Item 8.01Other Events.
Due to the global health pandemic related to the outbreak of the novel coronavirus (“COVID-19”), the Company is relying on the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (the “Order”) to delay the filing of its Quarterly Report on Form 10-Q for the quarterly period ended May 2, 2020 (the “Quarterly Report”) that is due on June 11, 2020.
The Company’s day-to-day operations and business have experienced significant disruptions due to the unprecedented conditions surrounding the COVID-19 pandemic. These disruptions include, but are not limited to, the temporary closure of all corporate offices, the Company’s decision to furlough or temporarily layoff a significant portion of its employees, and work from home orders, all of which have slowed the Company’s routine quarterly close process. In addition, the Company’s management team has had to devote considerable time and resources to manage emerging issues impacting its operations, which has also impacted the progress of the Company’s quarterly close process. In accordance with the Order, the Company will delay the filing of its Quarterly Report and expects to file the Quarterly Report no later than July 27, 2020, which is the first business day that is 45 days after the original filing due date for the Quarterly Report.
As a result of events occurring during the quarterly period ended May 2, 2020, including but not limited to the impacts of COVID-19, the Company continued to experience a significant sustained decline in the market price of its common stock and a significant decrease in sales. The Company determined that a triggering event occurred with respect to its goodwill and intangible assets, which will require an interim quantitative impairment assessment. In addition, the Company is reviewing its other long-lived assets for impairment. Currently, the Company expects to incur material impairment charges for its goodwill, intangible and long-lived assets during the quarterly period ended May 2, 2020.
In addition, the Company is supplementing the risk factors previously disclosed in the Form 10-K for the fiscal year ended February 1, 2020, with the following risk factor:
Our business continues to be adversely affected by the recent coronavirus outbreak.
As described in our Form 10-K, the U.S. and other countries are responding to COVID-19, which has adversely impacted, and will continue to adversely impact, our operations in a number of ways, including supply chain disruptions, temporary or permanent store closures, reduced traffic to our stores when they reopen, cancellations of large gatherings such as proms and weddings, and disruptions to our employees working at our stores, distribution centers and offices.
In addition to the risks described in our most recent Form 10-K, we note the following additional risks related to COVID-19:
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As we begin to reopen stores and other corporate facilities, we must develop and communicate new and/or modified health and safety procedures that comply with local, state and federal guidelines. These guidelines include, but are not limited to: testing, contact tracing, cleaning and disinfecting, training, social distancing, and travel restrictions. Further, we must ensure appropriate Personal Protective Equipment (“PPE”) and sanitation supplies are available, which will increase costs to our business. Failing to follow health & safety guidelines, including providing necessary PPE and sanitation supplies, may subject us to legal, operational, reputational and financial risks.
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