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Goodwill and Intangibles | 12 Months Ended
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Feb. 28, 2025
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangibles | Note 7 - Goodwill and Intangibles Amortization expense is recorded for intangible assets with definite useful lives and is reported within SG&A in our consolidated statements of income. Some of our goodwill is held in jurisdictions that allow deductions for tax purposes; however, in some of those jurisdictions we have no tax basis for the associated goodwill recorded. Accordingly, some of our goodwill is not deductible for tax purposes. We perform annual impairment testing each fiscal year and interim impairment testing, if necessary, as described in Note 1. We write down any asset deemed to be impaired to its fair value. During the second quarter of fiscal 2025, we concluded that a goodwill impairment triggering event had occurred primarily due to a sustained decline in our stock price. Additional factors that contributed to this conclusion included current macroeconomic trends and uncertainty surrounding inflation and high interest rates, which negatively impact consumer disposable income, credit availability, spending and overall consumer confidence. These factors were applicable to all of our reporting units which resulted in us performing quantitative goodwill impairment testing on all of our reporting units. We considered whether these events and circumstances would affect any other assets and concluded we should perform quantitative impairment testing on our indefinite-lived trademark licenses and trade names and our definite-lived trademark licenses, trade names, and customer relationships and lists. We performed quantitative impairment testing on our goodwill and intangible assets described above and determined none were impaired. During the fourth quarter of fiscal 2025, we concluded a goodwill impairment triggering event had occurred due to a continued sustained decline in our stock price, resulting in our carrying value (excluding long-term debt) exceeding the Company's total enterprise value (market capitalization plus long-term debt). Additional factors that contributed to this conclusion included downward revisions to our internal forecasts and strategic long-term plans. These factors were applicable to all of our reporting units and indefinite-lived and definite-lived trademark licenses and trade names. Thus, we performed quantitative impairment testing on our goodwill and intangible assets described above. We estimate the fair value of our trade names and trademark licenses using the relief from royalty method income approach which is based upon projected future discounted cash flows (“DCF Model”). Our indefinite-lived and definite-lived trademark license and trade name testing resulted in an impairment charge of $12.8 million to reduce the carrying value of our Drybar definite-lived trade name to an estimated fair value of $7.0 million. Our Drybar business is a separate reporting unit and is included within our Beauty & Wellness segment. We estimate the fair value of our reporting units using an income approach based upon projected future discounted cash flows. Our goodwill impairment testing resulted in an impairment charge of $38.7 million to reduce the goodwill of our Drybar reporting unit. Our Drybar business has continued to experience a decline in net sales revenue due to lower consumer demand, increased competition, and net distribution declines, all of which have contributed to reduced earnings and cash flows. In connection with our annual budgeting and forecasting process, management reduced its forecasts of Drybar's net sales revenue growth, gross margin and earnings before interest and taxes which also resulted in management selecting a lower royalty rate. Refer to Note 14 for additional information on our valuation method and related assumptions and estimates. For additional information regarding the testing and analysis performed, refer to Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations,” including “Critical Accounting Policies and Estimates” included within this Annual Report. We performed our annual impairment testing of our goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2024 and 2023 and determined based on our qualitative assessment that it was not more likely than not that the fair value of each reporting unit and indefinite-lived intangible asset was lower than its carrying value. Therefore, quantitative testing in fiscal 2024 and 2023 was not required. Accordingly, no impairment charges were recorded during fiscal 2024 and 2023. The following table summarizes the changes in our goodwill by segment for fiscal 2025 and 2024:
