INCOME TAXES

9 Months Ended

Oct. 30, 2022

Notes to Financial Statements [Abstract]

INCOME TAXES

INCOME TAXES

The effective income tax rates for the thirteen weeks ended October 30, 2022 and October 31, 2021 were 19.8% and 20.7%, respectively. The effective income tax rate for the thirteen weeks ended October 30, 2022 reflected a $(46.1) million income tax benefit recorded on $(232.8) million of pre-tax losses. The effective income tax rate for the thirteen weeks ended October 31, 2021 reflected a $72.9 million income tax expense recorded on $352.6 million of pre-tax income.

The effective income tax rates for the thirteen weeks ended October 30, 2022 and October 31, 2021 were relatively flat as compared to the United States statutory income tax rate.

The effective income tax rates for the thirty-nine weeks ended October 30, 2022 and October 31, 2021 were 45.1% and 27.4%, respectively. The effective income tax rate for the thirty-nine weeks ended October 30, 2022 reflected a $50.7 million income tax expense recorded on $112.4 million of pre-tax income. The effective income tax rate for the thirty-nine weeks ended October 31, 2021 reflected a $212.1 million income tax expense recorded on $773.3 million of pre-tax income.

The effective income tax rate for the thirty-nine weeks ended October 30, 2022 was higher than the United States statutory income tax rate primarily due to (i) the impact of the $417.1 million noncash goodwill impairment charge recorded during the third quarter of 2022, which resulted in a pre-tax loss with no tax benefit and is factored into the annualized effective tax rate, and (ii) the mix of foreign and domestic pre-tax results, partially offset by (iii) the favorable impact on certain liabilities for uncertain tax positions resulting from the expiration of applicable statutes of limitation and the settlement of a multi-year audit from an international jurisdiction.

The effective income tax rate for the thirty-nine weeks ended October 31, 2021 was higher than the United States statutory income tax rate primarily due to the tax on foreign earnings in excess of a deemed return on tangible assets of foreign corporations (known as “GILTI”) and the mix of foreign and domestic pre-tax results.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act, with tax provisions primarily focused on implementing a 15% corporate minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases. The corporate minimum tax will be effective in fiscal 2023 and the excise tax is effective January 1, 2023. Based on the Company’s current analysis, it does not expect the new law to have a material impact on its consolidated financial statements.

The Company files income tax returns in more than 40 international jurisdictions each year. A substantial amount of the Company’s earnings are in international jurisdictions, particularly the Netherlands and Hong Kong SAR, where the income tax rates, when coupled with special rates levied on income from certain of the Company’s jurisdictional activities, have historically been lower than the United States statutory income tax rate. In 2022, the Company no longer benefits from these special rates.