Goodwill and Intangible Assets

12 Months Ended

Feb. 02, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets were as follows:



($ thousands)	February 2, 2019			February 3, 2018
Intangible Assets
Famous Footwear	$	2,800		$	2,800
Brand Portfolio	388,288			285,988
Total intangible assets	391,088			288,788
Accumulated amortization	(83,722		)	(76,701		)
Total intangible assets, net	307,366			212,087
Goodwill
Brand Portfolio	242,531			127,081
Total goodwill	242,531			127,081
Goodwill and intangible assets, net	$	549,897		$	339,168

As further described in Note 2 to the consolidated financial statements, the Company acquired Vionic on October 18, 2018. The preliminary allocation of the purchase price resulted in estimated incremental intangible assets of $144.7 million, consisting of trademarks and customer relationships of $112.4 million and $32.3 million, respectively, and incremental goodwill of $148.5 million. The trademark is being amortized on a straight-line basis over its useful life of 20 years. The customer relationship intangible is being amortized on an accelerated basis over its useful life of approximately 16 years. As a result, the Company anticipates a higher level of amortization in future periods as compared to historical periods. In addition, the Company acquired Blowfish Malibu on July 6, 2018. The allocation of the purchase price resulted in incremental intangible assets of $17.6 million, consisting of trademarks and customer relationships of $11.1 million and $6.5 million, respectively, and incremental goodwill of $5.0 million.

The Company's intangible assets as of February 2, 2019 and February 3, 2018 were as follows:



($ thousands)		February 2, 2019
	Estimated Useful Lives	Original Cost		Accumulated Amortization		Impairment		Net Carrying Value
Trademarks	15-40 years	$	288,788	$	81,961	$	—	$	206,827
Trademarks	Indefinite	118,100		—		60,000		58,100
Customer relationships	15-16 years	44,200		1,761		—		42,439
		$	451,088	$	83,722	$	60,000	$	307,366



		February 3, 2018
	Estimated Useful Lives	Original Cost		Accumulated Amortization		Net Carrying Value
Trademarks	15-40 years	$	165,288	$	76,296	$	88,992
Trademarks	Indefinite	118,100		—		118,100
Customer relationships	15 years	5,400		405		4,995
		$	288,788	$	76,701	$	212,087

Amortization expense related to intangible assets was $7.0 million in 2018, $4.1 million in 2017 and $3.7 million in 2016. The Company estimates $13.1 million of amortization expense related to intangible assets in 2019, $12.8 million in 2020, $12.7 million in 2021, $12.5 million in 2022 and $12.2 million in 2023.

Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate it might be impaired, using either the qualitative assessment or a quantitative fair value-based test, as further discussed in Note 1 to the consolidated financial statements. As a result of its annual goodwill impairment testing, the Company determined that the carrying value of the Allen Edmonds reporting unit exceeded its fair value and recorded $38.0 million in impairment charges during 2018. The fair value of the reporting unit was determined using a discounted cash flow analysis with a discount rate of 11%. The Company recorded no impairment charges in 2017 and 2016.

Indefinite-lived intangible assets are tested for impairment as of the first day of the fourth quarter of each fiscal year unless events or circumstances indicate an interim test is required. The indefinite-lived intangible asset impairment reviews resulted in $60.0 million in impairment charges in 2018 associated with the Allen Edmonds trademark. The fair value of the Allen Edmonds trademark was determined using a discounted cash flow analysis with a discount rate of 12%.

The Company's total non-cash goodwill and indefinite-lived intangible asset impairment charges in 2018, reflected within the Brand Portfolio segment, were $98.0 million ($83.0 million on an after-tax basis, or $1.93 per diluted share). The impairment charges were attributable to a decline in projected revenues for Allen Edmonds as a result of the decision for the brand's pricing structure to be less promotional in the future. In addition, rising interest rates and less favorable operating results in 2018 contributed to the need for the impairment charges.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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