Taxes on Earnings

12 Months Ended

Feb. 01, 2025

Income Tax Disclosure [Abstract]

Taxes on Earnings

Taxes on Earnings

The provision for income taxes consisted of the following:

($000)	2024		2023		2022
Current
Federal	$	580,253	$	532,913	$	338,479
State	95,369		85,169		57,552
	675,622		618,082		396,031
Deferred
Federal	(7,016)		(16,265)		74,062
State	(2,182)		(4,556)		5,355
	(9,198)		(20,821)		79,417
Total	$	666,424	$	597,261	$	475,448

The provision for taxes for financial reporting purposes is different from the tax provision computed by applying the statutory federal income tax rate. The differences are reconciled below:

	2024		2023		2022
Federal income taxes at the statutory rate	21.0	%	21.0	%	21.0	%
State income taxes (net of federal benefit) and other, net	3.2	%	3.2	%	2.9	%
Total	24.2	%	24.2	%	23.9	%

The components of deferred taxes at February 1, 2025 and February 3, 2024 are as follows:

($000)	2024		2023
Deferred Tax Assets
Accrued liabilities	$	32,819	$	35,010
Deferred compensation	45,689		39,366
Stock-based compensation	53,995		52,431
State taxes and credits	20,534		18,494
Employee benefits	29,549		33,764
Operating lease liabilities	870,577		826,566
Other	9,633		9,053
Gross Deferred Tax Assets	1,062,796		1,014,684
Less: Valuation allowance	(583)		—
Deferred Tax Assets	1,062,213		1,014,684
Deferred Tax Liabilities
Depreciation and amortization	(364,320)		(369,529)
Merchandise inventory	(26,004)		(25,410)
Supplies	(14,873)		(14,137)
Operating lease assets	(826,425)		(785,608)
Other	(17,631)		(16,238)
Deferred Tax Liabilities	(1,249,253)		(1,210,922)
Net Deferred Tax Liabilities	$	(187,040)	$	(196,238)

At the end of fiscal 2024 and 2023, the Company’s state tax credit carryforwards for income tax purposes were approximately $9.6 million and $10.1 million, respectively. The state tax credit carryforwards will begin to expire in fiscal 2031. The Company has provided a valuation allowance of $0.6 million as of the end of fiscal 2024 for deferred tax assets related to state tax credits that are not expected to be realized.

The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest and penalties) at fiscal 2024, 2023, and 2022 are as follows:

($000)	2024		2023		2022
Unrecognized tax benefits - beginning of year	$	52,379	$	53,544	$	60,547
Gross increases:
Tax positions in current period	13,100		13,206		10,132
Tax positions in prior period	1,163		2,295		672
Gross decreases:
Tax positions in prior periods	(3,405)		(4,366)		(6,808)
Lapse of statutes of limitations	(8,820)		(11,148)		(9,989)
Settlements	(126)		(1,152)		(1,010)
Unrecognized tax benefits - end of year	$	54,291	$	52,379	$	53,544

At the end of fiscal 2024, 2023, and 2022, the reserves for unrecognized tax benefits were $62.2 million, $58.6 million, and $60.6 million inclusive of $7.9 million, $6.2 million, and $7.1 million of related reserves for interest and penalties, respectively. The Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for taxes on earnings. If recognized, $49.4 million would impact the Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amounts that would impact the effective tax rate relates to amounts attributable to deferred tax assets and liabilities. These amounts are net of federal and state income taxes.

It is reasonably possible that certain federal and state tax matters may be concluded or statutes of limitations may lapse during the next twelve months. Accordingly, the total amount of unrecognized tax benefits may decrease by up to $7.7 million.

The Company is open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2021 through 2024. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2020 through 2024. Certain state tax returns are currently under audit by various tax authorities. The Company does not expect the results of these audits to have a material impact on the consolidated financial statements.

In December 2021, the Organization for Economic Co-operation and Development released Pillar Two Model Rules (“Pillar Two”), which provide for a global minimum tax of 15% on multinational entities. Although the United States has not yet adopted Pillar Two, several countries enacted Pillar Two with an initial effective date of January 1, 2024. The impact of Pillar Two on the Company’s effective tax rate was not material for fiscal 2024. The Company will continue to monitor future Pillar Two legislation in relevant jurisdictions for any impacts to its effective tax rate.