Income Taxes

12 Months Ended

Jan. 29, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 3 — Income Taxes

The Company’s income tax expense (benefit) 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):

	52 Weeks Ended January 29, 2022		52 Weeks Ended January 30, 2021			52 Weeks Ended February 1, 2020
Current tax expense (benefit):
Federal	$	3,269	$	(10,124	)	$	(225	)
State		74		52			612
Deferred tax expense (benefit):
Federal		—		—			362
State		—		1,525			(71	)
	$	3,343	$	(8,547	)	$	678

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

	52 Weeks Ended January 29, 2022			52 Weeks Ended January 30, 2021			52 Weeks Ended February 1, 2020
Tax at federal statutory rate	$	5,327		$	1,699		$	(11,043	)
State income taxes, net of federal benefit		942			338			(1,456	)
Tax credits		(66	)		(90	)		(192	)
Enactment of tax legislation		—			(12,276	)		—
Executive compensation		255			177			—
Stock based compensation programs		(644	)		274			1,162
Valuation allowance		(2,494	)		1,292			12,035
Other		23			39			172
Income tax expense (benefit)	$	3,343		$	(8,547	)	$	678

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):

	January 29, 2022			January 30, 2021
Deferred tax assets:
Operating lease liabilities	$	39,007		$	48,808
Accruals		1,956			3,147
Inventory valuation		563			448
State tax credit carryforwards		148			148
Federal and state net operating loss carryforwards		791			1,111
Impairment		992			2,410
Other		2,690			2,366
Total deferred tax assets		46,147			58,438
Valuation allowance for deferred tax assets		(3,556	)		(6,033	)
Net deferred tax assets		42,591			52,405
Deferred tax liabilities:
Depreciation		(9,431	)		(12,556	)
Operating lease right-of-use assets		(32,289	)		(39,126	)
Prepaid assets		(871	)		(723	)
Total deferred tax liabilities		(42,591	)		(52,405	)
Net deferred tax assets	$	—		$	—

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss carry backs to offset 100% of taxable income for taxable years beginning before 2021. The Company elected to carryback its 2019 net operating loss to offset the Company’s previous taxable income, thus generating a refund of $12.3 million in fiscal 2020.

As of January 29, 2022, the Company has $15.4 million of state net operating loss carry-forwards available to offset future taxable income. State net operating loss carry-forwards expire in years 2035 through 2040. As of January 29, 2022, the Company has state tax credit carryforwards of approximately $187,000 that expire in years 2023 through 2025.

Future utilization of the deferred tax assets is evaluated by the Company, and any valuation allowance is adjusted accordingly. For fiscal 2019, the Company established a valuation allowance against its deferred tax assets due to uncertainty regarding their realization, and in fiscal 2020, the Company established an additional valuation allowance against state net operating loss carry forwards. Accordingly, the Company has established a valuation allowance of $3.6 million and $6.0 million with respect to the deferred tax assets as of January 29, 2022 and January 30, 2021, 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 decrease in the valuation allowance could 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 2018. With few exceptions, the Company is no longer subject to state and local income tax examinations for years prior to 2016. 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 January 29, 2022 and January 30, 2021. 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 January 29, 2022 and January 30, 2021.