060        14.85         1,120        14.82   

Vested

     (569     16.97         (166     14.77   

Cancelled

     (17     16.82         (731     14.72   
  

 

 

   

 

 

    

 

 

   

 

 

 

Nonvested — May 2, 2015

  2,070    $ 15.10      2,658    $ 15.95   

 

Discontinued Operations (Tables)

A rollforward of the liabilities recognized in the Consolidated Balance Sheets is as follows:

 

(In thousands)    May 2,
2015
 

Accrued liability as of January 31, 2015

   $ 12,456   

Add: Costs incurred

     —     

Less: Cash payments

     (6,247
  

 

 

 

Accrued liability as of May 2, 2015

$ 6,209   
  

 

 

 

 

A rollforward of the liabilities recognized in the Consolidated Balance Sheets is as follows:

 

(In thousands)    May 2,
2015
 

Accrued liability as of January 31, 2015

   $ 14,636   

Add: Costs incurred

     —     

Less: Cash payments

     (899
  

 

 

 

Accrued liability as of May 2, 2015

$ 13,737   
  

 

 

 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended
May 2, 2015
Segment
May 3, 2014
Significant Accounting Policies [Line Items]
 
 
Number of reportable segments
 
Net impairment loss recognized in earnings
$ 0 
$ 0 
Short-term investments
Long-term investments
Finite-lived impairment charges
Revenue related to gift card breakage
$ 1,700,000 
$ 1,600,000 
Number of operating segments
 
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 
 
Useful Lives of Major Classes of Assets (Detail)
3 Months Ended
May 2, 2015
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 
Fixtures and equipment
 
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
 
Useful lives in asset class
5 years 
Useful Lives of Major Classes of Assets (Parenthetical) (Detail) (Maximum, Leasehold Improvements)
3 Months Ended
May 2, 2015
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 Marketable Securities (Detail) (USD $)
In Thousands, unless otherwise specified
May 2, 2015
Jan. 31, 2015
May 3, 2014
Feb. 1, 2014
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
$ 326,907 
$ 410,697 
$ 327,699 
$ 418,933 
Total
326,907 
410,697 
327,699 
 
Cash
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
234,190 
370,692 
217,117 
 
Money-market
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
92,717 
40,005 
88,535 
 
Treasury bills
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
 
 
$ 22,047 
 
Cash and Cash Equivalents and Short-term Investments - Additional Information (Detail) (USD $)
3 Months Ended
May 2, 2015
May 3, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Proceeds from sale of available-for-sale securities
$ 0 
$ 10,002,000 
Purchase of available-for-sale securities
Unrecognized gains (losses) for available-for-sale securities
$ 0 
$ 0 
Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) Measured at Fair Value on Recurring Basis (Detail) (USD $)
In Thousands, unless otherwise specified
May 2, 2015
Jan. 31, 2015
May 3, 2014
Feb. 1, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
$ 326,907 
$ 410,697 
$ 327,699 
$ 418,933 
Total
326,907 
410,697 
327,699 
 
Cash
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
234,190 
370,692 
217,117 
 
Money-market
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
92,717 
40,005 
88,535 
 
Treasury bills
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
 
 
22,047 
 
Fair Value, Measurements, Recurring |
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
326,907 
 
327,699 
 
Total
326,907 
 
327,699 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Cash
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
234,190 
 
217,117 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Money-market
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
92,717 
 
88,535 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Treasury bills
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
 
 
$ 22,047 
 
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Detail)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Weighted average common shares outstanding:
 
 
Basic number of common shares outstanding
194,975 
194,060 
Dilutive effect of stock options and non-vested restricted stock
905 
642 
Diluted number of common shares outstanding
195,880 
194,702 
Earnings per Share - Additional Information (Detail)
3 Months Ended
May 2, 2015
May 3, 2014
Outstanding Stock Awards
 
 
Earnings Per Share Disclosure [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
40,000 
2,500,000 
Restricted Stock Units (RSUs)
 
