Income Taxes

6 Months Ended

Aug. 02, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The quarterly provision for income taxes is based on the current estimate of the annual effective income tax rate and the tax effect of discrete items occurring during the quarter. The Company’s quarterly provision and the estimate of the annual effective tax rate are subject to significant variation due to several factors. These factors include variability in the pre-tax jurisdictional mix of earnings, changes in how the Company does business including entering into new businesses or geographies, changes in foreign currency exchange rates, changes in laws, regulations, interpretations and administrative practices, relative changes in expenses or losses for which tax benefits are not recognized and the impact of discrete items. In addition, jurisdictions where the Company anticipates an ordinary loss for the fiscal year for which the Company does not anticipate future tax benefits are excluded from the overall computation of estimated annual effective tax rate and no tax benefits are recognized in the period related to losses in such jurisdictions. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.

One Big Beautiful Bill Act

On July 4, 2025, House Resolution 1, also known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law. The OBBBA includes, among other provisions, changes to U.S. corporate income tax law impacting the taxation of domestic and international business operations, including permanently extending certain expiring provisions of the Tax Cuts and Jobs Act, restoration of accelerated depreciation on capital expenditures, deductible research and experimental expenditures, and modifications to the international tax framework. The enactment of the OBBBA did not have a material impact on the consolidated financial statements and disclosures.

Impact of valuation allowances

During the thirteen and twenty-six weeks ended August 2, 2025, the Company did not recognize income tax benefits on $21.8 million and $31.8 million, respectively, of pretax losses, primarily in Switzerland, resulting in adverse tax impacts of $3.4 million and $4.9 million, respectively. During the thirteen and twenty-six weeks ended August 2, 2025, the Company recorded income tax expense of $5.6 million for the establishment of an additional valuation allowance against the remaining net deferred tax assets in Japan.

As of August 2, 2025, the Company had foreign net deferred tax assets of approximately $38.3 million, including $10.1 million, and $15.7 million in China, and the United Kingdom, respectively. While the Company believes that these net deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as the Company continues to evaluate and respond to situations as they emerge. Should circumstances change, the net deferred tax assets may become subject to additional valuation allowances in the future. Additional valuation allowances would result in additional tax expense.

During the thirteen and twenty-six weeks ended August 3, 2024, the Company did not recognize income tax benefits on $7.0 million and $14.6 million, respectively, of pretax losses, primarily in Switzerland, resulting in adverse tax impacts of $1.1 million and $2.2 million, respectively.

As of February 1, 2025, there were approximately $8.2 million, $5.4 million, and $13.4 million of net deferred tax assets in China, Japan, and the United Kingdom, respectively.

Share-based compensation

Refer to Note 12, “SHARE-BASED COMPENSATION,” for details on income tax benefits and charges related to share-based compensation awards during the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024.