INCOME TAXES

12 Months Ended

Jan. 31, 2026

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of Loss before provision (benefit) for income taxes were as follows:

	Fiscal Years Ended
	January 31, 2026		February 1, 2025		February 3, 2024
	(in thousands)
Domestic	$	(96,584)	$	(58,830)	$	(156,703)
Foreign	6,299		9,382		42,905
Total loss before provision (benefit) for income taxes	$	(90,285)	$	(49,448)	$	(113,798)

The components of the Company’s Provision (benefit) for income taxes consisted of the following:

	Fiscal Years Ended
	January 31, 2026			February 1, 2025			February 3, 2024
	(in thousands)
Current:
Federal	$	(4,127)		$	4,812		$	(1,239)
State and local	(286)			1,120			249
Foreign	2,972			2,439			4,758
Total current provision (benefit)	(1,441)			8,371			3,768
Deferred:
Federal	(643)			—			21,125
State and local	62			—			13,019
Foreign	—			—			2,831
Total deferred provision (benefit)	(581)			—			36,975
Total provision (benefit) for income taxes	$	(2,022)		$	8,371		$	40,743
Effective tax rate	2.2		%	(16.9)		%	(35.8)		%

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100% of taxable income and to generate a refund of previously paid income taxes. Pursuant to the CARES Act, the Company carried back the taxable year 2020 tax loss of $150.0 million to prior years. As of January 31, 2026, the remaining income tax receivable of $19.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets. Subsequent to Fiscal 2025, on February 5, 2026, the Company entered into a Receivables Purchase Agreement with TRMEF Basis II LLC to sell its income tax receivable of $19.1 million plus accrued interest of $3.7 million for a total purchase price of $20.1 million. Refer to “Note 17. Subsequent Events” of the Consolidated Financial Statements.

The Company prospectively adopted ASU 2023-09 that requires disaggregation of information in the effective income tax rate reconciliation and income taxes paid disclosures.

A reconciliation between the calculated tax benefit based on the U.S. federal statutory rate of 21.0% and the effective tax rate for Fiscal 2025 (in accordance with ASU 2023-09) is as follows:

	Fiscal Year Ended
	January 31, 2026
	(in thousands)		%
Calculated income tax benefit at U.S. federal statutory rate	$	(18,960)	21.0	%
State and local income taxes, net of federal income tax effect (1)	(163)		0.2	%
Foreign Tax Effects
Hong Kong
Foreign tax rate differential	(686)		0.8	%
Income excluded from Hong Kong tax base	(1,430)		1.6	%
Pillar Two	1,489		(1.6)	%
Other	(400)		0.4	%
Canada
Foreign tax rate differential	(483)		0.5	%
Changes in valuation allowance	2,368		(2.6)	%
Other	507		(0.6)	%
Other foreign jurisdictions	480		(0.5)	%
Effects of Cross-Border Tax Laws	(237)		0.3	%
Tax Credits	522		(0.6)	%
Changes in valuation allowance	16,433		(18.2)	%
Changes in Unrecognized tax benefits	(1,825)		2.0	%
Other	363		(0.5)	%
Total benefit for income taxes	$	(2,022)	2.2	%

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(1)     State and local tax expense was not material in Fiscal 2025.

The Organization for Economic Cooperation and Development (“OECD”) introduced a global minimum corporate tax rate of 15% under its Pillar Two initiative (“Pillar Two”), which became effective for tax years beginning in January 2024. Although the U.S. has not implemented the Pillar Two rules, other regions where we conduct business, primarily Hong Kong and Canada, have enacted such legislation. The effective income tax rate for Fiscal 2025 includes the global minimum tax provision of OECD Pillar Two for Hong Kong.