 
Earnings Per Share Disclosure [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
12,000 
1,700,000 
Shares of restricted stock units not included in the computation of weighted average diluted common share amounts because the number of shares ultimately issued is contingent on performance
1,900,000 
 
Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
May 2, 2015
Jan. 31, 2015
May 3, 2014
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, at cost
$ 1,720,740 
$ 1,684,709 
$ 1,655,322 
Less: Accumulated depreciation
(1,013,855)
(989,853)
(974,944)
Property and equipment, net
$ 706,885 
$ 694,856 
$ 680,378 
Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
May 2, 2015
Jan. 31, 2015
May 3, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
Trademarks and other intangibles, at cost
$ 60,462 
$ 59,385 
$ 58,761 
Less: Accumulated amortization
(13,043)
(12,179)
(9,674)
Intangible assets, net
$ 47,419 
$ 47,206 
$ 49,087 
Other Credit Arrangements - Additional Information (Detail) (USD $)
12 Months Ended
May 2, 2015
Entity
May 2, 2015
Demand letter of credit facilities
May 2, 2015
Trade Letter of Credit
Jan. 31, 2015
Asset Based Credit Facility
May 2, 2015
Unsecured Revolving Credit Facility
Debt Disclosure [Line Items]
 
 
 
 
 
Line of credit facility, expiration period
 
 
 
5 years 
 
Borrowing agreements with financial institutions
 
$ 155,000,000 
 
$ 400,000,000 
 
Letters of credit outstanding amount
 
 
 
 
8,100,000 
Borrowings
 
 
 
 
Borrowing agreements, number of financial institutions
 
 
 
 
Outstanding borrowings
 
 
$ 17,500,000 
 
 
Share-Based Compensation - Additional Information (Detail) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
May 2, 2015
May 3, 2014
May 2, 2015
Employee Stock Option
May 2, 2015
Employee Stock Option
May 2, 2015
Time Based Restricted Stock Units
May 2, 2015
Time Based Restricted Stock Units
May 2, 2015
Time Based Restricted Stock Units
Minimum
May 2, 2015
Time Based Restricted Stock Units
Maximum
May 2, 2015
Performance-Based Restricted Stock Units
May 2, 2015
Performance-Based Restricted Stock Units
Minimum
May 2, 2015
Performance-Based Restricted Stock Units
Minimum
May 2, 2015
Performance-Based Restricted Stock Units
Maximum
May 2, 2015
Performance-Based Restricted Stock Units
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
$ 8,102,000 
$ 3,188,000 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation, net of tax
4,900,000 
2,000,000 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average grant date fair value of stock options granted
 
$ 3.99 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of options exercised
200,000 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from stock options exercised
1,028,000 
6,755,000 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit realized from stock option exercises
(200,000)
(700,000)
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation expense
 
 
 
300,000 
 
 
 
 
 
 
 
 
 
Unrecognized compensation expense, weighted average period
 
 
1 year 10 months 24 days 
 
2 years 2 months 12 days 
 
 
 
 
1 year 
 
3 years 
 
Vesting period
 
 
 
 
 
 
1 year 
3 years 
 
 
1 year 
 
3 years 
Unrecognized compensation expense
 
 
 
 
 
$ 27,000,000 
 
 
$ 12,200,000 
 
 
 
 
Shares available for all equity grants
6.9 
 
 
 
 
 
 
 
 
 
 
 
 
Summary of Stock Option Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
May 2, 2015
Options
 
Outstanding - beginning of period
2,390 
Granted
Exercised
(72)1
Cancelled
(696)
Outstanding- end of period
1,623 
Vested and expected to vest-end of period
1,616 
Exercisable-end of period
1,170 2
Weighted-Average Exercise Price
 
Outstanding-beginning of period
$ 16.28 
Granted
$ 0 
Exercised
$ 14.36 1
Cancelled
$ 19.28 
Outstanding-end of period
$ 15.08 
Vested and expected to vest-end of period
$ 15.08 
Exercisable-end of period
$ 14.62 2
Weighted-Average Remaining Contractual Term (In years)
 
