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Income Taxes | 12 Months Ended
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Feb. 02, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of earnings before income taxes, by tax jurisdiction, are as follows:
| For the Fiscal Year Ended
(In thousands) | February 2, 2025 |  | January 28, 2024 |  | January 29, 2023
United States | $ | 1,301,017 |  |  | $ | 1,154,160 |  |  | $ | 1,331,492 |
Foreign | 184,715 |  |  | 119,195 |  |  | 169,190 |
Total | $ | 1,485,732 |  |  | $ | 1,273,355 |  |  | $ | 1,500,682 |
The provision for income taxes consists of the following:
| For the Fiscal Year Ended
(In thousands) | February 2, 2025 |  | January 28, 2024 |  | January 29, 2023
Current |  |  |  |  |
Federal | $ | 276,201 |  |  | $ | 275,734 |  |  | $ | 299,015 |
State | 64,834 |  |  | 54,903 |  |  | 71,120 |
Foreign | 29,187 |  |  | 22,041 |  |  | 26,466 |
Total current | $ | 370,222 |  |  | $ | 352,678 |  |  | $ | 396,601 |
Deferred |  |  |  |  |
Federal | $ | (7,608) |  |  | $ | (30,632) |  |  | $ | (17,293) |
State | (1,925) |  |  | 686 |  |  | (3,292) |
Foreign | (208) |  |  | 861 |  |  | (3,238) |
Total deferred | $ | (9,741) |  |  | $ | (29,085) |  |  | $ | (23,823) |
Total provision | $ | 360,481 |  |  | $ | 323,593 |  |  | $ | 372,778 |
In addition to U.S. tax law changes, a number of countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development (“OECD”) international tax framework, including the Pillar Two minimum tax regime. To mitigate the administrative burden for Multinational Enterprises in complying with the OECD Global Anti-Base Erosion rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor” (“Safe Harbor”). This Safe Harbor applies for fiscal years beginning on or before December 31, 2026, but not including a fiscal year that ends after June 30, 2028. Under the Safe Harbor, the top-up tax for such jurisdiction is deemed to be zero, provided that at least one of the Safe Harbor tests is met for the jurisdiction. Of the regions in which we operate, Canada, United Kingdom, Australia, Netherlands, Italy, Portugal and Vietnam have implemented Pillar Two frameworks effective January 1, 2024. Our subsidiaries were not subject to Pillar Two minimum tax in fiscal 2024 under the Safe Harbor rules. Pillar Two minimum tax will be treated as a period cost in future periods when it is applicable. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, and monitoring legislative developments by other countries, especially in the regions in which we operate. A reconciliation of income taxes at the federal statutory corporate rate to the effective rate is as follows:
| For the Fiscal Year Ended
| February 2, 2025 |  | January 28, 2024 |  | January 29, 2023
Federal income taxes at the statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income tax rate | 4.1 |  |  | 4.4 |  |  | 4.2 |
Officer’s compensation under Sec.162(m) | 0.9 |  |  | 0.9 |  |  | 1.4 |
Change in uncertain tax positions | 0.2 |  |  | (0.5) |  |  | 0.3 |
Deferred true up | — |  |  | 0.2 |  |  | 0.1 |
Stock-based compensation | (1.1) |  |  | (0.3) |  |  | (1.7) |
Foreign rate differential | (0.5) |  |  | (0.3) |  |  | (0.7) |
Credits | (0.1) |  |  | — |  |  | (0.2) |
Other | (0.2) |  |  | — |  |  | 0.4 |
Total | 24.3 | % |  | 25.4 | % |  | 24.8 | %
Significant components of our deferred income tax accounts are as follows:
| As of
(In thousands) | February 2, 2025 |  | January 28, 2024
Deferred tax assets (liabilities) |  |  |
Operating lease liabilities | $ | 332,146 |  |  | $ | 357,266 |
Merchandise inventories | 36,935 |  |  | 37,828 |
Compensation | 28,832 |  |  | 25,658 |
Gift cards | 24,515 |  |  | 23,929 |
Accrued liabilities | 16,879 |  |  | 20,178 |
Stock-based compensation | 13,822 |  |  | 10,593 |
Executive deferred compensation | 12,204 |  |  | 11,061 |
State taxes | 7,956 |  |  | 7,492 |
Loyalty rewards | 2,972 |  |  | 3,232 |
State net operating loss | 977 |  |  | 1,153 |
Operating lease right-of-use assets | (294,216) |  |  | (310,299) |
Property and equipment | (34,254) |  |  | (44,622) |
Deferred lease incentives | (23,452) |  |  | (29,638) |
Other | (7,587) |  |  | (5,003) |
Valuation allowance | (1,198) |  |  | (1,346) |
Total deferred tax assets, net | $ | 116,531 |  |  | $ | 107,482 |
We had net state operating loss carry-forwards as of February 2, 2025. A valuation allowance has been provided against certain state net operating loss carry-forwards, as we do not expect to fully utilize the losses in future years. The following table summarizes the activity related to gross unrecognized tax benefits:
| For the Fiscal Year Ended
(In thousands) | February 2, 2025 |  | January 28, 2024 |  | January 29, 2023
Beginning balance | $ | 31,582 |  |  | $ | 37,068 |  |  | $ | 33,612 |
Increases related to current year tax positions | 5,119 |  |  | 4,966 |  |  | 8,169 |
Increases for tax positions for prior years | 271 |  |  | 194 |  |  | 807 |
Decrease for tax positions for prior years | (558) |  |  | (1,170) |  |  | (2,237) |
Settlements | (370) |  |  | — |  |  | — |
Lapse in statute of limitations | (3,671) |  |  | (9,476) |  |  | (3,283) |
Ending balance | $ | 32,373 |  |  | $ | 31,582 |  |  | $ | 37,068 |
As of February 2, 2025, we had $32.4 million of gross unrecognized tax benefits, of which $26.3 million would, if recognized, affect the effective tax rate. We accrue interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of February 2, 2025 and January 28, 2024, accruals for the payment of interest and penalties totaled $6.7 million and $5.3 million, respectively. Due to the potential resolution of tax issues, it is reasonably possible that the balance of gross unrecognized tax benefits could decrease within the next twelve months by a range of $0 to $3.4 million. We file income tax returns in the U.S. and foreign jurisdictions. We are subject to examination by the tax authorities in these jurisdictions. U.S. federal taxable years for which the statute of limitations has not expired are fiscal years 2021 to 2024. Substantially all material state, local and foreign jurisdictions’ statutes of limitations are closed for taxable years prior to 2020.

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