INCOME TAXES (Tables)

12 Months Ended

Jan. 30, 2021

Schedule of Income before Income Tax, Domestic and Foreign

Components of income taxes

(Loss) income before income taxes consisted of:


(in thousands)	Fiscal 2020		Fiscal 2019		Fiscal 2018
Domestic (1)	$	(33,417)	$	17,590	$	53,858
Foreign	(15,326)		44,741		62,509
(Loss) income before income taxes	$	(48,743)	$	62,331	$	116,367

(1) Includes intercompany charges to foreign affiliates for management fees, cost-sharing, royalties and interest and excludes a portion of foreign income that is currently includable on the U.S. federal income tax return.

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense consisted of:


(in thousands)	Fiscal 2020		Fiscal 2019		Fiscal 2018
Current:
Federal	$	9,434	$	(2,193)	$	7,460
State	3,751		1,893		3,645
Foreign	23,041		8,521		20,508
Total current	$	36,226	$	8,221	$	31,613

Deferred:
Federal (1)	$	(73,104)	$	29,012	$	5,319
State	8,828		(107)		1,183
Foreign (1)	88,261		(19,755)		(556)
Total deferred	23,985		9,150		5,946
Income tax expense	$	60,211	$	17,371	$	37,559

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation between the statutory federal income tax rate and the effective tax rate is as follows:


	Fiscal 2020		Fiscal 2019		Fiscal 2018
U.S. federal corporate income tax rate	21.0	%	21.0	%	21.0	%
Net change in valuation allowances	(177.2)		8.2		0.7
Foreign taxation of non-U.S. operations (1)	32.7		5.5		(0.9)
Write-off of stock basis in subsidiary	—		3.2		—
Internal Revenue Code Section 162(m)	(5.5)		2.2		1.0
State income tax, net of U.S. federal income tax effect	2.6		1.9		3.6
Audit and other adjustments to prior years’ accruals, net	2.6		0.8		(0.1)
Permanent items	—		0.3		0.2
Statutory tax rate and law changes due to Swiss Tax Reform	—		(4.6)		—
Credit for increasing research activities	2.6		(3.6)		(1.7)
Net income attributable to noncontrolling interests	2.2		(1.9)		(0.8)
Additional U.S. taxation of non-U.S. operations	(0.2)		(1.4)		5.1
Trust-owned life insurance policies (at cash surrender value)	0.7		(1.1)		(0.6)
Other statutory tax rate and law changes	2.3		(0.9)		(0.1)
Tax (benefit) expense recognized on share-based compensation (2)	(7.5)		(0.9)		8.3
Credit items	0.2		(0.8)		(0.6)
Tax Cuts and Jobs Act of 2017	—		—		(3.0)
Other items, net	—		—		0.2
Total	(123.5)	%	27.9	%	32.3	%

(1) Prior to 2019, U.S. branch operations in Canada and Puerto Rico were subject to tax at the full U.S. tax rates. As a result, income from these operations do not create reconciling items. Effective in 2019, only Puerto Rico continues to be a branch of the U.S.

(2) Refer to Note 14, “SHARE-BASED COMPENSATION,” for details on discrete income tax benefits and charges related to share-based compensation awards during Fiscal 2020, Fiscal 2019, and Fiscal 2018.

Schedule of Deferred Tax Assets and Liabilities

The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:


(in thousands)	January 30, 2021		February 1, 2020
Deferred income tax assets:
Operating lease liabilities	$	311,286	$	370,068
Intangibles, foreign step-up in basis (1)	81,357		77,565
Deferred compensation	16,294		19,849
Accrued expenses and reserves	32,649		13,571
Net operating losses (NOL), tax credit and other carryforwards	56,341		13,204
Rent	530		2,727
Prepaid expenses	—		1,246
Other	2,171		3,613
Valuation allowances	(174,302)		(8,916)
Total deferred income tax assets	$	326,326	$	492,927

Deferred income tax liabilities:
Operating lease right-of-use assets	$	(253,417)	$	(319,005)
U.S. offset to foreign step-up in basis (1)	—		(77,565)
Property, equipment and intangibles	(15,328)		(17,236)
Inventory	(1,499)		(3,537)
Store supplies	(2,042)		(2,843)
U.S. offset to foreign deferred tax assets, excluding intangibles, foreign step-up in basis (2)	(183)		(1,654)
Prepaid expenses	(387)		—
Undistributed profits of non-U.S. subsidiaries	(318)		(587)
Other	(3,499)		(488)
Total deferred income tax liabilities	$	(276,673)	$	(422,915)
Net deferred income tax assets (2)	$	49,653	$	70,012

Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible

The amount of uncertain tax positions as of January 30, 2021, February 1, 2020 and February 2, 2019, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:


(in thousands)	Fiscal 2020		Fiscal 2019		Fiscal 2018
Uncertain tax positions, beginning of the year	$	1,794	$	478	$	1,113
Gross addition for tax positions of the current year	235		131		151
Gross addition (reduction) for tax positions of prior years	395		1,349		(3)
Reductions of tax positions of prior years for:
Lapses of applicable statutes of limitations	(48)		(151)		(218)
Settlements during the period	(1,381)		(13)		(16)
Changes in judgment / excess reserve	—		—		(549)
Uncertain tax positions, end of year	$	995	$	1,794	$	478