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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Note 5 – Goodwill and Other Intangible Assets The Company has two reporting units, Wholesale and Retail. Changes in the carrying amount of goodwill were as follows:
(In thousands) | Wholesale |  |  | Retail |  |  | Total |
Balance at December 31, 2022 and December 30, 2023 | $ |  | 181,035 |  |  | $ |  | 1,125 |  |  | $ |  | 182,160 |
Acquisitions (Note 2) |  |  | — |  |  |  |  | 44,591 |  |  |  |  | 44,591 |
Impairment |  |  | — |  |  |  |  | (45,716 | ) |  |  |  | (45,716 | )
Balance at December 28, 2024 | $ |  | 181,035 |  |  | $ |  | — |  |  | $ |  | 181,035 |
The Company reviews goodwill and other intangible assets for impairment annually, as of the first day of the fourth quarter of each year, and more frequently if circumstances indicate impairment is more likely than not to have occurred. Testing goodwill and other intangible assets for impairment requires management to make significant estimates about the Company’s future performance, cash flows, and other assumptions that can be affected by potential changes in economic, industry or market conditions, business operations, competition, or the Company’s stock price and market capitalization. These represent Level 3 valuation inputs under the ASC 820 fair value hierarchy, as further described in Note 8, Fair Value Measurements. During the Company's 2024 annual impairment review within the Wholesale and Retail reporting units, projected cash flows were discounted under the income approach based on a weighted average cost of capital ("WACC") of 9.0% and 8.4%, respectively. The WACC rates were developed from adjusted market-based and company specific factors, current interest rates, equity risk premiums, and other market-based expectations regarding expected investment returns. The development of the WACC rates requires estimates of an equity rate of return and a debt rate of return, which are specific to the respective industries in which the Wholesale and Retail reporting units operate. The Company benchmarks the calculated fair value resulting from the income approach against market comparisons using the guideline public company method. The Company concluded that the fair value of the Wholesale reporting unit was substantially in excess of its carrying value in the annual impairment review. During 2024, cash flow trends within the Retail reporting unit were steadily and negatively impacted by an increasingly competitive grocery retail environment. These competitive factors have led to increased pressure on pricing and promotions that have had an adverse impact, and are anticipated to continue to have an adverse impact, on volume, gross profit rates and other costs within the Retail reporting unit. Based on the Company’s annual impairment analysis, which contemplates the effects of these industry challenges, it was determined that the carrying value of the Retail reporting unit exceeded its fair value. Therefore, the Company concluded that a goodwill impairment existed as of the annual testing date. Following the annual testing date, the Company entered into two businesses combinations which contributed additional goodwill to the Retail reporting unit. As there was not a change in the underlying environmental factors of the industry, nor the assessed impact on the Retail reporting unit, management concluded that circumstances were present that indicated a goodwill impairment was more likely than not to be present. The Company, therefore, performed an additional goodwill impairment test during the fourth quarter and concluded that the Retail reporting unit carrying value, inclusive of newly acquired goodwill, again exceeded its fair value. As a result, the goodwill associated with the fourth quarter business combinations was also impaired. In total, the Company recorded goodwill impairment charges of $45.7 million in the Retail reporting unit. The following table reflects the components of amortized intangible assets, included in “Intangible assets, net” on the consolidated balance sheets:
|  |  | December 28, 2024 |  |  | December 30, 2023 |
|  |  | Gross |  |  |  |  |  |  | Gross |  |  |  |  |
|  |  | Carrying |  |  | Accumulated |  |  | Carrying |  |  | Accumulated |
(In thousands) |  |  | Amount |  |  | Amortization |  |  | Amount |  |  | Amortization |
Non-compete agreements |  |  |  | $ |  | 25 |  |  | $ |  | 10 |  |  | $ |  | 3,545 |  |  | $ |  | 3,190 |
Pharmacy customer prescription lists |  |  |  |  |  | 3,869 |  |  |  |  | 3,376 |  |  |  |  | 3,869 |  |  |  |  | 2,853 |
Customer relationships |  |  |  |  |  | 57,937 |  |  |  |  | 29,808 |  |  |  |  | 57,937 |  |  |  |  | 26,146 |
Franchise fees |  |  |  |  |  | 1,419 |  |  |  |  | 767 |  |  |  |  | 1,209 |  |  |  |  | 661 |
Total |  |  |  | $ |  | 63,250 |  |  | $ |  | 33,961 |  |  | $ |  | 66,560 |  |  | $ |  | 32,850 |
The weighted average amortization periods for amortizable intangible assets as of December 28, 2024 are as follows:
Non-compete agreements |  |  |  |  |  |  |  |  |  |  | 1.0 years |
Pharmacy customer prescription lists |  |  |  |  |  |  |  |  |  |  | 8.1 years |
Customer relationships |  |  |  |  |  |  |  |  |  |  | 16.4 years |
Franchise fees |  |  |  |  |  |  |  |  |  |  | 10.0 years |
Amortization expense for intangible assets was $4.7 million, $4.9 million and $5.0 million for 2024, 2023 and 2022, respectively. Estimated amortization expense for each of the five succeeding fiscal years is as follows:
(In thousands) | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | 2029 |
Amortization expense | $ |  | 4,292 |  |  | $ |  | 3,762 |  |  | $ |  | 3,740 |  |  | $ |  | 3,731 |  |  | $ |  | 3,716 |
The Company has indefinite-lived intangible assets that are not amortized, consisting primarily of indefinite-lived trade names and liquor licenses. Indefinite lived intangible assets are tested for impairment at least annually, and as needed if an indicator of potential impairment exists. A qualitative assessment was performed to determine whether it is more likely than not that an indefinite lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the fair value of the indefinite lived intangible asset exceeds its carrying value, a quantitative impairment test is not required. If the qualitative assessment does not support the fair value of the indefinite lived intangible asset, then a quantitative assessment is performed. Indefinite lived intangible assets are measured at fair value using Level 3 inputs under the fair value hierarchy, as further described in Note 8. The fair value of indefinite lived intangible assets is determined by estimating the amount and timing of net future cash flows generated from the use of the asset, generally using estimated revenue growth rates and profitability rates and, in the case of the relief-from-royalty methodology, royalty rates. Future cash flows are discounted based on the WACC of the reporting unit in which the asset resides, determined using current interest rates, equity risk premiums, and other market-based expectations regarding expected investment returns, as well as estimates of industry-specific equity and debt rates of return. During the second quarter and fourth quarters of 2024, the Company recognized impairment charges of $6.1 million and $6.7 million, respectively, related to two trade names based on changes in the assumptions supporting fair value. Changes in the carrying amount of indefinite-lived intangible assets were as follows:
|  |  |  |  |  |  | Indefinite-lived |
(In thousands) |  |  |  |  |  |  | Intangible Assets |
Balance at December 31, 2022 and December 30, 2023 |  |  |  |  |  |  | $ |  | 67,826 |
Additions |  |  |  |  |  |  |  |  | 672 |
Acquisitions (Note 2) |  |  |  |  |  |  |  |  | 32,750 |
Impairment |  |  |  |  |  |  |  |  | (12,716 | )
Balance at December 28, 2024 |  |  |  |  |  |  | $ |  | 88,532 |

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