Damage Policy Update

Damage Policy If an item has been damaged beyond the point of being able to be sold, this item should be removed from inventory. Damages must be clearly segregated from regular merchandise, so they do not get mixed together. Approved damages must be physically destroyed by the District Leader and under no circumstance can damages be taken or purchased by associates.

Gently Worn Items Damages cost the company a loss in profitability. When possible, try to repair or sell minor defective items. Items that can be considered “gently worn” should be marked on the tag with a damage discount, sold as is and returns are not allowed once purchased. A discount can be applied of up to 50% to help move through these units quickly.

The goal is to damage the least amount of product as possible. Setting a goal to return approximately 85% of the potentially damaged product back to the floor even if sold at a discount will help with striving toward the sales goals versus damaging and destroying the items completely.

A few of items that can be sold with a Gently Worn damage discount: • Apparel items with missing buttons, minor stains such as dirt that can be removed when laundered, small coffee/soda stains, minor separation at the seam that can be sewn.

• Repaired jewelry or sets missing a portion of the full set.

• OMG items that can be fixed with super glue before selling.

• Shoes that may have dirt or scuffs on the uppers or soles.

Examples of items not to put on the sales floor: rips (not in the seam), broken glass, blood stains or other hazardous materials should be damaged and removed from the floor immediately.

To mark an item as gently worn, utilize the damage tag found on Milo and staple it to the existing merchandise tag before returning it to the floor. Be sure to notate the reason for why the gently worn item has been discounted, it is marked final sale, and the percent discount off the regular price. Once marked, that item is to be placed back onto the sales floor in your sale room.

Items that are gently worn do not need to be processed through XStore but do need to be processed through Clarity as a damage to prevent future online orders.

Identifying and Tagging Damaged and Gently Worn Items When a damaged item is found, first ensure that the item is unable to be repaired. If it is not able to be repaired, retrieve a Damage Tag (pictured below) and fill it out in its entirety. Be as specific as possible with your Issue Description. Note the area where the damage is located along with any additional information as to why the item should be removed from inventory.

Damage Tags Can Be Found on Milo

Once your damage tag has been filled out, securely attach the tag to the damaged product in a visible location and place in a clear bin labeled “New Damages.” Damages should be kept somewhere out of sight of the customer.

• •

Place damaged jewelry into clear bags and staple the damage tag to the clear bag. This helps with organization and prevents jewelry items from becoming tangled.

Broken glass is a HAZARD! Always ensure that any broken glass is labeled and placed in a trash bag to keep broken pieces from being loose in your damage bin. If a trash bag is used, staple damage tag to the exterior of trash bag. DO NOT USE ALTAR’D STATE SHOPPING BAGS as these are much more expensive and should be reserved for your customers’ purchases.

Scanning and Processing Damages Gently Worn discounted items must be processed through the Clarity app in the Damage Workflow.

Steps to take on the Clarity app to process a gently worn damage: o Launch the Clarity App o Tap the Guest Name and type in your employee number and press the blue check mark o Choose the Workflow Builder option o Click on Damaged o Tap Bulk Scan at the top in the blue box o Utilize the RFID scanner to pick up the RFID tag for the damaged items o Press the Bulk Scan at the top in the red box when finished Damaged items to be destroyed by the District Leader must be processed through XStore to remove from inventory and in Clarity to prevent future online orders of these items.

Steps to take at the register to process the damages in XStore: o Go to Back Office o Select “Inventory” o Select “Shipping” o Click “Add New” o Document Type: “Store Transfer” o Ship To: “996-996 Damages” o Select “Process” o Begin scanning items and placing them into your empty scanned bin

If the store receives an item that is damaged due to not completing the workflow in the Clarity app, reject the order and do not send the guest a damaged or gently worn item. If it is a gently worn item that is on the sales floor, locate the item with the Geiger function and process it as a damage to prevent more orders. If it is an item to damage and destroy, find that item and make sure it has been processed correctly by reviewing the packing list.

The Operations ASL should also be auditing damages and removing reparable items and items with minor damages that can still be sold with the Gently Worn Discount applied.

Make EVERY opportunity to repair an item before it becomes a damage to be destroyed.

Begin the damage scanning process of items to be destroyed with apparel items followed by OMG/Accessories and then Jewelry. This system offers easier organization and will allow you to optimize the space in your bin. Be sure to group items with the same barcode together. These items will be automatically grouped together on the packing list regardless of the order they are scanned.

As you scan your items, ensure that they are placed into the Scanned bin in the order in which they are scanned. This allows the packing list to act as a map to your scanned items. If completed correctly, the last item you scanned should be at the very top of the box, the first item you scanned should be at the very bottom with all items in between following the order on the Packing List. This prevents the District Leader from having to go through the entire box to find a UPC and makes the approval process easier and much more efficient.

After all items have been scanned and placed into the scanned box. Note the number of items that have been scanned and the Document ID number (found on the left of the screen). o Select Save/Exit o Do you want to save changes? YES o Do you want to Ship Items? YES o Would you like to print a shipping label? NO o Would you like to print a packing list? YES Take your scanned bin and place a lid on top to ensure that no new items are added to the bin.

Retrieve your packing list from the printer. Attach Packing list to exterior of scanned bin and store in BOH until your District Leader verifies and approves of the damages to be discarded. **A District Leader is required to review the damages during their next visit before any of the items can be destroyed.

If new damages are scanned before the previous scanned items are approved/destroyed, they SHOULD NOT be added to the existing list. Start a completely new damaged process and scanned bin and keep the two separate to match the packing lists attached to the bins.

Verifying and Destroying Damages This step must be completed by the District Leader. Please plan time in your schedules to complete damages at a minimum weekly to have them prepared for the next District Leader visit for review.

•

•

Every item that cannot be sold as gently worn must be physically destroyed. This will prevent someone from obtaining the item in the dumpster and returning it for credit later. o Remove all hang tags (including price tag with UPC) o Remove the Altar’d State label wherever possible (apparel, handbags, shoes) o Separate jewelry from the hang card and break up sets. o Use your best judgment when dealing with OMG. Initial the paperwork once you have verified and file in your shipping log with other store transfers. This will be audited by your District Leader and DTiQ If you need to remove an item from damages, email inventory control to request the item be placed back into your inventory.