Income Taxes

9 Months Ended

Oct. 28, 2023

Income Taxes

Income Taxes

NOTE 12—INCOME TAXES

Our income tax expense (benefit) and effective tax rates were as follows:

	THREE MONTHS ENDED				NINE MONTHS ENDED
	OCTOBER 28,		OCTOBER 29,		OCTOBER 28,		OCTOBER 29,
	2023		2022		2023		2022
	(dollars in thousands)
Income tax expense (benefit)	$	(9,215)	$	36,162	$	34,615	$	(70,867)
Effective tax rate		80.8%		26.8%		23.0%		(20.2)%

The increase in our effective tax rate for the three months ended October 28, 2023 compared to the three months ended October 29, 2022 is primarily attributable to the net loss in the current period and tax benefits from the Federal Rehabilitation Tax Credit related to the San Francisco Design Gallery. The increase in our effective tax rate for the nine months ended October 28, 2023 compared to the nine months ended October 29, 2022 is primarily attributable to significantly lower net excess tax benefits from stock-based compensation in fiscal 2023 as compared to fiscal 2022.

As of October 28, 2023, we had $8.3 million of unrecognized tax benefits, of which $7.5 million would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. As of October 28, 2023, we had $5.7 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months.