GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Dec. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table presents goodwill by product category and the related change in the carrying amount:


(In millions)	Skin Care		Makeup		Fragrance		Hair Care		Total
Balance as of June 30, 2024
Goodwill, gross carrying amount	$	1,612	$	1,116	$	253	$	353	$	3,334
Accumulated impairments	(429)		(732)		(30)		—		(1,191)
Total goodwill	1,183		384		223		353		2,143


Impairment charges	—		(13)		—		—		(13)
Translation adjustments, goodwill	(72)		—		(2)		(1)		(75)
Translation adjustments, accumulated impairments	18		—		—		—		18
	(54)		(13)		(2)		(1)		(70)

Balance as of December 31, 2024
Goodwill, gross carrying amount	1,540		1,116		251		352		3,259
Accumulated impairments	(411)		(745)		(30)		—		(1,186)
Total goodwill	$	1,129	$	371	$	221	$	352	$	2,073

Other Intangible Assets

Other intangible assets consist of the following:


	December 31, 2024						June 30, 2024
(In millions)	Gross Carrying Value		Accumulated Amortization		Total Net Book Value		Gross Carrying Value		Accumulated Amortization		Total Net Book Value
Amortizable intangible assets:
Customer lists and other	$	1,897	$	941	$	956	$	1,971	$	895	$	1,076


Non-amortizable intangible assets:
Trademarks					3,202						4,107
Total other intangible assets, net					$	4,158					$	5,183

The aggregate amortization expense related to amortizable intangible assets was $35 million and $37 million for the three months ended December 31, 2024 and 2023, respectively, and $71 million and $73 million for the six months ended December 31, 2024 and 2023, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2025 and for each of the next four fiscal years is as follows:


	Fiscal
(In millions)	2025		2026		2027		2028		2029
Estimated aggregate amortization expense	$	65	$	136	$	119	$	94	$	93

Impairment Analysis During the Six Months Ended December 31, 2024

During the fiscal 2025 second quarter, the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels, including in mainland China, Asia travel retail and Hong Kong SAR. Also during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels. As a result, the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit. Additionally, there were increases in the weighted average cost of capital for both the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024.

The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the TOM FORD and Too Faced trademarks and Too Faced goodwill as well as a recoverability test for the Too Faced long-lived assets as of December 31, 2024. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method, and recorded an impairment charge of $773 million for TOM FORD and $75 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets for Too Faced were recoverable. Additionally, as a result of the interim impairment review, the remaining carrying value of Too Faced’s goodwill was not recoverable and the Company recorded an impairment charge of $13 million, reducing the carrying value to zero. The significant assumptions used in the relief-from-royalty method include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates. The most significant unobservable input used to estimate the fair value of the TOM FORD and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11.5% and 14%, respectively.

A summary of the impairment charges for the three and six months ended December 31, 2024 and the remaining trademark and goodwill carrying values as of December 31, 2024, for the TOM FORD brand and Too Faced reporting unit, are as follows:


			Impairment Charges(1)					Carrying Value
(In millions)		Three and Six Months Ended December 31, 2024				As of December 31, 2024
Brand/Reporting Unit	Geographic Region			Trademark		Goodwill		Trademark(2)		Goodwill
TOM FORD	The Americas			$	773	$	—	$	1,805	$	—
Too Faced	The Americas			75		13		112		—
Total				$	848	$	13	$	1,917	$	—

(1)The date of the fair value measurement for the TOM FORD and Too Faced trademark intangible assets and Too Faced reporting unit was December 31, 2024.

(2)The carrying values of the trademark intangible assets, subsequent to the impairment charges, are equal to their fair values.

The impairment charge related to the TOM FORD trademark intangible asset for the three and six months ended December 31, 2024 of $773 million was reflected in the fragrance, makeup and other product categories of $549 million, $170 million and $54 million, respectively. The trademark and goodwill impairment charges related to Too Faced were reflected in the makeup product category.