Goodwill and Intangible Impairment Charges

9 Months Ended

Oct. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Impairment Charges

GOODWILL AND INTANGIBLE IMPAIRMENT CHARGES

During the thirteen weeks ended May 2, 2020 ("last year's first quarter"), the Company experienced a significant decline in its market capitalization and disruptions to its operations as a result of the pandemic. Consequently, the Company reduced its level of forecasted earnings for fiscal 2020 and future periods across all of its brands. In light of the decline in the Company's stock price and market capitalization, the Company concluded that these factors, among other factors, represented impairment indicators which required the Company to test its goodwill and indefinite-lived intangible assets for impairment during last year's first quarter.

The Company performed its valuation of its goodwill and indefinite-lived intangible assets using a quantitative approach as of April 4, 2020 (the "interim test"), which was the last day in the second month of last year's first quarter. Changes in key assumptions and the resulting reduction in projected future cash flows included in the interim test resulted in a decrease in the fair values of our Chico's and WHBM reporting units such that their fair values were less than their carrying values. As a result, the Company recognized the following pre-tax goodwill impairment charges during the thirty-nine weeks ended October 31, 2020: a charge of $20.0 million at the Chico's reporting unit and a charge of $60.4 million at the WHBM reporting unit. The carrying values of goodwill at the Chico's and WHBM reporting units were $16.4 million and zero, respectively, and are included in goodwill in the accompanying unaudited condensed consolidated balance sheet as of October 31, 2020. In addition, the Company recognized pre-tax impairment charges during the thirty-nine weeks ended October 31, 2020 to write down the carrying values of its other indefinite-lived intangible assets to their fair values as follows: $28.0 million of our WHBM trademark and $4.8 million of our Chico's franchise rights. The carrying values of the trademark and franchise rights were $6.0 million and $0.2 million, respectively, and are included in other intangible assets, net, in the accompanying unaudited condensed consolidated balance sheet as of October 31, 2020. Collectively, these impairment charges are included in goodwill and intangible impairment charges in the accompanying unaudited condensed consolidated statements of income (loss).

The Company evaluated the need to perform an interim impairment test for its goodwill and indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended October 30, 2021 and during the thirteen weeks ended October 31, 2020. We considered macroeconomic, industry-specific and Company-specific factors in addition to the estimates and assumptions used in the most recently completed goodwill and indefinite-lived intangible assets analysis. Based on review of both quantitative and qualitative factors, we determined that we did not have a triggering event that would require an interim impairment test of goodwill and indefinite-lived intangible assets, and accordingly, we did not record any goodwill and intangible impairment charges during the thirteen and thirty-nine weeks ended October 30, 2021 and during the thirteen weeks ended October 31, 2020.

The following table details the changes in goodwill and other indefinite-lived intangible assets, net:

	October 30, 2021
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount
Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360
Other intangible assets:
WHBM trademark	$	34,000	$	(29,000)	$	5,000
Chico's franchise rights	4,930		(4,930)		—
	$	38,930	$	(33,930)	$	5,000
	January 30, 2021
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount
Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360
Other intangible assets:
WHBM trademark	$	34,000	$	(29,000)	$	5,000
Chico's franchise rights	4,930		(4,930)		—
	$	38,930	$	(33,930)	$	5,000
	October 31, 2020
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount
Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360
Other intangible assets:
WHBM trademark	$	34,000	$	(28,000)	$	6,000
Chico's franchise rights	4,930		(4,766)		164
	$	38,930	$	(32,766)	$	6,164