Outstanding-end of period
2 years 3 months 18 days 
Vested and expected to vest-end of period
2 years 3 months 18 days 
Exercisable-end of period
2 years 7 months 6 days 2
Aggregate Intrinsic Value
 
Outstanding-end of period
$ 1,674 
Vested and expected to vest-end of period
1,664 
Exercisable-end of period
$ 1,552 2
Summary of Stock Option Activity (Parenthetical) (Detail)
3 Months Ended
May 2, 2015
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
 
Options exercised, exercise price range, lower limit
$ 8.09 
Options exercised, exercise price range, upper limit
$ 16.49 
Black-Scholes Option Valuation Assumptions (Detail)
3 Months Ended
May 3, 2014
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items]
 
Risk-free interest rate
1.50% 1
Dividend yield
3.10% 
Volatility factor
41.20% 2
Weighted-average expected term
4 years 6 months 3
Expected forfeiture rate
8.00% 4
Summary of Restricted Stock Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
May 2, 2015
Time Based Restricted Stock Units
 
Shares
 
Nonvested - beginning of period
1,596 
Granted
1,060 
Vested
(569)
Cancelled
(17)
Nonvested - End of period
2,070 
Weighted-Average Grant Date Fair Value
 
Nonvested - beginning of period
$ 15.95 
Granted
$ 14.85 
Vested
$ 16.97 
Cancelled
$ 16.82 
Nonvested - end of period
$ 15.10 
Performance-Based Restricted Stock Units
 
Shares
 
Nonvested - beginning of period
2,435 
Granted
1,120 
Vested
(166)
Cancelled
(731)
Nonvested - End of period
2,658 
Weighted-Average Grant Date Fair Value
 
Nonvested - beginning of period
$ 16.02 
Granted
$ 14.82 
Vested
$ 14.77 
Cancelled
$ 14.72 
Nonvested - end of period
$ 15.95 
Income Taxes - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Income Taxes [Line Items]
 
 
Effective income tax rate from continuing operations
39.40% 
57.60% 
Significant changes to unrecognized tax benefits
$ (5.9)
 
Discontinued Operations - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
May 2, 2015
May 3, 2014
May 2, 2015
Segment, Discontinued Operations
May 3, 2014
Segment, Discontinued Operations
Feb. 2, 2013
Segment, Discontinued Operations
Store
Jan. 31, 2015
Segment, Discontinued Operations
Financial Standby Letter of Credit
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
Number of stores leases
 
 
 
 
21 
 
Proceeds from line Stand-by letter
 
 
 
 
 
$ 11,500,000 
Costs associated with discontinued operations
$ 0 
$ 0 
$ 0 
$ 0 
 
 
Rollforward of Liabilities Recognized in Consolidated Balance Sheet Discontinued Operations (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
Restructuring Cost and Reserve [Line Items]
 
Accrued liability as of January 31, 2015
$ 12,456 
Less: Cash payments
(6,247)
Accrued liability as of May 2, 2015
6,209 
Segment, Discontinued Operations
 
Restructuring Cost and Reserve [Line Items]
 
Accrued liability as of January 31, 2015
14,636 
Add: Costs incurred
Less: Cash payments
(899)
Accrued liability as of May 2, 2015
$ 13,737 
Restructuring Charges - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Restructuring Cost and Reserve [Line Items]
 
 
Costs associated with restructuring activities
$ 0 
$ 0 
Rollforward of Liabilities Recognized in Consolidated Balance Sheets (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
May 2, 2015
May 3, 2014
Restructuring Cost and Reserve [Line Items]
 
 
Accrued liability as of January 31, 2015
$ 12,456 
 
Add: Costs incurred
Less: Cash payments
(6,247)
 
Accrued liability as of May 2, 2015
$ 6,209