Income Taxes

9 Months Ended

Oct. 30, 2021

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 across jurisdictions.

For the thirteen weeks ended October 30, 2021 and October 31, 2020, the Company's effective tax rate was 9.9% and 26.9%, respectively. The effective tax rate of 9.9% for the thirteen weeks ended October 30, 2021 primarily reflects a change in estimate from the second quarter due to an increase in annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences and the rate differential provided by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The 26.9% effective tax rate for the thirteen weeks ended October 31, 2020 includes the annual benefit of the fiscal 2020 pre-tax loss due to the CARES Act, which was slightly offset by the impact of nondeductible book goodwill impairment charges.

For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, the Company's effective tax rate was 20.9% and 28.7%, respectively. The effective tax rate of 20.9% for the thirty-nine weeks ended October 30, 2021 primarily reflects an annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences, the rate differential provided by the CARES Act and favorable state audit settlements. The 28.7% effective tax rate for the thirty-nine weeks ended October 31, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense.

As of October 30, 2021, our unaudited condensed consolidated balance sheet reflected a $10.4 million income tax receivable, after collection of $50.0 million during the thirty-nine weeks ended October 30, 2021, related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.