XML 53 R26.htm IDEA: XBRL DOCUMENT
v3.25.1

Income Taxes | 12 Months Ended
--- | ---
Feb. 28, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Note 18 - Income Taxes We reorganized the Company in Bermuda in 1994 and many of our foreign subsidiaries are not directly or indirectly owned by a U.S. parent. As such, a large portion of our foreign income is not subject to U.S. taxation on a permanent basis under current law. Additionally, our intangible assets are largely owned by foreign affiliates, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which historically had the effect of decreasing our overall effective tax rate. The taxable income earned in each jurisdiction, whether U.S. or foreign, is determined by the subsidiary's operating results and transfer pricing and tax regulations in the related jurisdictions. The Organisation for Economic Co-operation and Development (“OECD”) has introduced a framework to implement a global minimum corporate income tax of 15%, referred to as “Pillar Two.” Certain countries in which we operate have enacted Pillar Two legislation and continue to modify their rules and guidance, often to align with ongoing OECD interpretive guidance on the “Model Rules.” Meanwhile, additional countries are in the process of introducing legislation to implement Pillar Two, even as the OECD continues to modify its administrative guidance. Pillar Two legislation effective for our fiscal 2025 has been incorporated into our financial statements. However, the extent to which other jurisdictions adopt or enact Pillar Two is uncertain and could increase the cost and complexity of compliance, and we expect that it could have a further material adverse affect on our global effective tax rate in fiscal 2026. In response to Pillar Two, on May 24, 2024, Barbados enacted a domestic corporate income tax rate of 9%, effective for our fiscal 2025. We incorporated this corporate income tax into our income tax provision and revalued our existing deferred tax liabilities subject to the Barbados legislation, which resulted in a discrete tax charge of $6.0 million during fiscal 2025. Additionally, Barbados enacted a DMTT of 15% which applies to Barbados businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective beginning with our fiscal 2026. Although we currently do not expect the Barbados DMTT to have a material impact to our consolidated financial statements, we will continue to monitor and evaluate impacts as further regulatory guidance becomes available. Like Barbados, the government of Bermuda enacted a 15% corporate income tax that will become effective for us in fiscal 2026. The Bermuda corporate income tax allows for a beginning net operating loss balance related to the five years preceding the effective date. Accordingly, during fiscal 2024, we recorded a deferred tax asset of $9.3 million for the Bermuda net operating losses generated from fiscal 2021 through 2024 with an offsetting valuation allowance of $9.3 million. Although we currently do not expect this Bermuda tax to have a material impact to our consolidated financial statements, we will continue to monitor and evaluate impacts as further regulatory guidance becomes available. In the fourth quarter of fiscal 2025, we implemented a reorganization involving the transfer of intangible assets previously held by Helen of Troy Limited (Barbados). The reorganization resulted in the consolidation of the ownership of intangible assets, supporting streamlined internal licensing and centralized management of the intangible assets. As a result of the reorganization, additional intangible assets are now owned by our subsidiary in Switzerland. Further, the reorganization resulted in a transitional income tax benefit of $64.6 million from the recognition of a deferred tax asset, partially offset by taxes associated with the transfer. The Company continues to elect to account for U.S. tax on global intangible low-taxed income (“GILTI”) as a period cost and therefore has not recorded deferred taxes related to GILTI on its foreign subsidiaries. