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Income Taxes | 12 Months Ended
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Jan. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 11. INCOME TAXES The Company’s income (loss) before income taxes in the United States and in foreign jurisdictions is as follows:
(in thousands) |  | Fiscal 2024 |  |  | Fiscal 2023 |  |  | Fiscal 2022 |
Income (loss) before income taxes |  |  |  |  |  |  |  |  |
United States |  | $ | 17,535 |  |  | $ | (126,745 | ) |  | $ | 4,646 |
Foreign |  |  | (7,039 | ) |  |  | (5,072 | ) |  |  | (19,325 | )
Total income (loss) before income taxes |  | $ | 10,496 |  |  | $ | (131,817 | ) |  | $ | (14,679 | )
Certain foreign operations are branches of Lands’ End and are subject to U.S. as well as foreign income tax. The pretax income (loss) by location and the analysis of the income tax provision by taxing jurisdiction are not directly related. The components of the provision for (benefit from) income taxes are as follows:
(in thousands) |  | Fiscal 2024 |  |  | Fiscal 2023 |  |  | Fiscal 2022 |
United States |  | $ | 4,065 |  |  | $ | (1,482 | ) |  | $ | (3,258 | )
Foreign |  |  | 198 |  |  |  | 349 |  |  |  | 1,109 |
Total provision (benefit) |  | $ | 4,263 |  |  | $ | (1,133 | ) |  | $ | (2,149 | )
(in thousands) |  | Fiscal 2024 |  |  | Fiscal 2023 |  |  | Fiscal 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | (17 | ) |  | $ | (3,092 | ) |  | $ | (3,928 | )
State |  |  | 700 |  |  |  | (192 | ) |  |  | (273 | )
Foreign |  |  | 187 |  |  |  | 338 |  |  |  | 1,125 |
Total current |  |  | 870 |  |  |  | (2,946 | ) |  |  | (3,076 | )
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 2,646 |  |  |  | (316 | ) |  |  | 682 |
State |  |  | 736 |  |  |  | 2,118 |  |  |  | 261 |
Foreign |  |  | 11 |  |  |  | 11 |  |  |  | (16 | )
Total deferred |  |  | 3,393 |  |  |  | 1,813 |  |  |  | 927 |
Total provision (benefit) |  | $ | 4,263 |  |  | $ | (1,133 | ) |  | $ | (2,149 | )
A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows:
|  | Fiscal 2024 |  |  | Fiscal 2023 |  |  | Fiscal 2022 |
Tax at statutory federal tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 10.8 | % |  |  | (1.1 | )% |  |  | 0.1 | %
Foreign differential |  |  | (19.1 | )% |  |  | 2.1 | % |  |  | 27.2 | %
Permanent differences |  |  | 7.2 | % |  |  | (0.8 | )% |  |  | (3.4 | )%
Uncertain tax benefits |  |  | (3.0 | )% |  |  | 0.1 | % |  |  | 1.1 | %
Change in foreign valuation allowance |  |  | 19.2 | % |  |  | (2.2 | )% |  |  | (32.4 | )%
Goodwill impairment |  |  | — | % |  |  | (17.0 | )% |  |  | — | %
Other, net |  |  | 4.5 | % |  |  | (1.2 | )% |  |  | 1.0 | %
Total |  |  | 40.6 | % |  |  | 0.9 | % |  |  | 14.6 | %
Deferred tax assets and liabilities consisted of the following:
(in thousands) |  | January 31, 2025 |  |  | February 2, 2024 |
Deferred tax assets |  |  |  |  |  |
Deferred revenue |  | $ | 8,079 |  |  | $ | 7,388 |
Legal accruals |  |  | 1,183 |  |  |  | 1,418 |
Deferred compensation |  |  | 5,275 |  |  |  | 6,100 |
Deferred interest |  |  | 8,775 |  |  |  | 640 |
Reserve for returns |  |  | 2,208 |  |  |  | 2,867 |
Inventory |  |  | 3,210 |  |  |  | 4,510 |
CTA investment in foreign subsidiaries |  |  | 4,234 |  |  |  | 4,271 |
Operating lease liabilities |  |  | 6,089 |  |  |  | 7,017 |
Other |  |  | 1,127 |  |  |  | 1,369 |
Net operating loss carryforward |  |  | 17,618 |  |  |  | 26,544 |
Total deferred tax assets |  |  | 57,798 |  |  |  | 62,124 |
Less valuation allowance |  |  | (18,058 | ) |  |  | (16,292 | )
Net deferred tax assets |  | $ | 39,740 |  |  | $ | 45,832 |
Deferred tax liabilities |  |  |  |  |  |
Intangible assets |  | $ | 61,919 |  |  | $ | 61,785 |
LIFO reserve |  |  | 18,228 |  |  |  | 19,137 |
Property and equipment |  |  | 4,509 |  |  |  | 5,662 |
Operating lease right-of-use assets |  |  | 5,066 |  |  |  | 5,709 |
Catalog advertising |  |  | 1,468 |  |  |  | 1,559 |
Total deferred tax liabilities |  |  | 91,190 |  |  |  | 93,852 |
Net deferred tax liability |  | $ | 51,450 |  |  | $ | 48,020 |
As of January 31, 2025, the Company had $117.5 million of federal and state net operating loss (“NOL”) and interest expense carryforwards (generating a $12.2 million deferred tax asset) available to offset future taxable income. The federal carryforwards have an indefinite life. The state NOL carryforwards generally expire between 2025 and 2044 with certain state NOLs and interest expense carryforwards generated after 2017 having indefinite lives. The Company’s foreign subsidiaries had $49.3 million of NOL carryforwards (generating a $14.1 million deferred tax asset) available to offset future taxable income. These foreign NOLs can be carried forward indefinitely, however, a valuation allowance was established since the future utilization of these NOLs is uncertain. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (“UTBs”) is as follows:
(in thousands) |  | Fiscal 2024 |  |  | Fiscal 2023 |  |  | Fiscal 2022 |
Gross UTBs balance at beginning of period |  | $ | 1,141 |  |  | $ | 1,297 |  |  | $ | 1,477 |
Tax positions related to the prior periods - gross increases (decreases) |  |  | 7,980 |  |  |  | (156 | ) |  |  | (180 | )
Settlements |  |  | (123 | ) |  |  | — |  |  |  | — |
Gross UTBs balance at end of period |  | $ | 8,998 |  |  | $ | 1,141 |  |  | $ | 1,297 |
As of January 31, 2025, the Company had gross UTBs of $9.0 million. Of this amount, $0.8 million would, if recognized, impact its effective tax rate. The remaining liability relates to tax positions for which there are offsetting tax benefits, or the uncertainty was related only to timing. The Company does not expect that UTBs will fluctuate significantly in the next 12 months for tax audit settlements and the expiration of the statute of limitations for certain jurisdictions. Tax years 2021 through 2025 remain open for examination by the Internal Revenue Service as well as various state and foreign jurisdictions. The Company classifies interest expense and penalties related to UTBs and interest income on tax overpayments as components of income tax expense. As of January 31, 2025, the total amount of interest expense and penalties recognized on the balance sheet was $0.5 million ($0.4 million net of federal benefit). As of February 2, 2024, the total amount of interest and penalties recognized on the balance sheet was $0.6 million ($0.5 million net of federal benefit). The total amount of net interest expense recognized in the Consolidated Statements of Operations was insignificant for all periods presented. The Company files income tax returns in both the United States and various foreign jurisdictions.

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