Income Taxes

12 Months Ended

Jan. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 6: Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions, among others, allowing for the carryback of net operating losses generated in fiscal 2018, 2019 and 2020 and technical amendments regarding the expensing of qualified improvement property. The application of the technical amendments made by the CARES Act to qualified improvement property resulted in additional tax net operating losses which were carried back from fiscal 2020 and fiscal 2019 to years with a higher federal corporate income tax rate. During the second quarter of fiscal 2021, the Company filed the fiscal 2020 carryback claims for federal tax refunds of approximately $57,400. Due to government delays in processing these claims, the majority of these funds are expected to be received in fiscal 2022.

Additionally, the CARES Act, in efforts to enhance business’ liquidity, provided for the deferral of the employer-paid portion of social security taxes during fiscal 2020. The Company elected to defer approximately $4,800 of employer-paid portion of social security taxes, with 50% remitted in fiscal 2021 and the remainder due in fiscal 2022.

The following table sets forth our income tax provision:

	January 30, 2022		January 31, 2021			February 2, 2020
Current provision:
Federal	$	21,899		$ (78,629)		$	11,744
State and local		4,577		(1,360	)		8,562
Foreign		333		(78	)		100
Total current provision		26,809		(80,067	)		20,406

	January 30, 2022			January 31, 2021			February 2, 2020
Deferred provision (benefit):
Federal		(2,354	)		(5,415	)		7,109
State and local		(5,441	)		1,951			(365	)
Foreign		—			99			(271	)
Total deferred provision (benefit)		(7,795	)		(3,365	)		6,473
Provision for income taxes	$	19,014		$	(83,432	)	$	26,879

The following table reconciles the effective tax rate to the federal income tax rate:

	January 30, 2022			January 31, 2021			February 2, 2020
Federal income tax rate		21.0	%		21.0	%		21.0	%
State and local income taxes, net of federal benefit		5.0	%		2.7	%		5.4	%
Permanent differences		2.0	%		(0.2	)%		1.5	%
Tax credits		(4.9	)%		0.7	%		(6.4	)%
Share-based compensation		(3.6	)%		(0.2	)%		(0.9	)%
Impact of net operating loss carryback		—	%		7.5	%		—	%
Other		(4.6	)%		(2.8	)%		0.5	%
Effective tax rate		14.9	%		28.7	%		21.1	%

Components of the deferred income tax liability, net consist of the following:

	January 30, 2022			January 31, 2021
Deferred tax assets:
Deferred revenue	$	27,577		$	24,136
Operating lease liability		380,145			383,378
Accrued liabilities		2,961			1,332
Workers compensation and general liability insurance		4,068			3,923
Share-based compensation		7,614			7,236
Hedging transactions		1,044			3,488
Net operating loss carryovers		8,028			10,303
Tax credit carryovers		943			3,054
Indirect benefit of unrecognized tax benefits		529			639
Other		4,173			5,549
Subtotal		437,082			443,038
Less: valuation allowance		(8,501	)		(13,747	)
Total deferred tax assets	$	428,581		$	429,291
Deferred tax liabilities:
Trademark/tradename	$	21,583		$	21,583
Property and equipment		121,516			127,969
Operating lease right of use asset		287,255			287,030
Other		278			493
Total deferred tax liabilities	$	430,632		$	437,075
Deferred tax liability, net		$ 2,051			$ 7,784

As of January 30, 2022, we had $99,004 of state net operating loss carryforwards, which will begin to expire in 2022, foreign operating loss carryforwards of $9,535, which will begin to expire in 2030, and foreign tax credit carryovers of $922, which will begin to expire in 2028.

During fiscal 2021, the decrease in the valuation allowance of $5,246 primarily relates to the use of available net operating loss carryforwards and the release of previously established allowance for certain net operating loss carryforwards due to improved operating performance. During fiscal 2020, the increase in the valuation allowance of $11,127 primarily relates to the increase in net operating loss carryovers.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

	January 30, 2022			January 31, 2021			February 2, 2020
Balance at beginning of year	$	2,564		$	2,080		$	2,333
Additions for tax positions of prior years		95			28			463
Reductions for tax positions of prior years		—			—			(44	)
Additions for tax positions of current year		757			660			450
Settlements with taxing authorities		—			—			(390	)
Lapse of statute of limitations		(330	)		(204	)		(732	)
Balance at end of year	$	3,086		$	2,564		$	2,080

The January 30, 2022 balance of unrecognized tax benefits includes $2,800, that if recognized, would affect our effective tax rate. At January 30, 2022, and January 31, 2021, we had accrued interest and penalties of $446 and $412, respectively. The Company recorded accrued interest related to the unrecognized tax benefits and penalties as a component of the provision for income taxes recognized in the Consolidated Statements of Comprehensive Income (Loss).

In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of certain tax matters, including payments on those tax matters or due to lapse of the statute of limitations. These resolutions and payments could reduce our unrecognized tax benefits by up to approximately $382.

We file consolidated income tax returns with all our domestic subsidiaries, which are periodically audited by various federal, state and foreign jurisdictions. We are generally no longer subject to federal, state, or foreign income tax examinations for years prior to 2014.

The Company recorded excess tax expense (benefits) of $(6,994), $437, and ($1,201), in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, to the provision for income taxes in the Consolidated Statements of Comprehensive Income (Loss).