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested; accordingly, no taxes have been recognized on such earnings. We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings. If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. income taxes. Due to the number of legal entities and jurisdictions involved, our legal entity structure, and the tax laws in the relevant jurisdictions, we believe it is not practicable to estimate the amount of additional taxes which may be payable upon distribution of these undistributed earnings. Our components of income before income tax are as follows:
| Fiscal Years Ended Last Day of February,
(in thousands) | 2025 |  | 2024 |  | 2023
U.S. | $ | 19,827 |  |  | $ | 68,957 |  |  | $ | 41,738 |
Non-U.S. | 71,837 |  |  | 140,085 |  |  | 129,551 |
Total | $ | 91,664 |  |  | $ | 209,042 |  |  | $ | 171,289 |
Our components of income tax (benefit) expense are as follows:
| Fiscal Years Ended Last Day of February,
(in thousands) | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
U.S. federal | $ | 9,570 |  |  | $ | 9,259 |  |  | $ | 13,472 |
State | 5,046 |  |  | 2,704 |  |  | 3,417 |
Non-U.S. | 29,279 |  |  | 15,275 |  |  | 13,369 |
| 43,895 |  |  | 27,238 |  |  | 30,258 |
Deferred: |  |  |  |  |
U.S. federal | (2,287) |  |  | 9,449 |  |  | (3,337) |
State | 614 |  |  | 3,252 |  |  | (1,815) |
Non-U.S. | (74,309) |  |  | 509 |  |  | 2,910 |
| (75,982) |  |  | 13,210 |  |  | (2,242) |
Total | $ | (32,087) |  |  | $ | 40,448 |  |  | $ | 28,016 |
Our total income tax (benefit) expense differs from the amounts computed by applying the U.S. statutory tax rate to income before income taxes. An income tax rate reconciliation of these differences are as follows:
| Fiscal Years Ended Last Day of February,
| 2025 |  | 2024 |  | 2023
Effective income tax rate at the U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Impact of U.S. state income taxes | 5.6 | % |  | 2.2 | % |  | 0.3 | %
Effect of statutory tax rate in Macau | (3.5) | % |  | (4.0) | % |  | (5.4) | %
Effect of statutory tax rate in Barbados | (1.6) | % |  | (2.4) | % |  | (3.3) | %
Effect of statutory tax rate in Switzerland | (0.3) | % |  | (1.8) | % |  | (2.0) | %
Effect of income from other non-U.S. operations subject to varying rates | 2.4 | % |  | 2.3 | % |  | 2.1 | %
Effect of foreign exchange fluctuations | 3.2 | % |  | (0.3) | % |  | 2.5 | %
Effect of stock compensation | 2.3 | % |  | 1.2 | % |  | — | %
Effect of uncertain tax positions | (7.7) | % |  | 0.4 | % |  | 0.2 | %
Effect of non-deductible executive compensation | 1.5 | % |  | 1.9 | % |  | 1.2 | %
Effect of intangible asset reorganization | (70.5) | % |  | — | % |  | — | %
Effect of asset impairment | 2.2 | % |  | — | % |  | — | %
Effect of changes in valuation allowance | 2.5 | % |  | 3.9 | % |  | (0.5) | %
Effect of base erosion and anti-abuse tax | 0.9 | % |  | — | % |  | — | %
Effect of changes in tax rates | 6.8 | % |  | (4.4) | % |  | (0.4) | %
Other items | 0.2 | % |  | (0.7) | % |  | 0.7 | %
Effective income tax rate | (35.0) | % |  | 19.3 | % |  | 16.4 | %
Each year there are significant transactions or events that are incidental to our core businesses and that by a combination of their nature and jurisdiction, can have a disproportionate impact on our reported effective tax rates. Without these transactions or events, the trend in our effective tax rates would follow a more normalized pattern. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:
| Fiscal Years Ended Last Day of February,
(in thousands) | 2025 |  | 2024
Deferred tax assets, gross: |  |  |
Operating loss carryforwards and tax credits | $ | 22,436 |  |  | $ | 19,345 |
Accounts receivable | 5,976 |  |  | 6,877 |
Inventories | 18,373 |  |  | 26,498 |
Operating lease liabilities | 10,448 |  |  | 10,329 |
Research and development expenditures | 4,911 |  |  | 2,847 |
Interest limitation | 13,616 |  |  | 7,561 |
Accrued expenses and other | 5,613 |  |  | 5,953 |
Amortization | 14,033 |  |  | — |
Total gross deferred tax assets | 95,406 |  |  | 79,410 |
