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Income Taxes
 9 Months Ended
Feb. 22, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For the three months ended February 22, 2025, the Company’s income tax benefit was $5.6 million, an effective tax rate of 11.3%, and for the three months ended February 24, 2024, the Company's income tax expense was $1.9 million, an effective tax rate of 43.2%. For the nine months ended February 22, 2025, the Company’s income tax benefit was $12.3 million, an effective tax rate of 9.4%, and for the nine months ended February 24, 2024, the Company's income tax expense was $7.8 million, an effective tax rate of 42.4%. The income tax benefit in fiscal 2025 was primarily attributed to the Company’s pretax loss. The lower effective tax rate in fiscal 2025 was due to the non-deductible portion of the goodwill impairment, coupled with the $2.2 million establishment of a valuation allowance on the Company’s UK entity. The higher effective tax rate in fiscal 2024 was attributed primarily to a nonrecurring increase in forfeiture of stock options, coupled with the capitalization of acquisition related costs for tax purposes.
The Company operates in an international environment. Accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings (losses) in various locations and the applicable tax rates in those jurisdictions. Fluctuations in the consolidated effective tax rate year over year are due to the changes in the mix of operating income and losses amongst the various jurisdictions in which the Company operates.
For the three months ended February 22, 2025 and February 24, 2024, the Company recognized a tax benefit of approximately $0.2 million and $0.1 million, respectively, associated with the exercise of nonqualified stock options, vesting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based stock units (“PSUs”), and disqualifying dispositions by employees of shares acquired under the Company's Employee Stock Purchase Plan (“ESPP”). For the nine months ended February 22, 2025 and February 24, 2024, the Company recognized a tax benefit of
approximately $1.5 million and $1.3 million, respectively, associated with the exercise of nonqualified stock options, vesting of RSAs, RSUs, PSUs, and disqualifying dispositions by employees of shares acquired under the ESPP.
The Company’s total liability for unrecognized gross tax benefits, including accrued interest and penalties, was $1.1 million and $1.0 million as of February 22, 2025 and May 25, 2024, which, if ultimately recognized, would impact the effective tax rate in future periods. The Company believes that there is a possibility that unrecognized gross tax benefits of $1.1 million will be recognized within the next 12 months due to the expiration of a statute of limitations. The unrecognized tax benefits are included in other long-term liabilities in the Consolidated Balance Sheets. None of the unrecognized tax benefits are considered short-term liabilities as the Company does not anticipate any cash payments to settle the liability within the next 12 months.