A reconciliation between the calculated tax provision (benefit) based on the U.S. federal statutory rate of 21.0% and the effective tax rate for Fiscal 2024 and Fiscal 2023 (as previously reported in accordance with guidance prior to the adoption of ASU 2023-09) is as follows:

	Fiscal Years Ended
	February 1, 2025		%		February 3, 2024		%
	(in thousands)
Calculated income tax benefit at U.S. federal statutory rate	$	(10,384)	21.0	%	$	(23,898)	21.0	%
State and local income taxes, net of federal benefit	(2,145)		4.3	%	(6,901)		6.1	%
Foreign tax rate differential (1)	(3,082)		6.2	%	(4,937)		4.3	%
Non-deductible expenses	2,654		(5.4)	%	(1,488)		1.3	%
Excess tax detriment related to stock compensation	889		(1.8)	%	558		(0.5)	%
Unrecognized tax benefits	104		(0.2)	%	3,127		(2.7)	%
Change in valuation allowance	18,251		(36.9)	%	68,625		(60.3)	%
Global intangible low-taxed income	251		(0.5)	%	9,505		(8.4)	%
Federal tax credits	(291)		0.6	%	(3,242)		2.8	%
Other	2,124		(4.2)	%	(606)		0.6	%
Total provision for income taxes	$	8,371	(16.9)	%	$	40,743	(35.8)	%

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(1)     The Company has substantial operations in Hong Kong, which has a lower statutory income tax rate as compared to the U.S. The Company’s foreign effective tax rate for Fiscal 2024 and Fiscal 2023 was 17.5%, and 11.6%, respectively. This rate will fluctuate from year to year in response to changes in the mix of income by country, as well as changes in tax laws in foreign jurisdictions.

The assessment of the amount of value assigned to the Company’s deferred tax assets under the applicable accounting rules is judgmental. The Company is required to consider all available positive and negative evidence in evaluating the likelihood that it will be able to realize the benefit of the Company’s deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. Realization of the Company’s deferred tax assets is dependent on generating sufficient taxable income in future periods. The Company believes that it is not more likely than not that future taxable income will be sufficient to allow it to recover substantially all of the value assigned to the Company’s deferred tax assets. Thus, in Fiscal 2025, the Company increased its valuation allowance by $20.9 million to $109.1 million.

Income taxes paid (refunded) in Fiscal 2025 (presented in accordance with ASU 2023-09) consisted of:

	Fiscal Year Ended
	January 31, 2026
	(in thousands)
Domestic - federal (1)	$	13,986
Domestic - state and local	(331)
Hong Kong	1,786
Other foreign	582
Total income taxes paid, net of refunds	$	16,023

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(1)     Includes the Tax Cuts and Jobs Act transition tax payments.

The tax effects of temporary differences which give rise to deferred tax assets and liabilities were as follows:

	January 31, 2026		February 1, 2025
	(in thousands)
Deferred tax assets:
Operating lease liabilities	$	45,641	$	45,209
Capitalized research and development, net	18,420		22,193
Net operating loss carryforward	31,954		13,578
Reserves	12,143		10,295
Interest expense carryforward	12,341		16,853
Tax credits	5,306		5,616
Inventory	21,422		10,299
Tradenames and customer databases, net	7,984		9,407
Charitable contributions	1,177		815
Stock-based compensation	487		843
Subtotal	156,875		135,108
Less: valuation allowance	(109,060)		(88,148)
Total deferred tax assets	47,815		46,960
Deferred tax liabilities:
Right-of-use assets	(42,325)		(41,460)
Property and equipment, net	(1,911)		(3,530)
Prepaid expenses	(2,607)		(998)
Foreign and state tax on unremitted earnings	(973)		(1,554)
Total deferred tax liabilities	(47,816)		(47,542)
Total deferred tax assets (liabilities), net	$	(1)	$	(582)

The Company has gross federal NOL carryforwards of approximately $75.1 million which do not expire, state NOL carryforwards of approximately $172.2 million, which either expire between two and nineteen years, or carryforward indefinitely, and foreign NOL carryforwards of approximately $25.5 million, which expire between five and twenty years. The Company also has an Alternative Minimum Tax credit (“AMT”) in Puerto Rico of approximately $0.5 million.