(in thousands) | Home & Outdoor |  |  |  |  | Beauty & Wellness |  | Total
Gross carrying amount as of February 28, 2023 | $ | 491,777 |  |  |  |  |  | $ | 574,702 |  |  | $ | 1,066,479 |
Accumulated impairment as of February 28, 2023 | — |  |  |  |  |  | — |  |  | — |
Acquisitions (1) | — |  |  |  |  |  | 251 |  |  | 251 |
Gross carrying amount as of February 29, 2024 | 491,777 |  |  |  |  |  | 574,953 |  |  | 1,066,730 |
Accumulated impairment as of February 29, 2024 | — |  |  |  |  |  | — |  |  | — |
Net carrying amount as of February 29, 2024 | $ | 491,777 |  |  |  |  |  | $ | 574,953 |  |  | $ | 1,066,730 |
Acquisitions (2) | — |  |  |  |  |  | 154,839 |  |  | 154,839 |
Impairment charges (3) | — |  |  |  |  |  | (38,670) |  |  | (38,670) |
Gross carrying amount as of February 28, 2025 | 491,777 |  |  |  |  |  | 729,792 |  |  | 1,221,569 |
Accumulated impairment as of February 28, 2025 | — |  |  |  |  |  | (38,670) |  |  | (38,670) |
Net carrying amount as of February 28, 2025 | $ | 491,777 |  |  |  |  |  | $ | 691,122 |  |  | $ | 1,182,899 |
(1)Reflects the final adjustment to goodwill recorded in the Beauty & Wellness segment in fiscal 2024 in connection with the acquisition of Curlsmith on April 22, 2022. For additional information see Note 6. (2)Reflects the goodwill recorded in the Beauty & Wellness segment in connection with the acquisition of Olive & June on December 16, 2024. For additional information see Note 6. (3)Reflects the goodwill impairment charge recorded in the Beauty & Wellness segment to reduce our Drybar reporting unit's goodwill to $134.3 million. The following table summarizes the components of our other intangible assets as follows:
|  |  | February 28, 2025 (1)(2) |  | February 29, 2024 (2)
(in thousands) |  |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Indefinite-lived: |  |  |  |  |  |  |  |  |  |  |  |  |
Trademark licenses |  |  | $ | 7,400 |  |  | $ | — |  |  | $ | 7,400 |  |  | $ | 7,400 |  |  | $ | — |  |  | $ | 7,400 |
Trade names |  |  | 358,200 |  |  | — |  |  | 358,200 |  |  | 358,200 |  |  | — |  |  | 358,200 |
Definite-lived: |  |  |  |  |  |  |  |  |  |  |  |  |
Trademark licenses |  |  | 75,050 |  |  | (9,454) |  |  | 65,596 |  |  | 74,650 |  |  | (7,523) |  |  | 67,127 |
Trade names |  |  | 89,365 |  |  | (14,030) |  |  | 75,335 |  |  | 51,150 |  |  | (10,267) |  |  | 40,883 |
Customer relationships and lists |  |  | 168,201 |  |  | (120,932) |  |  | 47,269 |  |  | 160,201 |  |  | (112,194) |  |  | 48,007 |
Other intangibles |  |  | 74,297 |  |  | (61,341) |  |  | 12,956 |  |  | 71,977 |  |  | (56,898) |  |  | 15,079 |
Total |  |  | $ | 772,513 |  |  | $ | (205,757) |  |  | $ | 566,756 |  |  | $ | 723,578 |  |  | $ | (186,882) |  |  | $ | 536,696 |
(1)Balances as of February 28, 2025 include intangible assets recorded in connection with the acquisition of Olive & June on December 16, 2024. For additional information see Note 6. In addition, balances as of February 28, 2025 reflect an impairment charge of $12.8 million to reduce the gross carrying amount of our Drybar trade name to a fair value of $7.0 million. (2)Balances as of February 28, 2025 and February 29, 2024 include intangible assets recorded in connection with the acquisition of Curlsmith on April 22, 2022. For additional information see Note 6. The following tables summarize amortization expense related to our other intangible assets as follows:
Aggregate Amortization Expense (in thousands) |
Fiscal 2025 | $ | 18,875 |
Fiscal 2024 | 18,326 |
Fiscal 2023 | 18,322 |
Estimated Amortization Expense (in thousands) |
Fiscal 2026 | $ | 19,979 |
Fiscal 2027 | 15,517 |
Fiscal 2028 | 12,803 |
Fiscal 2029 | 12,774 |
Fiscal 2030 | 12,448 |

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