Valuation allowance | (21,374) |  |  | (19,044) |
Deferred tax liabilities: |  |  |
Operating lease assets | (7,844) |  |  | (8,119) |
Depreciation | (27,811) |  |  | (28,433) |
Amortization | — |  |  | (61,405) |
Total deferred tax assets (liabilities), net | $ | 38,377 |  |  | $ | (37,591) |
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We consider the scheduled reversal of deferred tax liabilities, expected future taxable income and tax planning strategies in assessing the ultimate realization of deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not be recoverable. In fiscal 2025, the $2.3 million net increase in our valuation allowance was principally due to changes in the value of operating loss carryforwards not expected to be used in future years. The composition of our operating loss carryforwards and tax credits at the end of fiscal 2025 is as follows:
|  | February 28, 2025
(in thousands) | Tax Year Expiration Date Range | Deferred Tax Assets |  | Operating Loss Carryforward
U.S. state operating loss carryforwards | 2032-2044 | $ | 1,515 |  |  | $ | 32,974 |
Non-U.S. operating loss carryforwards with definite carryover periods | 2028-2041 | 3,342 |  |  | 13,973 |
Non-U.S. operating loss carryforwards with indefinite carryover periods | Indefinite | 17,579 |  |  | 98,298 |
Subtotal |  | 22,436 |  |  | $ | 145,245 |
Less portion of valuation allowance established for operating loss carryforwards |  | (21,298) |  |  |
Total operating loss carryforwards, net of valuation allowance |  | $ | 1,138 |  |  |
Any future amount of deferred tax asset considered realizable could be reduced in the near term if estimates of future taxable income during any carryforward periods are reduced. During fiscal 2025 and 2024, changes in the total amount of unrecognized tax benefits (excluding interest and penalties) were as follows:
| Fiscal Years Ended Last Day of February,
(in thousands) | 2025 |  | 2024
Total unrecognized tax benefits, beginning balance | $ | 6,824 |  |  | $ | 6,018 |
Tax positions taken during the current period | 894 |  |  | 806 |
Settlements | (7,113) |  |  | — |
Total unrecognized tax benefits, ending balance | 605 |  |  | 6,824 |
Less current unrecognized tax benefits | — |  |  | — |
Non-current unrecognized tax benefits | $ | 605 |  |  | $ | 6,824 |
During fiscal 2025, the amount of unrecognized tax benefits decreased by $7.1 million due to settlement and resolution of tax examinations. If we are able to sustain our positions with the relevant taxing authorities, approximately $0.6 million (excluding interest and penalties) of uncertain tax position liabilities as of February 28, 2025 would favorably impact our effective tax rate in future periods. We do not expect any significant changes to our existing unrecognized tax benefits during the next twelve months resulting from any issues currently pending with tax authorities. We classify interest and penalties on uncertain tax positions as income tax expense. At the end of fiscal 2025 and 2024, the liability for tax-related interest and penalties associated with unrecognized tax benefits was $2.2 million and $3.2 million, respectively. Additionally, during fiscal 2025 and 2024, we recognized tax benefits of $1.0 million and a de minimus amount of tax expense, respectively, from tax-related interest and penalties in the consolidated statements of income. We file income tax returns in the U.S. federal jurisdiction and in various states and foreign jurisdictions. As of February 28, 2025, tax years under examination or still subject to examination by material tax jurisdictions are as follows:
Jurisdiction |  | Tax Years Under Examination |  | Open Tax Years
Barbados |  | - None - |  | 2020 | — | 2025
China |  | 2009-2018 |  | 2009 | — | 2025
Hong Kong |  | 2014-2018 |  | 2014 | — | 2025
Macao |  | - None - |  | 2021 | — | 2025
Switzerland |  | - None - |  | 2017 | — | 2025
United Kingdom |  | - None - |  | 2024 | — | 2025
U.S. |  | - None - |  | 2021 | — | 2025

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration