Income Taxes

12 Months Ended

Feb. 03, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 3 — Income Taxes

The Company’s income tax expense is computed based on the federal statutory rates and the state statutory rates, net of related federal benefit. The Company’s provision for income taxes consists of the following (in thousands):

	53 Weeks Ended February 3, 2024		52 Weeks Ended January 28, 2023			52 Weeks Ended January 29, 2022
Current tax expense (benefit):
Federal	$	46	$	(153	)	$	3,269
State		473		696			74
Income tax expense	$	519	$	543		$	3,343

Income tax expense differs from the amount computed by applying the statutory federal income tax rate to (loss) income before income taxes. A reconciliation of income tax expense at the statutory federal income tax rate to the amount provided is as follows (in thousands):

	53 Weeks Ended February 3, 2024			52 Weeks Ended January 28, 2023			52 Weeks Ended January 29, 2022
Tax at federal statutory rate	$	(5,719	)	$	(9,272	)	$	5,327
State income taxes, net of federal benefit		(293	)		(798	)		942
Tax credits		(107	)		(79	)		(66	)
Executive compensation		(23	)		886			255
Stock based compensation programs		209			(1,296	)		(644	)
Valuation allowance		6,399			11,134			(2,494	)
Other		53			(32	)		23
Income tax expense	$	519		$	543		$	3,343

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and are included as part

of other assets on the consolidated balance sheets. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	February 3, 2024			January 28, 2023
Deferred tax assets:
Operating lease liabilities	$	36,406		$	39,661
Accruals		2,090			1,327
Inventory valuation		277			346
Federal and state tax credit carryforwards		192			148
Federal and state net operating loss carryforwards		15,794			11,169
Impairment		1,321			1,321
Other		3,989			3,583
Total deferred tax assets		60,069			57,555
Valuation allowance for deferred tax assets		(21,206	)		(14,690	)
Net deferred tax assets		38,863			42,865
Deferred tax liabilities:
Property and equipment		(5,974	)		(7,737	)
Operating lease right-of-use assets		(32,194	)		(34,435	)
Prepaid assets		(695	)		(693	)
Total deferred tax liabilities		(38,863	)		(42,865	)
Net deferred tax assets	$	—		$	—

As of February 3, 2024, the Company has a $61.9 million federal net operating loss carry-forward and $51.3 million of state net operating loss carry-forwards available to offset future taxable income. The federal net operating loss carry-forward does not expire and the state net operating loss carry-forwards expire in years 2037 through 2042. As of February 3, 2024, the Company has a federal tax credit carry-forward of approximately $135,000 that expires in year 2044 and state tax credit carry-forwards of approximately $72,000 that expire in years 2024 through 2025.

Future utilization of the deferred tax assets is evaluated by the Company, and any valuation allowance is adjusted accordingly. The Company has a full valuation allowance against its deferred tax assets due to uncertainty regarding their realization. Accordingly, the Company has established a valuation allowance of $21.2 million and $14.7 million with respect to deferred tax assets as of February 3, 2024 and January 28, 2023, respectively. Adjustments could be required in the future if the Company estimates that the amount of deferred tax assets to be realized is more or less than the net amount the Company has recorded. Any change in the valuation allowance would have the effect of increasing or decreasing the income tax provision based on the nature of the deferred tax asset deemed realizable in the period in which such a determination is made.

The Company and one or more of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by authorities for years prior to 2020. With few exceptions, the Company is no longer subject to state and local income tax examinations for years prior to 2018. The Company is not currently engaged in any U.S. federal, state or local income tax examinations.

The Company had no unrecognized tax benefits as of February 3, 2024 and January 28, 2023. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had no amounts accrued for the payment of interest and penalties associated with unrecognized tax benefits as of February 3, 2024 and January 28, 2023.