|12 Months Ended|
Feb. 01, 2020
23. SUBSEQUENT EVENTS
Sale of Joseph Abboud Trademarks
On March 4, 2020, we closed on our previously announced transaction to sell the Joseph Abboud trademarks to WHP Global (“WHP”) for $115 million. The Company has also entered into a licensing agreement with WHP for the exclusive rights to sell and rent Joseph Abboud branded apparel and related merchandise in the U.S. and Canada.
Beginning in early March 2020, a major global health pandemic related to the outbreak of the novel coronavirus (“COVID-19”) resulted in a significant decrease in store traffic and comparable sales as well as cancellations of high school proms and other special events, coinciding with heightened actions taken by governments and citizens to curb the spread of virus. In response, we are taking aggressive and prudent actions to reduce expenses, and defer discretionary capital expenditures and inventory purchases to preserve our cash. In addition to these efforts, in an abundance of caution and as a proactive measure, on March 16, 2020, we executed a borrowing of $260.0 million under our ABL Facility. Furthermore, after assessing the remaining availability under the ABL Facility and determining that additional borrowings were prudent to maximize cash on hand, on March 19, 2020 and on March 31, 2020, respectively, we borrowed an additional $25.0 million under the ABL Facility.
On March 17, 2020, we announced the temporary closure of our retail locations in the U.S. and Canada starting March 17, 2020 through March 28, 2020. On March 19, 2020, we announced the closure of our e-commerce fulfillment centers starting March 20, 2020 through March 28, 2020. On March 26, 2020, we extended the temporary closing of our retail stores until at least May 4, 2020. In conjunction with our decision to extend the temporary closure of our stores, we have also furloughed all of our U.S. store employees as well as a significant portion of employees in our U.S. distribution network and offices, and we implemented the temporary layoff of all Canadian store employees and a significant portion of Canadian employees in our Canadian distribution network and offices. Furthermore, in light of our store closures, we have taken certain actions with respect to some or all of our existing leases, including engaging with landlords to discuss rent reductions and/or rent deferrals, or discontinuing payment.
Effective March 29, 2020, the base salary of our Chief Executive Officer will be reduced by 50%. The base salary of all other named executive officers and other executives directly reporting to our Chief Executive Officer will be reduced by 25%. In addition, the base salaries of other members of our senior management team will be also be reduced. The Board of Directors has also agreed to a 50% reduction in its retainer fees. Effective April 5, 2020, all employees with a base salary in excess of $100,000 will have their salaries reduced by 10%.
On March 31, 2020, we announced that, after instituting enhanced social distancing and sanitation protocols that meet or exceed those recommended by the Centers for Disease Control and Prevention (“CDC”), our e-commerce fulfillment centers were reopened. We will continue to monitor this ongoing situation, relying on recommendations from the CDC, the World Health Organization (“WHO”) and government officials to regularly evaluate the renewed operations at our e-commerce fulfillment centers and determine when currently closed facilities will reopen.
While we cannot reasonably estimate the impact of COVID-19 on our financial position, results of operations and cash flows, we do expect such impact to be significantly negative. The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain, including, among others, the duration of the outbreak, new information that may emerge concerning the severity of COVID-19 and the actions, especially those taken by governmental authorities, to contain the pandemic or treat its impact. As events are rapidly changing, additional impacts may arise that we are not aware of currently.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef