Income Taxes

12 Months Ended

Jan. 29, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes from continuing operations includes the following (in thousands):

	Fiscal Year Ended January 29, 2022		Fiscal Year Ended January 30, 2021		Fiscal Year Ended February 1, 2020
Federal:
Current	$	88,507	$	94,947	$	29,187
Deferred	1,951		(1,130)		9,541
State:
Current	43,118		51,074		16,780
Deferred	(2,457)		(8,066)		704
Total income tax provision	$	131,119	$	136,825	$	56,212

A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:

	Fiscal Year Ended January 29, 2022		Fiscal Year Ended January 30, 2021		Fiscal Year Ended February 1, 2020
Statutory federal income tax rates	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	5.8		6.1		5.7
Work opportunity and solar energy tax credit	(0.8)		(0.6)		(1.0)
Charitable contributions	(0.3)		(0.2)		(0.2)
Prior year adjustments	—		(0.2)		0.1
Excess tax benefit related to share-based payments	(2.4)		(1.5)		(2.7)
Other	0.2		(0.1)		0.1
Effective income tax rate	23.5	%	24.5	%	23.0	%

Significant components of the Company’s deferred tax assets and liabilities as of January 29, 2022 and January 30, 2021 are as follows (in thousands):

	January 29, 2022		January 30, 2021
Deferred tax assets:
Operating lease liability	$	616,340	$	593,699
Self-insurance reserves	37,188		34,272
Compensation and benefits	25,958		28,549
Financing obligations	3,287		2,881
Interest rate swap	87		8,620
Environment clean up reserve	4,939		4,450
Startup costs	1,987		2,413
Other	22,863		18,412
Total deferred tax assets	$	712,649	$	693,296
Deferred tax liabilities:
Operating lease right-of-use assets	$	596,957	$	576,425
Property and equipment	116,053		104,458
Intangible assets	34,899		37,834
Debt costs	1,324		1,849
Other	10,759		12,089
Total deferred tax liabilities	759,992		732,655
Net deferred tax liabilities	$	(47,343)	$	(39,359)

The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the temporary differences become deductible. The Company has determined that it is more likely than not that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance has been recorded. In making this determination, the Company considered historical levels of income as well as projections for future periods.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Fiscal Year Ended January 29, 2022		Fiscal Year Ended January 30, 2021
Balance, beginning of period	$	2,201	$	2,161
Additions for tax positions taken during the current year	105		97
Lapses in statute of limitations	(43)		(57)
Balance, end of period	$	2,263	$	2,201

The total amount of unrecognized tax benefits, reflective of federal tax benefits at both January 29, 2022 and January 30, 2021 that, if recognized, would favorably affect the effective tax rate was $2.0 million and $1.9 million, respectively.

As of January 29, 2022, management has determined it is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by $1.0 million, due to the expiration of statute of limitations and expected resolution of state tax audits. The Company’s tax years from 2017 forward remain open and are subject to examination by the Internal Revenue Service or various state taxing jurisdictions.

The Company classifies interest expense and any penalties related to income tax uncertainties as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods. For the periods ended January 29, 2022 and January 30, 2021, the Company recognized no interest income or expense. For the period ended February 1, 2020, the Company recognized $0.3 million of interest income. As of both January 29, 2022 and January 30, 2021, the Company had $0.2 million of accrued interest related to income tax uncertainties.