Goodwill and Intangible Assets

12 Months Ended

Jan. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The carrying amount of the Company’s goodwill included in its Balance Sheets is as follows:

	January 30, 2022		January 31, 2021
Gross Goodwill	$	1,515	$	1,453
Accumulated Impairment	—		—
Net Goodwill	$	1,515	$	1,453

The changes in the carrying amount of goodwill are as follows:

	Fiscal Years Ended
	January 30, 2022		January 31, 2021
Beginning Balance	$	1,453	$	1,362
Goodwill acquired during the year	62		91
Ending balance	$	1,515	$	1,453

Goodwill acquired during fiscal 2021 and fiscal 2020 related to acquisitions presented in Note 4 and $3 million related to Other 2021 Acquisitions.

Goodwill represents the excess of purchase price over the fair value of net assets acquired. The Company does not amortize goodwill, but does assess the recoverability of goodwill on an annual basis during the fourth quarter. If an event occurs or circumstances change that would “more likely than not” reduce the fair value of a reporting unit below its carrying value, an interim impairment test would be performed between annual tests.

During the fiscal 2021 and fiscal 2020 annual assessment, the Company tested goodwill for impairment by performing a quantitative assessment that compared the fair value of the reporting unit with its carrying value. The Company estimated the fair value of its reporting unit through a combination of an income approach based on the present value of discounted cash flows and a market approach based on the sales and EBITDA multiples from operations and purchase transactions of comparable companies. The significant assumption used in the income approach is the gross margin. The discounted cash flows were based on the Company’s long-range forecasts and an estimated terminal value. The discount rate used in the discounted cash flows analysis was intended to reflect the risks inherent in the future cash flows of the respective reporting unit. For the market approach, the Company evaluated comparable company public trading values and recent transactions, using sales and EBITDA multiples that were used to value the reporting unit.

During the fiscal 2019 annual assessments, we tested goodwill for impairment by performing qualitative assessments. The qualitative assessments included evaluating economic, industry, regulatory and company specific factors that could impact the reporting unit fair value. These factors included historical and projected financial metrics (including net sales, margins and operating cash flow trends), public equity market trends, changing tax law and evaluation of the markets we serve. Based on these assessments it was determined that the fair value of its reporting unit was “more likely than not” to exceed the carrying value of its reporting unit in fiscal 2019. Therefore, no further assessment was necessary.

There was no goodwill impairment recorded during fiscal 2021, fiscal 2020 or fiscal 2019. The Company’s analyses were based in part on the expectation of future market conditions, future net sales and operating cash flow growth and discount rates that would be used by market participants in an arms-length transaction. Should actual performance or expectations of long-term assumptions be lower than presently expected, the Company’s goodwill could be impaired.

Intangible Assets

The Company’s intangible assets included in its Balance Sheets consist of the following:

	January 30, 2022						January 31, 2021
	Gross Intangible		Accumulated Amortization		Net Intangible		Gross Intangible		Accumulated Amortization		Net Intangible
Customer relationships	$	1,347	$	478	$	869	$	1,277	$	359	$	918
Other intangible assets	4		2		2		2		1		1
Total	$	1,351	$	480	$	871	$	1,279	$	360	$	919

Amortization expense related to intangible assets was as follows:

	Fiscal Years Ended
	January 30, 2022		January 31, 2021		February 2, 2020
Amortization expense	$	120	$	118	$	107

There were no intangible asset impairments recorded during fiscal 2021, fiscal 2020 or fiscal 2019.

The estimated aggregate amortization expense on intangible assets owned by the Company as of January 30, 2022 was expected to be as follows:

Fiscal 2022	$	117
Fiscal 2023	108
Fiscal 2024	100
Fiscal 2025	93
Fiscal 2026	86