INCOME TAXES (Tables)

12 Months Ended

Jan. 29, 2022

Schedule of Income before Income Tax, Domestic and Foreign

Components of income taxes

Income (loss) before income taxes consisted of:


(in thousands)	Fiscal 2021		Fiscal 2020		Fiscal 2019
Domestic (1)	$	283,793	$	(33,417)	$	17,590
Foreign	25,181		(15,326)		44,741
Income (loss) before income taxes	$	308,974	$	(48,743)	$	62,331

(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 (benefit) consisted of:


(in thousands)	Fiscal 2021		Fiscal 2020		Fiscal 2019
Current:
Federal	$	51,321	$	9,434	$	(2,193)
State	14,061		3,751		1,893
Foreign	5,448		23,041		8,521
Total current	$	70,830	$	36,226	$	8,221

Deferred:
Federal (1)	$	(15,401)	$	(73,104)	$	29,012
State	(8,995)		8,828		(107)
Foreign (1)	(7,526)		88,261		(19,755)
Total deferred	(31,922)		23,985		9,150
Income tax expense	$	38,908	$	60,211	$	17,371

Schedule of Effective Income Tax Rate Reconciliation

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


	Fiscal 2021		Fiscal 2020		Fiscal 2019
U.S. federal corporate income tax rate	21.0	%	21.0	%	21.0	%
Audit and other adjustments to prior years’ accruals, net	4.7		2.6		0.8
State income tax, net of U.S. federal income tax effect	4.4		2.6		1.9
Foreign taxation of non-U.S. operations (1)	3.5		32.7		5.5
Internal Revenue Code Section 162(m)	1.6		(5.5)		2.2
Additional U.S. taxation of non-U.S. operations	0.6		(0.2)		(1.4)
Permanent items	0.2		—		0.3
Net change in valuation allowances	(19.7)		(177.2)		8.2
Tax (benefit) expense recognized on share-based compensation (2)	(1.3)		(7.5)		(0.9)
Other statutory tax rate and law changes	(1.2)		2.3		(0.9)
Credit for increasing research activities	(0.6)		2.6		(3.6)
Net income attributable to noncontrolling interests	(0.5)		2.2		(1.9)
Trust-owned life insurance policies (at cash surrender value)	(0.1)		0.7		(1.1)
Credit items	—		0.2		(0.8)
Write-off of stock basis in subsidiary	—		—		3.2
Statutory tax rate and law changes due to Swiss Tax Reform	—		—		(4.6)



Total	12.6	%	(123.5)	%	27.9	%

(1)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 2021, Fiscal 2020, and Fiscal 2019.

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 29, 2022		January 30, 2021
Deferred income tax assets:
Operating lease liabilities	$	242,290	$	311,286
Intangibles, foreign step-up in basis (1)	64,281		81,357
Net operating losses (NOL), tax credit and other carryforwards	52,970		56,341
Accrued expenses and reserves	30,026		32,649
Deferred compensation	16,050		16,294
Inventory	3,578		—
Rent	—		530


Other	45		2,171
Valuation allowances	(110,057)		(174,302)
Total deferred income tax assets	$	299,183	$	326,326

Deferred income tax liabilities:
Operating lease right-of-use assets	$	(202,916)	$	(253,417)
Property and equipment and intangibles	(10,150)		(15,328)
Prepaid expenses	(2,451)		(387)
Store supplies	(1,811)		(2,042)
Undistributed profits of non-U.S. subsidiaries	(1,082)		(318)
Rent	(360)		—
Inventory	—		(1,499)

U.S. offset to foreign deferred tax assets, excluding intangibles, foreign step-up in basis (2)	—		(183)

Other	(30)		(3,499)
Total deferred income tax liabilities	$	(218,800)	$	(276,673)
Net deferred income tax assets (2)	$	80,383	$	49,653

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

The amount of uncertain tax positions as of January 29, 2022, January 30, 2021 and February 1, 2020, 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 2021		Fiscal 2020		Fiscal 2019
Uncertain tax positions, beginning of the year	$	995	$	1,794	$	478
Gross addition for tax positions of the current year	490		235		131
Gross (reduction) addition for tax positions of prior years	(136)		395		1,349
Reductions of tax positions of prior years for:
Lapses of applicable statutes of limitations	(81)		(48)		(151)
Settlements during the period	(154)		(1,381)		(13)

Uncertain tax positions, end of year	$	1,114	$	995	$	1,794