Income Taxes

12 Months Ended

Feb. 01, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table summarizes our distribution between domestic and foreign earnings (loss) before income taxes and the provision (benefit) for income taxes (in thousands):

	Fiscal 2024		Fiscal 2023		Fiscal 2022
Earnings before income taxes:
Domestic	$	110,862	$	62,772	$	206,944
Foreign	5,706		12,174		8,781
Earnings before income taxes	$	116,568	$	74,946	$	215,725
Income taxes:
Current:
Federal	$	14,229	$	28,183	$	41,776
State	4,848		7,530		8,835
Foreign	825		2,419		1,191
	19,902		38,132		51,802
Deferred—Domestic	3,563		(24,083)		71
Deferred—Foreign	130		194		(1,883)
Income taxes	$	23,595	$	14,243	$	49,990

Reconciliations of the United States federal statutory income tax rates and our effective tax rates are summarized as follows:

	Fiscal 2024		Fiscal 2023		Fiscal 2022
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes—net of federal income tax benefit	3.7	%	1.6	%	3.6	%
Change in reserve for uncertain tax positions & method change	1.7	%	1.5	%	0.2	%
Impact of foreign operations rate differential	0.1	%	0.3	%	0.1	%
U.S. federal tax credits	(4.5)	%	(3.0)	%	(0.7)	%
Rate benefit, NOL Carryback Interest	(1.7)	%	—	%	—	%
Impact of prior year true-ups	(1.3)	%	(1.9)	%	(0.3)	%
Excess Tax Benefit, Restricted Stock Vesting	(0.3)	%	(1.6)	%	(0.1)	%
Impact of valuation allowances related to operating losses	—	%	(0.9)	%	(1.6)	%
Other, net	1.5	%	2.0	%	1.0	%
Effective tax rate for continuing operations	20.2	%	19.0	%	23.2	%

Deferred tax assets and liabilities included in our consolidated balance sheets are comprised of the following (in thousands):

	February 1, 2025		February 3, 2024
Deferred Tax Assets:
Inventories	$	21,124	$	21,254
Accrued compensation and benefits	12,361		10,982
Receivable allowances and reserves	1,823		2,433
Operating lease liabilities	101,719		77,150
Operating loss and other carry-forwards	706		709
Other, net	6,531		5,902
Deferred tax assets	144,264		118,430
Deferred Tax Liabilities:
Operating lease assets	(97,732)		(74,004)
Depreciation and amortization	(18,343)		(16,907)
Acquired intangible assets	(5,547)		(1,051)
Deferred tax liabilities	(121,622)		(91,962)
Valuation allowance	(2,322)		(2,289)
Net deferred tax asset	$	20,320	$	24,179

The majority of our valuation allowance of $2 million as of February 1, 2025 and February 3, 2024 relates to our capital loss carry-forwards. The amount of the valuation allowance could change in the future if our operating results or estimates of future taxable operating results changes.

Certain amounts of foreign earnings are currently subject to U.S. federal tax pursuant to the GILTI rules regardless of whether those earnings are distributed, and actual distributions of foreign earnings are generally no longer subject to U.S. federal tax. We continue to assert that our investments in substantially all of our foreign subsidiaries and substantially all of the related earnings are permanently reinvested outside the United States. We believe that any other taxes such as foreign withholding or U.S. state tax payable would be immaterial if we were to repatriate the foreign earnings. Therefore, we have not recorded any deferred tax liabilities related to these foreign investments and earnings in our consolidated balance sheets as of February 1, 2025 and February 3, 2024.

Accounting for income taxes requires that we offset deferred tax liabilities and assets within each tax jurisdiction and present the net deferred tax amount for each jurisdiction as a net deferred tax amount in our consolidated balance sheets. The amounts of deferred income taxes included in our consolidated balance sheets are as follows (in thousands):

	February 1, 2025		February 3, 2024
Assets:
Deferred tax assets	$	20,320	$	24,179
Liabilities:
Deferred tax liabilities	—		—
Net deferred tax asset	$	20,320	$	24,179

A reconciliation of the changes in the gross amount of unrecognized tax benefits, which are included in other non-current liabilities, is as follows (in thousands):

	Fiscal 2024		Fiscal 2023		Fiscal 2022
Balance of unrecognized tax benefits at beginning of year	$	3,710	$	3,664	$	3,390
Increase related to prior period tax positions	—		233		110
Decrease related to prior period tax positions	(13)		(2,027)		—
Increase related to current period tax positions	2,166		1,940		646
Decrease related to settlements with taxing authorities	—		—		—
Decrease related to lapse of statute of limitations	(220)		(100)		(482)
Balance of unrecognized tax benefits at end of year	$	5,643	$	3,710	$	3,664

Approximately $4 million of our uncertain tax positions as of February 1, 2025, if recognized, would reduce the future effective tax rate in the period settled. The total amount of unrecognized tax benefits relating to our tax positions is subject to change based on future events including, but not limited to, settlements of ongoing audits and assessments and the expiration of applicable statutes of limitation. The ultimate occurrence, outcomes, and timing of such events could differ from our current expectations. Interest and penalties associated with unrecognized tax positions are recorded within income tax expense in our consolidated statements of operations. During each of Fiscal 2024, Fiscal 2023 and Fiscal 2022, we recognized less than $1 million of interest and penalties associated with unrecognized tax positions in our consolidated statements of operations.

Pillar Two Directive

As part of our ongoing assessment of the OECD's Pillar Two global minimum tax framework, we conducted a comprehensive review of our global tax position to evaluate the potential impact on our effective tax rate. Based on this analysis, we expect the impact of Pillar Two to be immaterial to our financial statements. We do not anticipate any material adjustments to our effective tax rate or tax liability as a result of these rules.

Our assessments are ongoing, and we are actively evaluating our compliance with the Income Inclusion Rule (IIR) and the Undertaxed Payments Rule (UTPR) under Pillar Two. Due to pending final regulations in certain jurisdictions, the full financial impact of these rules remains undetermined. We will continue to monitor developments and will update our disclosures in future filings as appropriate.