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Income Taxes
 12 Months Ended
Feb. 01, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table provides the components of the Company’s Provision for Income Taxes for 2024, 2023 and 2022:
202420232022
 (in millions)
Current:
U.S. Federal$46 $19 $67 
U.S. State17 10 22 
Non-U.S.18 18 18 
Total81 47 107 
Deferred:
U.S. Federal(26)(14)(20)
U.S. State(6)(2)(4)
Non-U.S.3 — (4)
Total(29)(16)(28)
Provision for Income Taxes$52 $31 $79 
The non-U.S. component of pre-tax income, arising principally from overseas operations, was income of $92 million, $112 million and $92 million for 2024, 2023 and 2022, respectively.
The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2024, 2023 and 2022:
202420232022
Federal Income Tax Rate21.0 %21.0 %21.0 %
State Income Taxes, Net of Federal Income Tax Effect3.1 %3.1 %3.9 %
Foreign Rate Differential(4.4 %)(9.1 %)(3.4 %)
Share-based Compensation 1.7 %1.1 %(4.6 %)
U.S. Permanent Items1.4 %1.7 %0.3 %
Adore Me Contingent Compensation1.0 %3.3 %— %
Impact of Non-U.S. Operations0.6 %1.4 %1.8 %
Uncertain Tax Positions(0.2 %)0.7 %0.2 %
Change in Valuation Allowance(0.2 %)(0.9 %)(0.1 %)
Other Items, Net(0.4 %)(0.9 %)(0.1 %)
Effective Tax Rate23.6 %21.4 %19.0 %
Deferred Taxes
The following table provides the effect of temporary differences that cause deferred income taxes as of February 1, 2025 and February 3, 2024. Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective year.
 February 1, 2025February 3, 2024
AssetsLiabilitiesTotalAssetsLiabilitiesTotal
(in millions)
Loss Carryforwards$120 $— $120 $130 $— $130 
Leases443 (402)41 359 (319)40 
Deferred Revenue47 — 47 51 — 51 
Accrued Expenses37 — 37 35 — 35 
Share-based Compensation14 — 14 12 — 12 
Trade Name and Other Intangibles— (91)(91)— (97)(97)
Property and Equipment— (42)(42)— (57)(57)
Other31 (10)21 26 (11)15 
Valuation Allowance(136)— (136)(146)— (146)
Total Deferred Income Taxes$556 $(545)$11 $467 $(484)$(17)
As of February 1, 2025, the Company had loss carryforwards of $120 million, of which $32 million has an indefinite carryforward. The remainder of the non-U.S. carryforwards, if unused, will expire at various dates from 2025 through 2041. For certain jurisdictions where the Company has determined that it is more likely than not that the loss carryforwards will not be realized, a valuation allowance has been provided on those loss carryforwards as well as other net deferred tax assets.
Income tax payments were $54 million for 2024, $74 million for 2023 and $161 million for 2022.
Uncertain Tax Positions
The following table summarizes the activity related to the Company’s unrecognized tax benefits for U.S. federal, state and non-U.S. tax jurisdictions for 2024, 2023 and 2022, without interest and penalties:
202420232022
(in millions)
Gross Unrecognized Tax Benefits, as of the Beginning of the Fiscal Year$38 $31 $10 
Increases to Unrecognized Tax Benefits as a Result of Current Year Activity9 9 10 
Increases to Unrecognized Tax Benefits for Prior Years, Including Acquisitions— 13 11 
Decreases to Unrecognized Tax Benefits for Prior Years(4)(15)— 
Gross Unrecognized Tax Benefits, as of the End of the Fiscal Year$43 $38 $31 
Of the total gross unrecognized tax benefits, approximately $40 million, $35 million and $20 million at February 1, 2025, February 3, 2024, and January 28, 2023, respectively, represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. These amounts are net of the offsetting tax effects from other tax jurisdictions.
Of the total unrecognized tax benefits, it is reasonably possible that $32 million could change in the next 12 months due to audit settlement, expiration of statute of limitations or other resolution of uncertainties. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in amounts which could be different from this estimate. In such cases, the Company will record additional tax expense or tax benefit in the period in which such matters are effectively settled.
The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense. The Company recognized interest and penalties expense of $2 million in 2024, $2 million in 2023, and $1 million in 2022. The Company has accrued approximately $5 million for the payment of interest and penalties as of February 1, 2025, and $3 million as of February 3, 2024. Accrued interest and penalties are included within Other Long-term Liabilities on the Consolidated Balance Sheets.
The Company files income tax returns with the U.S. and various state, local, and non-U.S. jurisdictions. The Company participates in the Compliance Assurance Process (“CAP”) of the Internal Revenue Service. As part of CAP, tax years are examined on a contemporaneous basis. The Company is not subject to U.S. federal examination for years prior to fiscal year 2020. The Company is currently under examination, or may be subject to examination, by various state and local tax jurisdictions for fiscal year 2017 through 2023, and non-U.S. tax jurisdictions for fiscal year 2015 through 2023. In some situations, the Company determines that it does not have a filing requirement in a particular tax jurisdiction. Where no return has been filed, no statute of limitations applies. Accordingly, if a tax jurisdiction reaches a conclusion that a filing requirement does exist, additional years may be reviewed by the tax authority. The Company believes it has appropriately accounted for uncertainties related to this issue.