GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Feb. 01, 2025

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

2. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through February 1, 2025:

	2024		2023
Balance beginning of year
Goodwill	$	5,737	$	5,737
Accumulated impairment losses		(2,821)		(2,821)
Subtotal		2,916		2,916
Activity during the year
Sale of Kroger Specialty Pharmacy see Note 17		(242)		—
Balance end of year
Goodwill		5,385		5,737
Accumulated impairment losses		(2,711)		(2,821)
Total Goodwill	$	2,674	$	2,916

Testing for impairment is performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth quarter of 2024, 2023 and 2022. The evaluation did not result in impairment in 2023. The evaluation resulted in an impairment of indefinite-lived trade name assets in 2024 and an impairment of goodwill in 2022.

Based on the results of the Company’s impairment assessment in the fourth quarter of 2022, Vitacost.com recorded a $160 goodwill impairment.  In the fourth quarter of 2022, as the Company’s digital strategy evolved, the Company’s primary focus was to effectively utilize its Pickup and Delivery capabilities.  This reprioritization resulted in reduced long-term profitability expectations and a decline in the market value for one underlying channel of business and led to the pre-tax and after-tax impairment charge of $160.  The pre-impairment goodwill balance for Vitacost.com was $160 as of the fourth quarter 2022.  There is no goodwill remaining for Vitacost.com as of January 28, 2023.

The following table summarizes the Company’s intangible assets balance through February 1, 2025:

	2024				2023
	Gross carrying		Accumulated		Gross carrying		Accumulated
	amount		amortization(1)		amount		amortization(1)
Definite-lived pharmacy prescription files(2)	$	247	$	(183)	$	360	$	(259)
Definite-lived customer relationships(2)		148		(145)		186		(179)
Definite-lived other(2)		106		(92)		118		(103)
Indefinite-lived trade name		655		—		685		—
Indefinite-lived liquor licenses		98		—		91		—
Total	$	1,254	$	(420)	$	1,440	$	(541)

(1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense.

(2) The reduction of these definite-lived intangible assets between 2024 and 2023 are primarily the result of the sale of the Kroger Specialty Pharmacy in the third quarter of 2024 (see Note 17).

Based on the results of the Company’s impairment assessment in the fourth quarter of 2024, a $30, $24 net of tax, impairment was recognized for indefinite-lived trade names.

Amortization expense associated with intangible assets totaled approximately $30, $42 and $52, during fiscal years 2024, 2023 and 2022, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2024 is estimated to be approximately:

2025	$	27
2026		12
2027		11
2028		10
2029		10
Thereafter		11
Total future estimated amortization associated with definite-lived intangible assets	$	81