Income Taxes

6 Months Ended

Aug. 04, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings.

For the thirteen weeks ended August 4, 2018, the Company's 25.4% effective tax rate for income taxes differed from the Company’s federal income tax statutory rate of 21% primarily because of the effects of state and local taxes. The Company's provisions for income taxes for the thirteen weeks ended August 4, 2018 and July 29, 2017 included favorable audit settlements of approximately $0.2 million and $1.1 million, respectively. These items as well as the enactment of the Tax Act resulted in an effective tax rate for the thirteen weeks ended August 4, 2018 of 25.4% compared to 35.1% for the thirteen weeks ended July 29, 2017.

For the twenty-six weeks ended August 4, 2018 and July 29, 2017, the Company's effective tax rate was 27.0% and 37.0%, respectively. The 10.0% reduction in the effective rate was primarily the result of the Tax Act, partially offset by a 130 basis point increase due to employee share-based payment accounting and a 95 basis point increase due to favorable tax audit settlements in the prior year.

In accordance with Staff Accounting Bulletin No. 118, the Company is performing an ongoing analysis of information necessary to estimate the accounting for the impacts of the Tax Act. We will continue to analyze additional information and guidance related to the Tax Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. Consequently, reasonable estimates of the impact of the Tax Act on the Company’s deferred tax balances and executive compensation deductions have been reported as provisional, as defined in Staff Accounting Bulletin No. 118. We expect to complete our analysis no later than the fourth quarter of fiscal 2018.