Intangible Assets and Goodwill |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets and Goodwill | Intangible Assets and Goodwill The following table details the carrying values of the Company’s intangible assets other than goodwill (in millions):
(1)The year-over-year change in net carrying amount reflects an impairment charge of $70 million and foreign currency translation of $8 million for the fiscal year ended March 30, 2024. For the fiscal year ended April 1, 2023, the Company recorded impairment charges of $24 million. (2)The year-over-year change in net carrying amount reflects an impairment charge of $227 million and foreign currency translation of $3 million for the fiscal year ended March 30, 2024. There were no impairment charges for the fiscal year ended April 1, 2023. Reacquired rights relate to the Company’s reacquisition of the rights to use the Michael Kors trademarks and to import, sell, advertise and promote certain of its products in the previously licensed territories in the Greater China region and are being amortized through March 31, 2041, the expiration date of the former licensing agreement. The trademarks relate to the Michael Kors brand name and are amortized over twenty years. Customer relationships are generally amortized over to eighteen years. Amortization expense for the Company’s definite-lived intangibles was $45 million, $44 million and $49 million, respectively, for each of the fiscal years ended March 30, 2024, April 1, 2023 and April 2, 2022. Indefinite-lived intangible assets other than goodwill included the Versace and Jimmy Choo brands, which were recorded in connection with the acquisitions of Versace and Jimmy Choo, and have an indefinite life as they are essential to the Company’s ability to operate the Versace and Jimmy Choo businesses for the foreseeable future. Estimated amortization expense for each of the next five years is as follows (in millions):
The future amortization expense above reflects weighted-average estimated remaining useful lives of seventeen years for reacquired rights and nine years for customer relationships. The following table details the changes in goodwill for each of the Company’s reportable segments (in millions):
(1)The Company recorded impairment charges of $192 million during Fiscal 2024 related to the Jimmy Choo retail and wholesale reporting units. As of March 30, 2024, the Company had accumulated impairment charges of $539 million related to its Jimmy Choo reporting units. The Company’s goodwill and the Versace and Jimmy Choo brands are not subject to amortization but are evaluated for impairment annually in the last quarter of each fiscal year, or whenever impairment indicators exist. During the fourth quarter of Fiscal 2024, the Company performed its annual goodwill and indefinite-lived intangible asset impairment analysis. The Company performed its goodwill impairment assessment for its Michael Kors reporting units using a qualitative assessment. Based on the results of the Company’s qualitative impairment assessment, the Company concluded that it is more likely than not that the fair value of the Michael Kors’ reporting units exceeded their carrying values and, therefore, were not impaired. The Company performed its annual goodwill and indefinite-lived intangible asset impairment analysis for both the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair value of each brands’ reporting units. The Company also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand indefinite-lived intangible assets using an income approach to estimate their fair values. Based on the results of these assessments, the Company determined there was no impairment for the Jimmy Choo Licensing reporting unit goodwill and Versace reporting units goodwill as the fair values of the reporting units and the brand intangible assets exceeded the related carrying amounts. However, the Company concluded that the fair value of the Jimmy Choo Retail and Wholesale reporting units goodwill and Retail and Wholesale brand indefinite-lived intangible assets did not exceed their related carrying amounts and recorded impairment charges. These impairment charges were primarily related to a continued decline in revenue trends from prior expectations. Additionally, the Versace Retail and Wholesale brand indefinite-lived intangible assets did not exceed their related carrying amounts. These impairment charges were primarily related to a slowdown in revenue driven predominantly by softening demand globally for fashion luxury goods. Accordingly, the Company recorded goodwill impairment charges of $192 million related to the Jimmy Choo Retail and Wholesale reporting units, $70 million related to the Jimmy Choo Retail and Wholesale brand intangible assets and $227 million related to the Versace Retail and Wholesale brand intangible assets during Fiscal 2024. In total, $489 million of impairment was recorded related to goodwill and indefinite lived intangible assets within impairment of assets on the Company’s consolidated statement of operations and comprehensive (loss) income for the fiscal year ended March 30, 2024. In Fiscal 2023, the Company recorded goodwill impairment charges of $82 million related to the Jimmy Choo Retail and Wholesale reporting units and $24 million related to the Jimmy Choo brand intangible assets. The impairment charges were recorded within impairment of assets on the Company’s consolidated statement of operations and comprehensive (loss) income for the fiscal year ended April 1, 2023. In Fiscal 2022, the Company did not incur any impairment charges. See Note 14 for additional information.
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