Income Taxes

12 Months Ended

Jan. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13 - INCOME TAXES

Income/(loss) before provision/(benefit) for income taxes for the fiscal year ended January 31, 2025, 2024 and 2023 on a legal entity basis consists of the following (in thousands):

	2025			2024			2023
				(As Restated)			(As Restated)
U.S. (loss)/ income before taxes	$	(4,974	)	$	(3,126	)	$	25,214
Non-U.S. income before taxes		31,625			57,093			91,924
Income before income taxes	$	26,651		$	53,967		$	117,138

Cash paid for income taxes during fiscal 2025, 2024 and 2023 was $28.4 million, $28.7 million and $29.0 million respectively.

The provision/(benefit) for income taxes for the fiscal years ended January 31, 2025, 2024 and 2023 consists of the following components (in thousands):

	2025		2024			2023
			(As Restated)			(As Restated)
Current:
U.S. Federal	$	997	$	165		$	5,492
U.S. State and Local		165		201			2,055
Non-U.S.		5,453		11,107			17,425
		6,615		11,473			24,972
Deferred:
U.S. Federal		285		(58	)		203
U.S. State and Local		171		1,024			60
Non-U.S.		371		(647	)		(975	)
		827		319			(712	)
Provision for income taxes	$	7,442	$	11,792		$	24,260

Significant components of the Company’s deferred income tax assets and liabilities for the fiscal years ended January 31, 2025 and 2024 are as follows (in thousands):

	2025 Deferred Taxes					2024 Deferred Taxes
	Assets			Liabilities		Assets			Liabilities
						(As Restated)			(As Restated)
Net operating loss carryforwards	$	5,351		$	—	$	5,761		$	—
Inventory		1,280			—		1,899			—
Unprocessed returns		1,292			—		998			—
Receivables allowances		656			—		569			—
Deferred compensation		17,418			—		16,853			—
Depreciation/amortization		14,039			—		14,583			—
Other provisions/accruals		1,252			—		1,500			—
Deferred occupancy costs		19,968			17,678		21,092			18,879
Miscellaneous		1,204			—		1,506			—
		62,460			17,678		64,761			18,879
Valuation allowance		(3,679	)		—		(3,298	)		—
Total deferred tax assets and liabilities	$	58,781		$	17,678	$	61,463		$	18,879

As of January 31, 2025, the Company had U.S. state and foreign net operating loss carryforwards of $0.7 million and $4.6 million, respectively, with expiration dates ranging from 1-10 years and, with respect to some foreign jurisdictions, an indefinite carryforward period. Of the foreign net operating losses, $1.8 million is related to the United Kingdom, $1.6 million is related to China and the remaining is related to other foreign countries.

A valuation allowance is required to be established unless management determines it is more likely than not that the Company will ultimately utilize the tax benefit associated with a deferred tax asset. The Company has foreign valuation allowances of $3.7 million, which are primarily related to net operating loss carryforwards.

Management will continue to evaluate the appropriate level of valuation allowance on all deferred tax assets considering such factors as prior earnings history, expected future earnings, carryback and carryforward periods and tax and business strategies that could potentially enhance the likelihood of realization of the deferred tax assets.

The Company elected to account for the tax on Global Intangible Low-Taxed Income ("GILTI") as a period cost and therefore has not recorded deferred taxes related to GILTI.

The provision/(benefit) for income taxes for the fiscal years ended January 31, 2025, 2024 and 2023 differs from the U.S. federal statutory rate due to the following (in thousands):

	Fiscal Year Ended January 31,
	2025			2024			2023
				(As Restated)			(As Restated)
Provision for income taxes at the U.S. statutory rate	$	5,591		$	11,333		$	24,599
Lower effective non-U.S. income tax rate		(1,755	)		(1,984	)		(2,455	)
State and local taxes, net of federal benefit		265			974			1,743
Valuation allowance		955			277			(1,671	)
Compensation and benefits		668			(48	)		545
Cross-border tax effects		1,762			1,032			122
Other, net		(44	)		208			1,377
Total provision for income taxes	$	7,442		$	11,792		$	24,260

The effective tax rate for fiscal 2025 was 27.9% and differed from the U.S. statutory tax rate of 21.0% primarily due to the tax consequences of a foreign currency gain related to an extraordinary intercompany dividend and an increase in valuation allowances against certain foreign losses, partially offset by foreign profits being taxed in lower taxing jurisdictions. The effective tax rate for fiscal 2024 was 21.8% and differed from the U.S. statutory tax rate of 21.0% primarily due to foreign profits being taxed in lower taxing jurisdictions, partially offset by cross-border tax effects and U.S. state and local taxes, net of the federal benefit.

In August 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into law by President Biden. Among other things, the IR Act implemented a 1% excise tax on the fair market stock repurchases by covered corporations, a 15% minimum tax based on adjusted financial statement income of certain large corporations, and several tax incentives to promote clean energy. Although the Company is continuing to evaluate the IR Act and its potential impact on future periods, to date, the IR Act has not had a material impact on its Consolidated Financial Statements.

The Organization for Economic Cooperation and Development (“OECD”) has issued Pillar Two model rules implementing a new global minimum tax of 15%, which was intended to be effective on January 1, 2024 While several countries have adopted and enacted changes to their legislation in response to Pillar Two, in January 2025, the President of the United States issued an executive order announcing the United States’ opposition to aspects of these rules. The Company's revenue currently does not meet the minimum requirements that were set by OECD inclusive framework and rules. Although the Company will continue to evaluate and monitor the enactments of Pillar Two, to the extent that Pillar Two becomes applicable, the Company does not expect a material impact on its Consolidated Financial Statements.

The Company conducts business globally and, as a result, is subject to income taxes in the U.S. federal, state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities in many countries, such as Germany, Hong Kong, Switzerland and the United States. The Company is no longer subject to income tax examination for years ended prior to January 31, 2021, with few exceptions.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (exclusive of interest) for the fiscal years ended January 31, 2025, 2024 and 2023 are as follows (in thousands):

	2025			2024			2023
				(As Restated)			(As Restated)
Beginning balance	$	547		$	569		$	876
Tax positions taken in the current year		—			—			—
Tax positions taken in prior years		—			—			205
Lapse of statute of limitations		10			3			(168	)
Settlements		(1	)		(25	)		(331	)
Non-U.S. currency exchange fluctuations		(5	)		—			(13	)
Ending balance	$	551		$	547		$	569

Included in the balances at January 31, 2025, January 31, 2024 and January 31, 2023 are $0.5 million for each period of unrecognized tax benefits which would impact the Company’s effective tax rate, if recognized. As of January 31, 2025, January 31, 2024, and January 31, 2023, the Company had $0.3 million, $0.2 million and $0.2 million, respectively, of accrued interest (net of tax benefit) and penalties related to unrecognized tax benefits. Interest (net of tax benefit) and penalties accrued in fiscal years 2025, 2024 and 2023 were immaterial. The Company does not anticipate any significant increases or decreases to unrecognized tax benefits during the next twelve months.

At January 31, 2025, the Company had no deferred tax liability for substantially all of the undistributed foreign earnings of approximately $234.2 million because the Company intends to permanently reinvest such earnings in its foreign operations. It is not practicable to estimate the tax liability related to a future distribution of these permanently reinvested foreign earnings.