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Income Taxes | 12 Months Ended
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Jan. 28, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table presents the (benefit) provision for income taxes from continuing operations:
|  |  | Fiscal
|  |  | 2022 |  | 2021 |  | 2020
Current tax (benefit) expense: |  |  |  |  |  |  |
Federal |  |  | $ | (2.1) |  |  | $ | (13.2) |  |  | $ | (154.9) |
State |  |  | 4.0 |  |  | 7.6 |  |  | (1.5) |
Foreign |  |  | 11.7 |  |  | 7.8 |  |  | 18.8 |
|  |  | 13.6 |  |  | 2.2 |  |  | (137.6) |
Deferred tax (benefit) expense: |  |  |  |  |  |  |
Federal |  |  | — |  |  | — |  |  | 45.5 |
State |  |  | — |  |  | — |  |  | 7.6 |
Foreign |  |  | (2.6) |  |  | (16.3) |  |  | 29.2 |
|  |  | (2.6) |  |  | (16.3) |  |  | 82.3 |
Total income tax expense (benefit) |  |  | $ | 11.0 |  |  | $ | (14.1) |  |  | $ | (55.3) |
The following table presents the components of loss from continuing operations before income taxes:
|  |  | Fiscal
|  |  | 2022 |  | 2021 |  | 2020
United States |  |  | $ | (272.7) |  |  | $ | (362.7) |  |  | $ | (224.6) |
International |  |  | (29.4) |  |  | (32.7) |  |  | (45.3) |
Total |  |  | $ | (302.1) |  |  | $ | (395.4) |  |  | $ | (269.9) |
The following is a reconciliation of income tax expense (benefit) from continuing operations computed at the U.S. Federal statutory tax rate to income tax (benefit) expense reported in our Consolidated Statements of Operations:
|  |  | Fiscal
|  |  | 2022 |  | 2021 |  | 2020
Federal statutory tax rate |  |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal effect |  |  | 2.3 |  |  | 3.1 |  |  | 5.0 |
Foreign income tax rate differential |  |  | 0.2 |  |  | 0.4 |  |  | (3.9) |
Change in valuation allowance |  |  | (27.2) |  |  | (33.6) |  |  | (41.8) |
Change in unrecognized tax benefits |  |  | (0.4) |  |  | (1.4) |  |  | — |
Withholding tax expense |  |  | (0.3) |  |  | (0.3) |  |  | (0.3) |
Stock-based compensation |  |  | (0.2) |  |  | 6.4 |  |  | — |
U.S. impact of foreign operations |  |  | — |  |  | — |  |  | 7.6 |
Incremental benefit of net operating loss carryback |  |  | 1.1 |  |  | 3.6 |  |  | 23.5 |
Loss on worthless debt and related investment |  |  | — |  |  | 5.5 |  |  | 10.7 |
Other (including permanent differences)(1) |  |  | (0.1) |  |  | (1.1) |  |  | (1.3) |
|  |  | (3.6) | % |  | 3.6 | % |  | 20.5 | %
__________________ (1) Other is comprised of numerous items, none of which is individually or in the aggregate greater than 5% of income tax expense calculated at the statutory rate. Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities which are presented in the table below.
