Benchmarking

Retail Hits: Writedown in Aisle Three

Neiman Marcus, other store operators, lead the latest list of companies revealing impairments in their financials.
Stephen TaubMarch 11, 2009

The impairment hits keep on coming, as companies big and small mark down the value of acquisitions or other assets. Lately, the markdowns have been in the retail aisle.

Neiman Marcus led the way with its noncash impairment charges of $560.1 million most recent second quarter, ended Jan. 31 The upscale department-store chain said they reflected a $291.1-million pretax impairment charge related to its reduction of the fair value of goodwill, a $242.2-million pretax impairment charge related to the writedown to fair value of the net carrying value of trade names, and a $26.8-million pretax impairment charge related to the writedown to fair value of the net carrying value of certain long-lived assets. 

A bit farther down the list, in terms of corporate size, Bon-Ton Stores Inc., which operates 280 department stores, recorded a $17.8 million impairment charge to write off the value of goodwill in its latest period. And American Eagle Outfitters took a $6.7 million charge related to the impairment of certain underperforming stores.

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Beyond the retail world, TriMas Corp., which provides engineered and applied products, recorded noncash goodwill and indefinite-lived intangible asset impairment charges of $172.2 million in the 2008 fourth quarter. The company cited the impact on its businesses of declining end market demand and the significant decline in financial markets given global recessionary uncertainties.

Park-Ohio Holdings Corp. recorded a noncash goodwill impairment charge of $95.8 million along with restructuring and asset impairment charges of $13.4 million associated with the decision to exit its relationship with its largest customer along with the general economic downturn. The provider of supply-chain logistics services and manufacturer said that the charges, taken in its third quarter, were composed of $5 million of inventory impairment included in cost of products sold and $8.4 million for impairment of property and equipment, loss on disposal of a foreign subsidiary and severance costs. The company recorded $18.1 million of restructuring and asset impairment charges in the period, associated with the weakness and volatility in the automotive markets. That included $13.8 million in the Aluminum Products segment and $4.3 million in the Manufactured Products segment. Inventory impairment charges of $600,000 were included in Cost of Products Sold and $17.5 million were included in Restructuring and impairment charges.

Meanwhile, Sinclair Broadcast Group Inc. said last week that it took a $463.9 million impairment charge, including $270.4 million related to broadcast licenses. It said that broadcast licenses were impaired in 31 of 35 markets. Impaired goodwill was noted in four markets: St. Louis, Las Vegas, the Flint, Mich., area, and Springfield/Champaign, Ill. There had been no impairment recorded for the year ended December 2007. Sinclair also took a $193.5 million charge related to goodwill. This included an impairment of $1.6 million related to goodwill associated with Acrodyne Communications Inc., an “other operating divisions” segment company.