Income Taxes

3 Months Ended

May 02, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for interim periods is based on an estimate of the annual effective tax rate adjusted to reflect the impact of discrete items. Management judgment is required in projecting ordinary income to estimate the Company’s annual effective tax rate.

The effective tax rate for the thirteen weeks ended May 2, 2020, was 39.4%, compared to 24.8% for the thirteen weeks ended May 4, 2019. The year-over-year effective tax rate increase was primarily due to the net operating loss (“NOL”) carryback in the current-year period as a result of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) that was enacted on March 27, 2020 in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.