Goodwill and Trade Name

12 Months Ended

Jan. 29, 2022

Goodwill, Trade Names and Other Intangible Assets, Net [Abstract]

Goodwill and Trade Name

Goodwill and Trade Name

Goodwill

The Company previously recorded goodwill related to its North America and Greater China reporting units resulting from business combinations and acquisitions.

As of the end of the third quarter of 2019, the Company performed a quantitative interim impairment assessment over the North America and Greater China reporting units. An interim assessment was performed in consideration of the negative performance of these reporting units and their impact on the sustained decline in the Former Parent's market capitalization. Further, for the Greater China reporting unit, the Company considered the results of the long-lived store asset impairment assessment.

The interim assessment concluded that the fair value of the North America reporting unit, which was based on a weighted average of the income and market approaches, exceeded its carrying value. However, the fair value of the Greater China reporting unit, which was based on the income approach, did not exceed its carrying value. Accordingly, the Company recognized a goodwill impairment charge of $30 million in 2019 related to the Greater China reporting unit. This charge is included in Impairment of Goodwill in the 2019 Consolidated and Combined Statement of Loss.

As of the end of 2019, the Company completed its annual goodwill impairment assessment over the North America reporting unit. As a result of continued declines in business performance during the Holiday season and increased risk, volatility and uncertainty related to the North America reporting unit, the estimated fair value of the reporting unit decreased as compared to the interim assessment.

As such, the annual assessment concluded that the fair value of the North America reporting unit did not exceed its carrying value. Accordingly, the Company recognized a goodwill impairment charge of $690 million related to the North America reporting unit. This charge is included in Impairment of Goodwill in the 2019 Consolidated and Combined Statement of Loss. Subsequent to these impairments in 2019, the Company no longer has any goodwill recorded on the Consolidated and Combined Balance Sheets.

The Company estimated the fair value of the North America reporting unit as of the end of 2019 using a market approach. The market approach is based on earnings multiples of selected guideline public companies, while the income approach is based on estimated discounted future cash flows. The approaches, which are determined using Level 3 inputs within the fair value hierarchy, incorporated a number of significant assumptions and judgments including, but not limited to, estimated future cash flows, multiples of earnings of similar public companies, discount rates, income tax rates, terminal growth rates and an implied control premium relative to the Former Parent's market capitalization.

Trade Name

The Victoria's Secret trade name, an indefinite-lived intangible asset, was $246 million as of January 29, 2022 and January 30, 2021, respectively.

As of the end of 2021 and 2020, the Company performed its annual impairment assessment of the Victoria's Secret trade name. To estimate the fair value of the trade name, the Company used the relief from royalty method under the income approach. The assessments concluded that the fair value of the trade name was in excess of its carrying value.