Goodwill and intangibles

9 Months Ended

Oct. 28, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

In connection with the acquisition of R2Net on September 12, 2017, the Company recognized $348.5 million of goodwill, which is reported in the Sterling Jewelers segment. The amount of goodwill generated will be adjusted for any additional assets or liabilities identified by the Company or for any adjustments to the preliminary fair values identified for the assets acquired and liabilities assumed in the R2Net acquisition.

Goodwill

The following table summarizes the Company’s goodwill by reportable segment:



(in millions)	Sterling Jewelers		Zale Jewelry		Piercing Pagoda		UK Jewelry		Other		Total
Balance at January 30, 2016	$	23.2	$	488.7	$	—	$	—	$	3.6	$	515.5
Impact of foreign exchange	—		2.1		—		—		—		2.1
Balance at January 28, 2017	23.2		490.8		—		—		3.6		517.6
Acquisitions	348.5		—		—		—		—		348.5
Impact of foreign exchange	—		1.0		—		—		—		1.0
Balance at October 28, 2017	$	371.7	$	491.8	$	—	$	—	$	3.6	$	867.1

There have been no goodwill impairment losses recognized during the fiscal periods presented in the condensed consolidated income statements.

Intangibles

The following table provides detail regarding the composition of intangible assets and liabilities:



		October 28, 2017									January 28, 2017									October 29, 2016
(in millions)	Balance sheet location	Gross carrying amount			Accumulated amortization			Net carrying amount			Gross carrying amount			Accumulated amortization			Net carrying amount			Gross carrying amount			Accumulated amortization			Net carrying amount
Definite-lived intangible assets:
Trade names	Intangible assets, net	$	1.5		$	(1.0	)	$	0.5		$	1.4		$	(0.8	)	$	0.6		$	1.4		$	(0.7	)	$	0.7
Favorable leases	Intangible assets, net	47.9			(44.1		)	3.8			47.6			(36.0		)	11.6			47.5			(32.6		)	14.9
Total definite-lived intangible assets		49.4			(45.1		)	4.3			49.0			(36.8		)	12.2			48.9			(33.3		)	15.6
Indefinite-lived trade names	Intangible assets, net	406.1			—			406.1			404.8			—			404.8			404.2			—			404.2
Total intangible assets, net		$	455.5		$	(45.1	)	$	410.4		$	453.8		$	(36.8	)	$	417.0		$	453.1		$	(33.3	)	$	419.8
Definite-lived intangible liabilities:
Unfavorable leases	Other liabilities	$	(48.5	)	$	45.4		$	(3.1	)	$	(48.3	)	$	38.2		$	(10.1	)	$	(48.1	)	$	34.7		$	(13.4	)
Unfavorable contracts	Other liabilities	(65.6		)	37.6			(28.0		)	(65.6		)	33.5			(32.1		)	(65.6		)	32.1			(33.5		)
Total intangible liabilities, net		$	(114.1	)	$	83.0		$	(31.1	)	$	(113.9	)	$	71.7		$	(42.2	)	$	(113.7	)	$	66.8		$	(46.9	)

During the second quarter of Fiscal 2018, the Company performed its annual evaluation of its indefinite-lived intangible assets, including goodwill and trade names identified in the Zale acquisition, for impairment indicators. Impairment indicators identified included weakness in the overall retail environment, declines in same store sales, as well a general decline in the market valuation of the Company’s common shares. At this time, the estimated fair value of the reporting units and indefinite-lived trade names continues to exceed the carrying values. However, the Company will continue to monitor sales trends, interest rates, and other key inputs to the estimates of fair value. A further decline in the key inputs, especially sales trends used in the valuation of trade names, may result in an impairment charge.

- 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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