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Goodwill and intangibles | 12 Months Ended
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Feb. 03, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and intangibles | Goodwill and intangibles Goodwill and other indefinite-lived intangible assets, such as indefinite-lived trade names, are evaluated for impairment annually. Additionally, if events or conditions indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may be greater than its fair value, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other indefinite-lived intangible asset with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded. The impairment test for goodwill involves estimating the fair value of the reporting unit through either estimated discounted future cash flows or market-based methodologies. The impairment test for other indefinite-lived intangible assets involves estimating the fair value of the asset, which is typically performed using the relief from royalty method for indefinite-lived trade names. Fiscal 2022 In the second quarter of Fiscal 2022, the annual testing date of the Digital Banners was changed from the last day of the fiscal year to the last day of the fourth period of each fiscal year. The Digital Banners represents a reporting unit within the Company’s North America reportable segment. The new impairment testing date was preferable, as this date corresponds with the testing date for the other North America reporting units. This allows information and assumptions to be applied consistently to all reporting units. In connection with the acquisition of Rocksbox on March 29, 2021, the Company recognized $11.6 million of definite-lived intangible assets and $4.6 million of goodwill, which are reported in the North America reportable segment. The weighted-average amortization period of the definite-lived intangibles assets acquired is eight years. In connection with the acquisition of Diamonds Direct on November 17, 2021, the Company recognized $126.0 million of indefinite-lived intangible assets related to the Diamonds Direct trade name and $251.2 million of goodwill, which are reported in the North America reportable segment. Refer to Note 4 for additional information. During Fiscal 2022, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived intangible assets exceed their fair values. Fiscal 2023 During Fiscal 2023, the Company completed its annual evaluation of its indefinite-lived intangible assets, including goodwill and trade names, and through the qualitative assessment, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceeded their fair values. In connection with the acquisition of Blue Nile on August 19, 2022, the Company recognized $96.0 million of indefinite-lived intangible assets and $256.8 million of goodwill, which are reported in the North America reportable segment. Refer to Note 4 for additional information. During Fiscal 2023, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived intangible assets exceed their fair values. Fiscal 2024 During Fiscal 2024, the Company completed its annual evaluation of its indefinite-lived intangible assets, including goodwill and trade names. The Company utilized the qualitative assessment for all reporting units and trade names, except the Digital Banners and Diamonds Direct reporting units and trade names, for which the quantitative assessment was utilized. Through the qualitative assessment, the Company did not identify any events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived trade names exceeded their fair values. The Company noted no impairment through the quantitative assessments based on the estimated fair values of the reporting units and trade names exceeding their carrying values. During the fourth quarter of Fiscal 2024, the Company determined a triggering event had occurred requiring an interim impairment assessment for the Blue Nile trade name which management performed on a quantitative basis. The Company noted no impairment based on the estimated fair value of the trade name approximating its carrying value. The Company did not identify any other events or conditions that would indicate that it was more likely than not that the carrying values of the reporting units and indefinite-lived intangible assets exceed their fair values during Fiscal 2024. The uncertainty related to the current macroeconomic environment, such as rising interest rates and the heightened inflationary pressure on consumers’ discretionary spending, could negatively affect the share price of the Company’s common stock, as well as key assumptions used to estimate fair value, such as sales trends, margin trends, long-term growth rates and discount rates. Thus, an adverse change in any of these factors could result in a risk of impairment in the Company’s goodwill or indefinite-lived trade names in future periods. Goodwill The following table summarizes the Company’s goodwill by reportable segment:
(in millions) | North America |  |  |  |  |  |
Balance at January 29, 2022 (1) | $ | 484.6 |  |  |  |  |  |  |
Acquisitions (2) | 267.1 |  |  |  |  |  |  |
Balance at January 28, 2023 (1) | $ | 751.7 |  |  |  |  |  |  |
Acquisitions (2) | 2.8 |  |  |  |  |  |  |
Balance at February 3, 2024 (1) | $ | 754.5 |  |  |  |  |  |  |
(1) For the periods presented, the carrying amount of goodwill is presented net of accumulated impairment losses of $576.0 million. (2) For the period ended February 3, 2024, the change in goodwill during the period primarily consists of the acquisition of SJR and the finalization of the purchase price allocation of Blue Nile. For the period ended January 28, 2023, the change in goodwill during the period primarily consists of the acquisition of Blue Nile and the finalization of the purchase price allocation of Diamonds Direct. Refer to Note 4 for additional information. Intangibles Definite-lived intangible assets include trade names, technology and customer relationship assets. Indefinite-lived intangible assets consist of trade names. Both definite and indefinite-lived assets are recorded within intangible assets, net on the consolidated balance sheets. Intangible liabilities, net consists of unfavorable contracts and is recorded within accrued expenses and other current liabilities and other liabilities - non-current on the consolidated balance sheets. The following table provides additional detail regarding the composition of intangible assets and liabilities:
|  | February 3, 2024 |  | January 28, 2023
(in millions) |  | Gross carrying amount |  | Accumulated amortization |  |  |  | Net carrying amount |  | Gross carrying amount |  | Accumulated amortization |  |  |  | Net carrying amount
Intangible assets, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Definite-lived intangible assets |  | $ | 11.2 |  |  | $ | (7.5) |  |  |  |  | $ | 3.7 |  |  | $ | 15.8 |  |  | $ | (7.6) |  |  |  |  | $ | 8.2 |
Indefinite-lived intangible assets (1) |  | 399.1 |  |  | — |  |  |  |  | 399.1 |  |  | 399.2 |  |  | — |  |  |  |  | 399.2 |
Total intangible assets, net |  | $ | 410.3 |  |  | $ | (7.5) |  |  |  |  | $ | 402.8 |  |  | $ | 415.0 |  |  | $ | (7.6) |  |  |  |  | $ | 407.4 |
Intangible liabilities, net |  | $ | (38.0) |  |  | $ | 34.4 |  |  |  |  | $ | (3.6) |  |  | $ | (38.0) |  |  | $ | 32.6 |  |  |  |  | $ | (5.4) |
(1) The change in the indefinite-lived intangible asset balances during the periods presented was due to the impact of foreign currency translation. Amortization expense relating to intangible assets was $1.9 million in Fiscal 2024 (Fiscal 2023: $2.3 million; Fiscal 2022: $1.1 million). Unfavorable contracts are classified as liabilities and recognized over the term of the underlying contract. Amortization relating to intangible liabilities was $1.8 million in Fiscal 2024 (Fiscal 2023: $1.8 million; Fiscal 2022: $3.3 million). Expected future amortization for intangible assets and intangible liabilities recorded at February 3, 2024 is as follows:
(in millions) | Intangible assets amortization |  | Intangible liabilities amortization
Fiscal 2025 | $ | 0.9 |  |  | $ | (1.8) |
Fiscal 2026 | 0.5 |  |  | (1.8) |
Fiscal 2027 | 0.5 |  |  | — |
Fiscal 2028 | 0.5 |  |  | — |
Fiscal 2029 | 0.4 |  |  | — |
Thereafter | 0.9 |  |  | — |
Total | $ | 3.7 |  |  | $ | (3.6) |

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