INCOME TAXES

12 Months Ended

Feb. 01, 2025

INCOME TAXES

INCOME TAXES

6.   INCOME TAXES

The components of earnings before income taxes consisted of domestic earnings before income taxes of $84.8 million, $132.5 million and $168.0 million in 2024, 2023 and 2022, respectively.  The Company’s international earnings before income taxes were $50.4 million, $48.8 million and $45.0 million in 2024, 2023 and 2022, respectively.

The components of income tax provision on earnings were as follows:

($ thousands)	2024		2023		2022
Federal
Current	$	3,818	$	10,849	$	11,506
Deferred		13,710		5,138		6,975
Total federal income tax provision		17,528		15,987		18,481
State
Current		1,876		2,423		6,660
Deferred		4,775		(9,819)		3,421
Total state income tax provision (benefit)		6,651		(7,396)		10,081
International
Current		5,289		4,879		4,759
Deferred		(407)		(3,980)		18
Total international income tax provision		4,882		899		4,777
Total income tax provision	$	29,061	$	9,490	$	33,339

The differences between the income tax provision reflected in the consolidated financial statements and the amounts calculated at the federal statutory income tax rate were as follows:

($ thousands)	2024		2023		2022
Income taxes at statutory rate	$	28,383	$	38,078	$	44,737
State income taxes, net of federal tax benefit		4,514		5,710		8,981
International earnings taxed at differing rates from U.S. statutory		(3,584)		(5,367)		(1,974)
Share-based compensation		(2,647)		(3,106)		(602)
Valuation allowances, net		(2,204)		(30,054)		(20,743)
Non-deductibility of 162(m) limitations		3,401		4,373		3,363
GILTI, BEAT and FDII provisions		1,307		427		422
Other (1)		(109)		(571)		(845)
Total income tax provision	$	29,061	$	9,490	$	33,339

(1) The other category of income tax provision principally represents the impact of expenses that are not deductible or partially deductible for federal income tax purposes and the impact of any return-to-provision adjustments.

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

($ thousands)	February 1, 2025		February 3, 2024
Deferred Tax Assets
Lease obligations	$	158,310	$	148,242
Goodwill		30,308		34,386
Net operating loss carryforward/carryback		6,551		10,107
Accrued expenses		14,053		17,870
Employee benefits, compensation and insurance		10,954		15,689
Accounts receivable		4,043		6,094
Inventory capitalization and inventory reserves		6,532		6,623
Impairment of investment in nonconsolidated affiliate		1,418		1,470
Postretirement and postemployment benefit plans		201		207
Other		3,444		1,605
Total deferred tax assets, before valuation allowance		235,814		242,293
Valuation allowance		(3,406)		(7,153)
Total deferred tax assets, net of valuation allowance	$	232,408	$	235,140
Deferred Tax Liabilities
Lease right-of-use assets	$	(149,414)	$	(138,315)
Intangible assets		(15,472)		(13,659)
LIFO inventory valuation		(54,808)		(51,021)
Retirement plans		(18,184)		(17,239)
Capitalized software		(1,797)		(1,800)
Depreciation		(17,100)		(16,822)
Other		(2,579)		(3,419)
Total deferred tax liabilities		(259,354)		(242,275)
Net deferred tax liability	$	(26,946)	$	(7,135)

As of February 1, 2025, the Company had various federal, state and international net operating loss (“NOL”) carryforwards with tax values totaling $6.6 million.  The state NOLs totaling $2.9 million have carryforward periods ranging from one to 20 years.  The Company has NOLs in Canada, the United Kingdom and China of $1.8 million and $1.3 million and $0.6 million, respectively.  The Canada and China NOLs have a carryforward period of 17 years and 5 years, respectively, while the United Kingdom NOLs have no expiration.  

As of February 1, 2025, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s international subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative international earnings, as required by the Tax Cuts and Jobs Act.  The Company periodically evaluates its international investment opportunities and plans, as well as its international working capital needs, to determine the level of investment required and, accordingly, determines the level of international earnings that is considered indefinitely reinvested.  Based upon that evaluation, earnings of the Company’s international subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided.  If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted international earnings.  If the Company’s unremitted international earnings were not considered indefinitely reinvested as of February 1, 2025, an immaterial amount of additional deferred taxes would have been provided.

Uncertain Tax Positions

ASC 740, Income Taxes, establishes a single model to address accounting for uncertain tax positions.  The standard clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.  The standard also provides guidance on derecognition, measurement

classification, interest and penalties, accounting in interim periods, disclosure and transition.  As of February 1, 2025 and February 3, 2024, the Company had no unrecognized tax benefits.  

For federal purposes, the Company’s tax filings for fiscal years 2019 to 2023 remain open to examination but are not currently being examined.   The Company also files tax returns in various international jurisdictions and numerous states for which various tax years are subject to examination and currently involved in audits.  While the Company is involved in examinations in certain jurisdictions, it does not expect any significant changes in its liability for uncertain tax positions during the next 12 months.