Income Taxes

6 Months Ended

Jul. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

Since the end of fiscal 2013, the Company has maintained a full valuation allowance against its deferred tax assets. During the second quarter of fiscal 2022, the Company determined that it was more likely than not that it would be able to realize the benefit of substantially all of its deferred tax assets in the United States. In reaching this determination, the Company considered the cumulative three years of profitability, its expectations regarding the generation of future taxable income as well as the overall improvement in the Company's business and its current market position. As a result, in the second quarter of fiscal 2022, the Company recognized a discrete tax benefit related to the release of approximately $35.5 million in valuation allowance against its deferred tax assets in the United States that are expected to be realized in future years. At July 30, 2022, the Company continued to provide a valuation allowance of $2.4 million primarily against certain state and foreign net operating losses ("NOLs").

During the second quarter and first six months of fiscal 2022, the Company recorded an income tax benefit of $35.1 million and $35.0 million, respectively. Excluding the release of $35.5 million in valuation allowance, the Company recorded income tax expense of $408,000 and $511,000, respectively, primarily related to income tax in states where NOL usage is statutorily limited.

During the second quarter and first six months of fiscal 2021, the Company recorded income tax expense of $426,000 and $454,000, respectively, primarily related to income tax in states where NOL usage is statutorily limited.

For federal income tax purposes, at the end of fiscal 2021, the Company had net operating loss carryforwards of approximately $100.7 million, which will expire from fiscal 2028 through fiscal 2037, and net operating loss carryforwards of $43.1 million that are not subject to expiration. For state purposes, at the end of fiscal 2021, the Company had $90.0 million of net operating losses that are available to offset future taxable income, the majority of which will expire from fiscal 2028 through fiscal 2041.