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Income Taxes
 12 Months Ended
Jan. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

The components of income (loss) before income taxes are as follows:

 

 

 

Fiscal Year Ended January 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Domestic

 

$

389,059

 

 

$

13,103

 

 

$

233,742

 

Foreign

 

 

15,572

 

 

 

(9,590

)

 

 

5,978

 

 

 

$

404,631

 

 

$

3,513

 

 

$

239,720

 

 

The components of the provision for income tax expense/(benefit) are as follows:

 

 

 

Fiscal Year Ended January 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

75,533

 

 

$

11,623

 

 

$

50,507

 

State

 

 

18,972

 

 

 

894

 

 

 

13,525

 

Foreign

 

 

2,205

 

 

 

4,030

 

 

 

6,141

 

 

 

$

96,710

 

 

$

16,547

 

 

$

70,173

 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

(4,151

)

 

$

(7,801

)

 

$

(3,260

)

State

 

 

498

 

 

 

(3,325

)

 

 

(772

)

Foreign

 

 

958

 

 

 

(3,144

)

 

 

5,483

 

 

 

 

(2,695

)

 

 

(14,270

)

 

 

1,451

 

 

 

$

94,015

 

 

$

2,277

 

 

$

71,624

 

 

The following table reflects the differences between the statutory U.S. federal income tax rate and the Company’s effective tax rate: 

 

 

Fiscal Year Ended January 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Expected provision at statutory U.S. federal tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State and local income taxes, net of federal tax benefit

 

 

3.8

 

 

 

(88.1

)

 

 

4.2

 

Foreign taxes

 

 

(1.8

)

 

 

56.9

 

 

 

4.0

 

Uncertain tax positions

 

 

0.1

 

 

 

28.8

 

 

 

0.5

 

Stock compensation

 

 

(0.1

)

 

 

36.1

 

 

 

0.2

 

Tax rate changes

 

 

0.1

 

 

 

8.5

 

 

 

0.1

 

Prior year adjustments

 

 

0.1

 

 

 

15.7

 

 

 

(0.3

)

Federal tax credits

 

 

(0.2

)

 

 

(16.0

)

 

 

(0.2

)

Nondeductible expenses

 

 

0.1

 

 

 

8.6

 

 

 

0.2

 

Tax exempt income

 

 

—

 

 

 

(3.4

)

 

 

—

 

Other

 

 

0.1

 

 

 

(3.3

)

 

 

0.2

 

Effective tax rate

 

 

23.2

%

 

 

64.8

%

 

 

29.9

%

 

The variance in percentages for the components of the effective tax rate for fiscal 2021 as compared to fiscal 2022 and 2020 are primarily due to the ratio of foreign taxable losses to global taxable profits and lower income before income taxes in fiscal 2021.

The significant components of deferred tax assets and liabilities as of January 31, 2022 and 2021 are as follows:

 

 

January 31,

 

 

 

2022

 

 

2021

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Prepaid expense

 

$

(3,132

)

 

$

(2,191

)

Depreciation

 

 

(50,674

)

 

 

(34,476

)

Operating lease right-of-use assets

 

 

(233,299

)

 

 

(250,292

)

Other temporary differences

 

 

(365

)

 

 

(906

)

Gross deferred tax liabilities

 

 

(287,470

)

 

 

(287,865

)

Deferred tax assets:

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

272,953

 

 

 

296,413

 

Deferred rent

 

 

14,176

 

 

 

6,685

 

Inventory

 

 

19,896

 

 

 

18,279

 

Accounts receivable

 

 

1,252

 

 

 

1,930

 

Net operating loss carryforwards

 

 

20,873

 

 

 

11,359

 

Tax uncertainties

 

 

1,135

 

 

 

1,611

 

Accrued salaries and benefits

 

 

25,249

 

 

 

16,711

 

Income tax credits

 

 

4,714

 

 

 

4,494

 

