Goodwill and Trade Names (Notes)

9 Months Ended

Nov. 02, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Trade Names

Goodwill

Goodwill is reviewed for impairment each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change. If the Company determines that the fair value of a reporting unit is less than its carrying value, an impairment charge is recognized equal to the difference, not to exceed the total amount of goodwill allocated to the reporting unit. The Company's reporting units that have goodwill are Victoria's Secret, Bath & Body Works and Greater China, which is included within the Victoria's Secret and Bath & Body Works International reportable segment.

The following table provides detail regarding the composition of goodwill as of November 2, 2019, February 2, 2019 and November 3, 2018:



	November 2, 2019		February 2, 2019		November 3, 2018
	(in millions)
Victoria's Secret	$	690	$	690	$	690
Bath & Body Works	628		628		628
Victoria's Secret's Secret and Bath & Body Works International	—		30		30
Goodwill	$	1,318	$	1,348	$	1,348

As of November 2, 2019, the Company performed a quantitative interim impairment assessment over the Victoria's Secret and Greater China reporting units. An interim assessment was performed in consideration of the negative performance of these reporting units and their impact on the sustained decline in the Company's market capitalization. Further, for the Greater China reporting unit, the Company considered the results of the long-lived store asset impairment assessment.

The interim assessment concluded that the fair value of the Victoria's Secret reporting unit exceeded its carrying value. However, the fair value of the Greater China reporting unit did not exceed its carrying value. Accordingly, the Company recognized a goodwill impairment charge of $30 million in the third quarter of 2019 related to the Greater China reporting unit, due to its estimated future cash flows. This charge is included in General, Administrative and Store Operating Expenses in the 2019 Consolidated Statements of Income (Loss).

The estimated fair value of the Victoria's Secret reporting unit was based on a weighted average of the income and market approaches, while the estimated fair value of the Greater China reporting unit was based on the income approach. The income approach is based on estimated discounted future cash flows, while the market approach is based on earnings multiples of selected guideline public companies. The approaches, which qualify as level 3 in the fair value hierarchy, incorporated a number of significant assumptions and judgments including, but not limited to, estimated future cash flows, discount rates, income tax rates, terminal growth rates, multiples of earnings of similar public companies and an implied control premium relative to the Company's market capitalization.

Intangible Assets - Indefinite Lives

Intangible assets with indefinite lives represent the Victoria’s Secret and Bath & Body Works trade names. Intangible assets with indefinite lives are reviewed for impairment each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change. The following table provides detail regarding the composition of trade names as of November 2, 2019, February 2, 2019 and November 3, 2018:



	November 2, 2019		February 2, 2019		November 3, 2018
	(in millions)
Victoria's Secret	$	246	$	246	$	246
Bath & Body Works	165		165		165
Trade Names	$	411	$	411	$	411

As of November 2, 2019, the Company performed a quantitative interim impairment assessment of the Victoria's Secret trade name. An interim assessment was performed in consideration of the negative performance of Victoria's Secret. To estimate the fair value of the Victoria's Secret trade name, the Company used the relief from royalty method under the income approach. The interim assessment concluded that the fair value of the Victoria's Secret trade name exceeded its carrying value.