INTANGIBLE ASSETS

12 Months Ended

Jan. 31, 2023

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

NOTE 7 — INTANGIBLE ASSETS

Intangible assets consist of:

January 31, 2023	Estimated Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
		(In thousands)
Finite-lived intangible assets
Licenses	14 years	$	18,955	$	(17,314)	$	1,641
Customer relationships	15-17 years		52,392		(22,931)		29,461
Other	5-10 years		8,583		(4,843)		3,740
Total finite-lived intangible assets		$	79,930	$	(45,088)	$	34,842
Indefinite-lived intangible assets
Trademarks							628,156
Total indefinite-lived intangible assets							628,156
Total intangible assets, net						$	662,998

January 31, 2022	Estimated Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
		(In thousands)
Finite-lived intangible assets
Licenses	14 years	$	19,334	$	(17,113)	$	2,221
Customer relationships	15-17 years		48,240		(20,224)		28,016
Other	5-10 years		8,534		(7,410)		1,124
Total finite-lived intangible assets		$	76,108	$	(44,747)	$	31,361
Indefinite-lived intangible assets
Goodwill							262,527
Trademarks							453,329
Total indefinite-lived intangible assets							715,856
Total intangible assets, net						$	747,217

Amortization expense

Amortization expense with respect to finite-lived intangibles amounted to $3.9 million, $3.7 million and $4.3 million for the years ended January 31, 2023, 2022 and 2021, respectively.

The estimated amortization expense with respect to intangibles for the next five years is as follows:

Year Ending January 31,	Amortization Expense
	(In thousands)
2024	$	4,267
2025		4,115
2026		4,050
2027		3,776
2028		3,206

Intangible assets with finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired.

Change in Goodwill

Changes in the amounts of goodwill for each of the years ended January 31, 2023 and 2022 are summarized by reportable segment as follows (in thousands):

	Wholesale		Retail		Total
January 31, 2021	$	263,135		—		263,135
Acquisition of Sonia Rykiel		1,518		—		1,518
Currency translation		(2,126)		—		(2,126)
January 31, 2022		262,527		—		262,527
Acquisition of Karl Lagerfeld		84,336		—		84,336
Acquisition of other foreign business		3,523		—		3,523
Impairment		(347,172)		—		(347,172)
Currency translation		(3,214)		—		(3,214)
January 31, 2023	$	—	$	—	$	—

Impairment

Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method. The Company reviews and tests its goodwill and intangible assets with indefinite lives for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may be impaired. The Company performs its goodwill test as of January 31 of each year using a qualitative evaluation or a quantitative test using an income approach through a discounted cash flow analysis methodology. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. The Company also performs its annual test for intangible assets with indefinite lives as of January 31 of each year using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability.

Fiscal 2023 Annual Goodwill Impairment Test

The Company performed its annual test of its wholesale reporting unit as of January 31, 2023 by electing to bypass the qualitative assessment and proceed directly to the quantitative impairment test using a discounted cash flows method to estimate the fair value of its wholesale reporting unit. The Company made this election due to its decline in market capitalization.

The fair value of the wholesale reporting unit for goodwill impairment testing was determined using an income approach and validated using a market approach. The income approach was based on discounted projected future (debt-free) cash flows for the reporting unit. The discount rate applied to these cash flows was based on the weighted average cost of capital for the wholesale reporting unit, which takes market participant assumptions into consideration, inclusive of a Company-specific 7.5% risk premium to account for the additional risk of uncertainly perceived by market participants related to the Company’s overall cash flows. Estimated future operating cash flows were discounted at a rate of 17.5% to account for the relative risks of the estimated future cash flows. For the market approach, used to validate the results of the income approach method, the Company used the guideline company method, which analyzes market multiples of adjusted earnings before interest, taxes, depreciation and amortization for a group of comparable public companies.

As a result of the Company’s fiscal 2023 annual impairment test, the Company recorded a $347.2 million non-cash impairment charge during its fourth quarter of fiscal 2023 to fully impair the carrying value of its goodwill, which was included in assets impairments and gain on lease terminations in the Company’s consolidated statements of operations and comprehensive income (loss). This impairment charge was recorded to the Company’s wholesale operations segment.

Fiscal 2022 and Fiscal 2021 Annual Goodwill Impairment Test

The Company performed its annual tests of its wholesale reporting unit using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of the Company’s annual tests determined that the estimated fair values of its wholesale reporting unit were substantially in excess of its carrying value.

Fiscal 2023 Annual Indefinite-Lived Intangible Assets Impairment Test

The Company performed its annual test of its indefinite-lived trademarks as of January 31, 2023 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. The Company determined that the fair values of each of its indefinite-lived intangible assets substantially exceeded its carrying value and, therefore, there were no impairments identified as of January 31, 2023 as a result of these tests.

Fiscal 2022 and Fiscal 2021 Annual Indefinite-Lived Intangible Assets Impairment Test

The Company performed its annual test of its indefinite-lived trademarks using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of the Company’s annual tests determined that the estimated fair values of its indefinite-lived trademarks were substantially in excess of their carrying values.

The Company’s indefinite-lived trademark balance is primarily composed of the Donna Karan/DKNY trademarks that were acquired in fiscal 2017 and the Karl Lagerfeld trademark that was acquired in fiscal 2023.

The fair value of the Company’s goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy.