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Income Taxes | 12 Months Ended
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Feb. 01, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Provision for Income Taxes The components of the provision for income taxes are as follows for the fiscal years presented (in thousands):
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | 292,197 |  |  | $ | 212,369 |  |  | $ | 253,776 |
State | 76,366 |  |  | 55,920 |  |  | 63,734 |
Total current provision | 368,563 |  |  | 268,289 |  |  | 317,510 |
Deferred: |  |  |  |  |
Federal | (13,255) |  |  | 4,301 |  |  | 15,074 |
State | (1,583) |  |  | (958) |  |  | 8,026 |
Total deferred provision | (14,838) |  |  | 3,343 |  |  | 23,100 |
Total provision | $ | 353,725 |  |  | $ | 271,632 |  |  | $ | 340,610 |
The Company’s effective income tax rate differs from the federal statutory rate as follows for the fiscal years presented:
| 2024 |  | 2023 |  | 2022
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State tax, net of federal benefit | 4.2 | % |  | 4.2 | % |  | 4.1 | %
Excess tax benefit related to stock-based compensation | (1.8) | % |  | (4.9) | % |  | (1.9) | %
Eliminated bond hedge deduction following Convertible Senior Notes exchanges | — | % |  | 0.2 | % |  | 1.6 | %
Other permanent items | (0.1) | % |  | 0.1 | % |  | (0.2) | %
Effective income tax rate | 23.3 | % |  | 20.6 | % |  | 24.6 | %
Components of deferred tax assets (liabilities) consist of the following as of the end of the fiscal years presented (in thousands):
| 2024 |  | 2023
Operating lease liabilities | $ | 782,953 |  |  | $ | 725,656 |
Inventory | 57,793 |  |  | 50,840 |
Employee benefits and withholdings | 49,653 |  |  | 47,780 |
Stock-based compensation | 18,395 |  |  | 16,440 |
Gift cards | 24,946 |  |  | 22,364 |
Deferred revenue currently taxable | 1,295 |  |  | 864 |
Other accrued expenses not currently deductible for tax purposes | 16,338 |  |  | 15,896 |
Net operating loss carryforward | — |  |  | 55 |
Non income-based tax reserves | 4,317 |  |  | 4,984 |
Uncertain income tax positions | 1,397 |  |  | 965 |
Insurance | 3,589 |  |  | 3,438 |
Intangibles | 1,443 |  |  | — |
Other | 1,932 |  |  | 1,596 |
Total deferred tax assets | 964,051 |  |  | 890,878 |
Operating lease assets | (605,401) |  |  | (577,599) |
Property and equipment | (274,823) |  |  | (243,150) |
Inventory valuation | (27,849) |  |  | (26,676) |
Intangibles | — |  |  | (2,087) |
Prepaid expenses | (3,294) |  |  | (3,520) |
Total deferred tax liabilities | (911,367) |  |  | (853,032) |
Net deferred tax asset | $ | 52,684 |  |  | $ | 37,846 |
The net deferred tax asset balances at February 1, 2025 and February 3, 2024 were included within long-term assets on the Consolidated Balance Sheets. No additional income taxes have been provided for any remaining undistributed foreign earnings or foreign withholdings and U.S. state taxes not subject to the one-time transition tax under the 2017 Tax Cuts and Jobs Act, as the Company intends to permanently reinvest the earnings from foreign subsidiaries outside of the United States. The amount of any unrecorded deferred tax liability is expected to be minimal due to the availability of the 100% dividends received deduction, along with insignificant state and withholding tax impacts. Unrecognized Tax Benefits The following table provides a reconciliation of the Company’s total balance of unrecognized tax benefits, excluding interest and penalties (in thousands):
| 2024 |  | 2023 |  | 2022
Beginning of fiscal year | $ | 2,851 |  |  | $ | 1,058 |  |  | $ | 1,058 |
Increases as a result of tax positions taken in a prior period | 3,201 |  |  | 1,463 |  |  | 6 |
Decreases as a result of tax positions taken in a prior period | (1,058) |  |  | — |  |  | — |
Increases as a result of tax positions taken in the current period | 1,364 |  |  | — |  |  | — |
Increases as a result of settlements during the current period | — |  |  | 364 |  |  | — |
Decreases as a result of settlements during the current period | (108) |  |  | (34) |  |  | (6) |
Reductions as a result of a lapse of statute of limitations during the current period | — |  |  | — |  |  | — |
End of fiscal year | $ | 6,250 |  |  | $ | 2,851 |  |  | $ | 1,058 |
The balance at February 1, 2025 includes $5.0 million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties from unrecognized tax benefits in income tax expense. As of February 1, 2025 the Company’s total liability for uncertain tax positions, including $1.8 million for interest and penalties, was approximately $8.1 million. The Company recorded a benefit of $0.4 million during fiscal 2024, and $0.7 million and $0.1 million of expense during fiscal 2023 and 2022, respectively, related to the accrual of interest and penalties in the Consolidated Statements of Income. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2025. Audits The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”). As part of CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed its examination for tax year 2022. For tax year 2021, the Company was accepted into the CAP Bridge phase during which it is not the intent of the IRS to examine the tax return. Acceptance into the Bridge phase is based on a taxpayer’s low risk of noncompliance and having few, if any, material issues. Tax years prior to 2021 are no longer subject to examination by the IRS. The Company is no longer subject to examination in any of its major state jurisdictions for years prior to 2019. Recent Tax Legislation The Organization for Economic Cooperation and Development introduced a framework to implement a global 15% minimum corporate tax (“Pillar Two”). The European Union issued a directive to its member states to enact the Pillar Two in their local laws effective after December 2023. A number of other countries are expected to implement similar legislation with effective dates in the future. The Company is continuing to evaluate and does not currently anticipate that Pillar Two legislation will have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.

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