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INCOME TAXES | 6 Months Ended
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Aug. 03, 2024
INCOME TAXES |
INCOME TAXES | NOTE 12—INCOME TAXES Our income tax expense and effective tax rates were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | THREE MONTHS ENDED | ​ | SIX MONTHS ENDED
​ | ​ | AUGUST 3, |  | JULY 29, | ​ | AUGUST 3, |  | JULY 29,
​ |  | 2024 |  | 2023 | ​ | 2024 |  | 2023
​ | ​ | (dollars in thousands)
Income tax expense | ​ | $ | 3,717 | ​ | ​ | $ | 27,245 | ​ |  | $ | 1,626 | ​ | ​ | $ | 43,830 | ​
Effective tax rate | ​ | ​ | 11.4 | % | ​ | ​ | 26.3 | % | ​ | ​ | 6.0 | % | ​ | ​ | 27.0 | %
​ The decrease in our effective tax rates for the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023 is primarily attributable to higher net excess tax benefits from stock-based compensation year over year. As of August 3, 2024, we had $3.2 million of unrecognized tax benefits, of which $2.6 million would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. As of August 3, 2024, we had $0.2 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months. In October 2017, we filed an amended federal tax return claiming a $5.4 million refund, however, no income tax benefit was recorded at the time due to the technical nature and amount of the refund claim. As of the first quarter of fiscal 2024, we are no longer appealing this refund claim and have reversed the receivable and related reserve. The Organization for Economic Cooperation and Development (“OECD”) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15%. Many countries are actively considering, have proposed or have enacted, changes to their tax laws based upon the Pillar II proposals, which could increase our tax obligations in countries where we do business or cause us to change the way we operate our business. 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.” We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and there is no material impact to our tax provision for the three and six months ended August 3, 2024. We will continue to evaluate the impact of these tax law changes in future reporting periods.

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