XML 54 R20.htm IDEA: XBRL DOCUMENT v3.25.2
Income Taxes
 12 Months Ended
Jun. 29, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Significant components of the income tax provision are as follows:
Years Ended
June 29, 2025June 30, 2024July 2, 2023
(in thousands)
Current provision (benefit):
Federal$(1,942)$11,774 $976 
State1,125 161 1,572 
Foreign 176 — — 
Current income tax (benefit) expense(641)11,935 2,548 
Deferred provision (benefit):
Federal(12,880)(14,246)(3,145)
State131 2,514 (1,463)
Foreign26 — — 
Deferred income tax benefit(12,723)(11,732)(4,608)
Income tax (benefit) expense $(13,364)$203 $(2,060)
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:
Years Ended
June 29, 2025June 30, 2024July 2, 2023
Tax at U.S. statutory rates21.0%21.0%21.0%
State income taxes, net of federal tax benefit3.4 (8.1)(0.2)
Non-deductible impairment charge(1.4)- (16.8)
Valuation allowance change(16.8)(28.5)(0.2)
Non-deductible compensation(0.1)(0.6)(2.1)
Excess tax benefit/shortfalls from stock-based compensation(0.2)(11.9)(1.7)
Tax credits0.3 16.9 2.7 
Enhanced deductions- 11.8 2.6 
Other, net0.1 (4.0)(0.9)
Effective tax rate6.3 %(3.4%)4.4%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's deferred income tax assets (liabilities) are as follows:
June 29, 2025June 30, 2024
(in thousands)
Deferred income tax assets:
Loss and carryforwards$17,508 $8,096 
Accrued expenses and reserves4,949 3,146 
Inventory4,366 5,417 
Stock-based compensation2,613 1,767 
Deferred compensation7,242 6,815 
Operating lease liability29,002 30,763 
       Other intangibles 20,604 — 
Gross deferred income tax assets86,284 56,004 
Less: Valuation allowance(40,581)(4,868)
Deferred tax assets, net45,703 51,136 
Deferred income tax liabilities:
Other intangibles— (10,693)
Tax in excess of book depreciation(25,409)(31,206)
Operating lease right-of-use asset(26,973)(28,639)
Deferred tax liabilities(52,382)(70,538)
Net deferred income tax liabilities$(6,679)$(19,402)
At June 29, 2025, the Company had $22.0 million of indefinite lived federal net operating losses, $110.4 million of state net operating loss carryforwards, some of which will begin to expire in fiscal 2026 to the extent not utilized and $5.4 million of foreign net operating loss carryforwards, which will begin to expire in fiscal 2034 if not utilized. At June 29, 2025, the Company’s federal charitable contribution carryforwards were $21.9 million, which will begin to expire in fiscal 2027 if not utilized. At June 29, 2025, the Company’s research and development and work opportunity credit carryforwards were $0.6 million and $0.1 million, respectively, which will both begin to expire in fiscal 2045 if not utilized.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. In completing this evaluation, the Company considers available positive and negative evidence. Such evidence includes historical operating results, the existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if permitted under the tax law, the time period over which our temporary differences will reverse, the implementation of feasible and prudent tax planning strategies, and expectations for future pre-tax operating income. Estimating future taxable income is inherently uncertain and requires judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future periods. During fiscal 2025, the Company completed a detailed analysis of future taxable income, focused on the scheduling of temporary differences that are expected to reverse in periods where the Company anticipates taxable income. Due to the goodwill and intangible impairment charge recorded during fiscal 2025, deferred tax liabilities were reduced to an amount whereby the lack of sufficient reversing taxable temporary differences is significant evidence considered by the Company in recording a $35.9 million valuation allowance. At the time of the impairment, the Company was in a three-year cumulative loss position and had not identified any tax planning strategies to support the deferred tax asset realizability. Additionally, the impairment charge reduced previously available deferred tax liabilities that had supported the realization of deferred tax assets. During fiscal 2024, the Company recorded valuation allowances of $1.7 million relating to certain state and foreign jurisdictions. As of June 30, 2024, the Company had valuation allowances of $4.9 million primarily related to certain state and foreign net operating losses.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. Fiscal 2022, fiscal 2023, and fiscal 2024 remain subject to U.S. federal examination. Due to nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2021. The Company's foreign income tax filings from fiscal 2018 forward are open for examination by its respective foreign tax authorities, mainly Canada and Brazil. The Company is not currently under examination by federal, state or foreign taxing jurisdictions.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At June 29, 2025, the Company has an unrecognized tax benefit, including accrued interest and penalties, included within the “Other liabilities” line item in the consolidated balance sheets, of approximately $3.4 million all of which if fully recognized would impact our effective tax rate. The Company believes that $0.3 million of the unrecognized tax positions will be resolved over the next twelve months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Years Ended
June 29, 2025June 30, 2024July 2, 2023
(in thousands)
Beginning balance$2,780 $1,724 $1,374 
Increases on tax positions for prior years72 1,100 30 
Increases on tax positions for current year209 387 320 
Settlements(166)- - 
Statute of limitation expirations(135)(431)- 
Ending balance$2,760 $2,780 $1,724