|  | January 28, 2023 |  | January 29, 2022
Deferred tax asset: |  |  |  |
Inventory |  | $ | 6.8 |  |  | $ | 8.6 |
Deferred rents |  | 1.0 |  |  | 0.9 |
Operating lease liabilities |  | 162.9 |  |  | 180.0 |
Stock-based compensation |  | 10.0 |  |  | 4.7 |
Net operating losses and other loss carryforwards |  | 280.7 |  |  | 219.8 |
Customer liabilities |  | 34.3 |  |  | 15.1 |
Credits |  | 25.2 |  |  | 25.1 |
Accrued compensation |  | 6.4 |  |  | 9.3 |
Intangible assets |  | 13.9 |  |  | 25.5 |
Goodwill |  | 0.7 |  |  | 0.9 |
Other |  | 48.4 |  |  | 48.1 |
Total deferred tax assets |  | 590.3 |  |  | 538.0 |
Valuation allowance |  | (408.5) |  |  | (338.3) |
Total deferred tax assets, net |  | 181.8 |  |  | 199.7 |
Deferred tax liabilities: |  |  |  |
Property and equipment |  | (4.8) |  |  | (5.4) |
Prepaid expenses |  | (0.2) |  |  | (0.9) |
Operating lease right-of-use assets |  | (157.8) |  |  | (177.1) |
Other |  | (0.8) |  |  | — |
Total deferred tax liabilities |  | (163.6) |  |  | (183.4) |
Net deferred tax assets |  | $ | 18.2 |  |  | $ | 16.3 |
The above amounts are reflected in the consolidated financial statements as: |  |  |  |
Deferred income taxes - assets |  | $ | 18.3 |  |  | $ | 16.3 |
Deferred income taxes - liabilities |  | $ | — |  |  | $ | — |
During fiscal 2022, we increased our valuation allowances by approximately $70.2 million in various jurisdictions where it was determined that it was more likely than not that existing gross and/or net deferred tax assets would not be realized, primarily due to cumulative losses in those jurisdictions. As of January 28, 2023, we maintain full valuation allowances on our deferred tax assets in all jurisdictions except for Australia and New Zealand. We will continue to assess the realizability of our gross and net deferred tax assets in all tax jurisdictions in which we do business in future periods. With respect to state and local jurisdictions and countries outside of the United States, we and our subsidiaries are typically subject to examination for three years to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to state, local or foreign audits. As of January 28, 2023, we have approximately $7.0 million of net operating loss carryforwards in various foreign jurisdictions that expire in years 2027 through 2042, as well as $419.7 million of foreign net operating loss carryforwards that have no expiration date. In addition, we have approximately $22.2 million of foreign tax credit carryforwards that expire in years 2024 through 2027. We also have approximately $53.0 million of U.S. federal net operating loss carryovers acquired through the ThinkGeek acquisition that will expire in years 2023 through 2034. Section 382 under the Internal Revenue Code imposes limits on the amount of tax attributes that can be utilized where there has been an ownership change. The federal and state net operating loss carryovers acquired through the ThinkGeek acquisition experienced an ownership change on July 17, 2015, and we have determined that these net operating loss carryforwards will be subject to future limitation. During fiscal 2022, we received a $171.5 million U.S. federal income tax refund resulting from the carryback of net operating losses allowed pursuant to the CARES Act. Income tax receivable is recognized in prepaid expenses and other current assets on our Consolidated Balance Sheets. As of January 28, 2023, the gross amount of unrecognized tax benefits was approximately $9.5 million. If we were to prevail on all uncertain tax positions, the net effect would be a benefit to our effective tax rate of approximately $9.5 million, exclusive of any benefits related to interest and penalties. The following table presents a reconciliation of the changes in the gross balances of unrecognized tax benefits:
|  |  | Fiscal
|  |  | 2022 |  | 2021 |  | 2020
Beginning balance of unrecognized tax benefits |  |  | $ | 9.1 |  |  | $ | 5.7 |  |  | $ | 6.5 |
Increases related to current period tax positions |  |  | 0.1 |  |  | 4.0 |  |  | — |
Increases related to prior period tax positions |  |  | 1.6 |  |  | 0.7 |  |  | 1.2 |
Reductions as a result of a lapse of the applicable statute of limitations |  |  | (1.3) |  |  | (0.8) |  |  | (0.6) |
Reductions as a result of settlements with taxing authorities |  |  | — |  |  | (0.5) |  |  | (1.4) |
Ending balance of unrecognized tax benefits |  |  | $ | 9.5 |  |  | $ | 9.1 |  |  | $ | 5.7 |
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in our Consolidated Statement of Operations. As of January 28, 2023, January 29, 2022, and January 30, 2021, we had approximately $3.7 million, $3.8 million and $3.4 million, respectively, in interest and penalties related to unrecognized tax benefit accrued, of which approximately $0.1 million of benefit, $0.4 million of expense and $0.6 million of expense were recognized through income tax expense in fiscal 2022, 2021 and 2020, respectively. If we were to prevail on all uncertain tax positions, the reversal of these accruals related to interest and penalties would also be a benefit to our effective tax rate. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions could significantly increase or decrease within the next 12 months as a result of settling ongoing audits. However, as audit outcomes and the timing of audit resolutions are subject to significant uncertainty and given the nature and complexity of the issues involved, we are unable to reasonably estimate the possible amount of change in the unrecognized tax benefits, if any, that may occur within the next 12 months as a result of ongoing examinations. Nevertheless, we believe we are adequately reserved for our uncertain tax positions as of January 28, 2023. We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries. Income tax and/or withholding tax associated with any amounts available for distribution as of January 28, 2023 is not expected to be material to our financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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