Other temporary differences

 

 

28,000

 

 

 

15,548

 

Gross deferred tax assets, before valuation allowances

 

 

388,248

 

 

 

373,030

 

Valuation allowances

 

 

(30,852

)

 

 

(18,689

)

Net deferred tax assets

 

$

69,926

 

 

$

66,476

 

 

Net deferred tax assets are attributed to the jurisdictions in which the Company operates. As of January 31, 2022 and 2021, respectively, $38,718 and $34,037 were attributable to U.S. federal, $19,190 and $19,084 were attributed to state jurisdictions and $12,018 and $13,355 were attributed to foreign jurisdictions.

As of January 31, 2022, certain non-U.S. subsidiaries of the Company had net operating loss carryforwards for tax purposes of approximately $7,710 that expire from 2022 through 2031 and approximately $65,193 that do not expire. Certain U.S. subsidiaries of the Company had state net operating loss carryforwards for tax purposes of approximately $31,304 that expire from 2022 through 2042 and approximately $11,218 that do not expire. Certain U.S. subsidiaries of the Company had state credit carryforwards for tax purposes of approximately $5,925 that expire from 2022 through 2031. As of January 31, 2022, the Company had full and partial valuation allowances for certain foreign and state net operating loss carryforwards and a partial valuation allowance against state credit carryforwards where it was uncertain the carryforwards would be utilized. The Company had no valuation allowance for certain other foreign and state net operating loss carryforwards where management believes it is more-likely-than-not the tax benefit of these carryforwards will be realized.

As of January 31, 2022, approximately $153,700 of cash and cash equivalents were held by the Company’s non-U.S. subsidiaries for which no deferred taxes have been provided. The Company has accumulated undistributed earnings generated by foreign subsidiaries of approximately $430,495. Since such earnings have previously been subject to the one-time deemed repatriation transition tax required by the U.S. Tax Cuts and Jobs Act or other U.S. tax requirements on undistributed foreign earnings, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. The Company continues to believe that foreign earnings are indefinitely reinvested excluding earnings that have previously been subject to the one-time deemed repatriation transition tax required by the U.S. Tax Cuts and Jobs Act. With respect to outside basis differences in all other non-U.S. subsidiaries, the Company expects that either (i) such basis differences will not reverse in the foreseeable future, or (ii) such basis differences will reverse in a tax-neutral manner.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

 

 

 

January 31,

 

Tax Benefit Reconciliation

 

2022

 

 

2021

 

 

2020

 

Balance at the beginning of the period

 

$

22,259

 

 

$

21,924

 

 

$

21,406

 

Increases in tax positions for prior years

 

 

28

 

 

 

476

 

 

 

661

 

Decreases in tax positions for prior years

 

 

(3,178

)

 

 

(51

)

 

 

(101

)

Increases in tax positions for current year

 

 

249

 

 

 

41

 

 

 

125

 

Settlements

 

 

—

 

 

 

—

 

 

 

—

 

Lapse in statute of limitations

 

 

(413

)

 

 

(131

)

 

 

(167

)

Balance at the end of the period

 

$

18,945

 

 

$

22,259

 

 

$

21,924

 

 

 

The total amount of net unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $21,288 and $23,497 as of January 31, 2022 and 2021, respectively. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Income, which is consistent with the recognition of these items in prior reporting periods. During the years ended January 31, 2022, 2021 and 2020, the Company recognized expense/(benefit) of $630, $950 and $1,038, respectively, related to interest and penalties. The Company accrued $3,440 and $2,810 for the payment of interest and penalties as of January 31, 2022 and 2021, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is under audit in certain state and foreign jurisdictions. Certain federal, foreign and state jurisdictions are subject to audit from fiscal 2010 to 2021. It is possible that a state or foreign examination may be resolved within 12 months. Due to the potential for resolution of federal and foreign audit and state examinations, and the expiration of various statutes of limitation, it is possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $911.