The Company has concluded that it is not more likely than not that its deferred tax assets, including NOLs, can be utilized in the foreseeable future. Thus, the Company’s valuation allowance continues to be maintained against its net deferred tax assets. However, to the extent that tax benefits related to these deferred tax assets are realized in the future, the reduction of the valuation allowance will reduce income tax expense accordingly.

During Fiscal 2024, there was a change of control of the Company. This change of control constituted an “ownership change” under the Internal Revenue Code Section 382, subjecting the Company to an annual limitation on its ability to utilize its existing NOLs and tax credits as of the ownership change date to offset future taxable income. The application of such limitation may cause U.S. federal income taxes to be paid by the Company earlier than they otherwise would be paid if such limitation was not in effect, which would adversely affect the Company’s operating results and cash flows if it has taxable income in the future. In addition to the aforementioned federal income tax implications pursuant to Section 382 of the Code, most U.S. states follow the general provision of Section 382 of the Code, either explicitly or implicitly resulting in separate state NOL limitations. This may cause state income taxes to be paid earlier than otherwise would be paid if such limitation was not in effect and could cause such NOLs to expire unused.

On December 22, 2017, the U.S. government passed the Tax Cuts and Jobs Act (the “Tax Act”), which is a comprehensive tax legislation that implemented complex changes to the U.S. tax code including, but not limited to, the reduction of the corporate tax rate from 35% to 21% and a move from a global tax regime to a modified territorial regime which required U.S. companies to pay a mandatory one-time transition tax on historical offshore earnings that have not been repatriated to the U.S. During Fiscal 2025, the Company made the final installment payment related to the transition tax liability of $9.5 million.

During the fourth quarter of Fiscal 2025, the Company removed its indefinite reinvestment assertion on earnings subsequent to the enactment of the transition tax under the Tax Act. Accordingly, the Company is no longer indefinitely reinvested with respect to its undistributed earnings from foreign subsidiaries pre and post the one-time transition tax. The Company has provided a deferred tax liability for any income tax impacts that would result from cash distributions, including any withholding taxes. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in the Company’s foreign subsidiaries is not practicable.

Unrecognized Tax Benefits

Tax positions are evaluated in a two-step process. First, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination. Second, if a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement.

A reconciliation of the gross amounts of unrecognized tax benefits, excluding accrued interest and penalties, is as follows:

	Fiscal Years Ended
	January 31, 2026		February 1, 2025
	(in thousands)
Beginning Balance	$	6,874	$	6,990
Additions for current year tax positions	215		636
Additions for prior year tax positions	1		35
Reductions for prior year tax positions	(341)		(661)
Reductions related to settlements with taxing authorities	—		(70)
Reductions due to a lapse of the applicable statute of limitations	(1,455)		(56)
Ending Balance	$	5,294	$	6,874

Unrecognized tax benefits of $4.9 million, excluding accrued interest and penalties, at January 31, 2026 would affect the Company’s effective tax rate in future periods, if recognized. The Company accrues interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. At January 31, 2026 and February 1, 2025, accrued interest and penalties of $0.5 million and $0.8 million, respectively, were included in unrecognized tax benefits. Interest, penalties, and reversals thereof, net of taxes, amounted to a benefit of $(0.4) million in Fiscal 2025 and an expense of $0.2 million in Fiscal 2024.

The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company files a consolidated U.S. income tax return for federal income tax purposes. The Company is no longer subject to income tax examinations by U.S. federal, state and local or foreign tax authorities for tax years 2015 and prior.

The Internal Revenue Service is currently conducting an examination of the Company’s tax return for fiscal year 2020 in conjunction with its review of the CARES Act NOL carryback to earlier fiscal years. The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues arise as a result of a tax audit, and are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States. The legislation contains certain provisions related to the full expensing of U.S. research and development costs and other depreciable property. The legislation also includes changes to the determination of the amount of U.S. interest expense that is deductible for U.S. tax purposes. While these changes are generally favorable to the Company’s cash tax position, the legislation did not have a material impact on our effective tax rate and consolidated financial statements for Fiscal 2025.