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Income Taxes | 12 Months Ended
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Feb. 01, 2025
Income Taxes [Abstract] |
Income Taxes | 12. Income Taxes: Unrecognized tax benefits for uncertain tax positions, primarily recorded in Other noncurrent liabilities, are established in accordance with ASC 740 when, despite the fact that the tax return positions are supportable, the Company believes these positions may be challenged and the results are uncertain. The Company adjusts these liabilities in light of changing facts and circumstances. As of February 1, 2025, the Company had gross unrecognized tax benefits totaling approximately $ 3.2 million. Including the gross unrecognized tax benefits, and interest and penalties, $ 4.3 million would affect the effective tax rate if recognized. The Company had approximately $ 1.7 million, $ 1.8 million and $ 2.0 million of interest and penalties accrued related to uncertain tax positions as of February 1, 2025, February 3, 2024 and January 28, 2023, respectively. The Company recognizes interest and penalties related to the resolution of uncertain tax positions as a component of income tax expense. The Company recognized $ 295,000 , $ 393,000 and $ 517,000 of interest and penalties in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 1, 2025, February 3, 2024 and January 28, 2023, respectively. The Company is no longer subject to U.S. federal income tax examinations for years before 2021. In state and local tax jurisdictions, the Company has limited exposure before 2014. During the next 12 months, various state and local taxing authorities’ statutes of limitations will expire and certain state examinations may close, which could result in a potential reduction of unrecognized tax benefits for which a range cannot be determined. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): ` February 1, 2025 February 3, 2024 January 28, 2023 Fiscal Year Ended Balances, beginning $ 3,897 $ 4,886 $ 5,286 Additions for tax positions of the current year 65 76 431 Additions for tax positions of prior years - - 137 Reduction for tax positions of prior years for: Lapses of applicable statutes of limitations (728) (1,065) (968) Balances, ending $ 3,234 $ 3,897 $ 4,886 The provision for income taxes consists of the following (in thousands): ` February 1, 2025 February 3, 2024 January 28, 2023 Fiscal Year Ended Current income taxes: Federal $ (128) $ (148) $ (817) State 395 (334) (231) Foreign 1,677 1,898 2,403 Total 1,944 1,416 1,355 Deferred income taxes: Federal - 6,613 200 State - 2,093 186 Foreign - 18 - Total - 8,724 386 Total income tax expense $ 1,944 $ 10,140 $ 1,741 Significant components of the Company’s deferred tax assets and liabilities as of February 1, 2025 and February 3, 2024 are as follows (in thousands): February 1, 2025 February 3, 2024 Deferred tax assets: Allowance for customer credit losses $ 124 $ 150 Inventory valuation 1,584 1,076 Non-deductible accrued liabilities 1,587 1,367 Other taxes 834 862 Federal benefit of uncertain tax positions 655 712 Equity compensation expense 2,750 2,975 Federal tax credits 928 379 Net operating losses 11,147 7,854 Charitable contribution carryover 264 265 Lease liabilities 33,077 34,810 Property and equipment 4,735 3,885 Amortization 1,774 1,401 Other 1,776 2,150 Total deferred tax assets before valuation allowance 61,235 57,886 Valuation allowance (23,151) (17,998) Total deferred tax assets after valuation allowance 38,084 39,888 Deferred tax liabilities: Right-of-Use assets 38,000 39,721 Accrued self-insurance reserves 84 167 Total deferred tax liabilities 38,084 39,888 Net deferred tax assets $ - $ - The changes in the valuation allowance are presented below: February 1, 2025 February 3, 2024 January 28, 2023 Valuation Allowance Beginning Balance $ (17,998) $ (5,058) $ (4,473) Net Valuation Allowance (Additions) / Reductions (5,153) (12,940) (585) Valuation Allowance Ending Balance $ (23,151) $ (17,998) $ (5,058) As of February 1, 2025, the Company had $ 8.0 million of net deferred tax assets attributable to state net operating loss carryforwards and $ 0.2 million of other deferred tax assets affecting state income tax. The Company assessed the likelihood that deferred tax assets related to state net operating loss carryforwards and other deferred tax assets affecting state income tax will be realized. Based on this assessment, the Company concluded that it is more likely than not the Company will not be able to realize $ 8.0 million and $ 0.2 million of the net operating losses and other deferred assets, respectively, and accordingly, has recorded a valuation allowance for the same amount. As of February 1, 2025, the Company had $ 14.9 million of net deferred tax assets attributable to U.S. federal net operating loss carryforwards, other credit carryforwards and all other deferred tax assets net of deferred tax liabilities. The Company assessed the likelihood that deferred tax assets related to net operating loss carryforwards, credit carryforwards and all other remaining deferred tax assets net of deferred tax liabilities will be realized. Based on this assessment, the Company concluded that it is more likely than not the Company will not be able to realize $ 3.2 million of net operating loss carryforwards, $ 0.9 million of credit carryforwards and $ 10.8 million of remaining deferred tax assets net of deferred tax liabilities. The net change in the valuation allowance of $ 5.2 million for the year ended February 1, 2025 is due to recording a valuation allowance of $ 3.9 million against net deferred tax assets attributable to U.S. federal net operating loss carryforwards, other credit carryforwards and all other deferred tax assets net of deferred tax liabilities, including $ 1.3 million against state net operating losses. The net change in the valuation allowance for the year ended February 3, 2024 is U.S. federal net operating loss carryforwards, other credit carryforwards, all other deferred tax assets net of deferred tax liabilities, state net operating losses and state tax credits. As of February 1, 2025, the Company’s position is that its overseas subsidiaries will not invest undistributed earnings indefinitely. Future unremitted earnings when distributed are expected to be either distributions of GILTI-previously taxed income or eligible for a 100 % dividends received deduction. The withholding tax rate on any unremitted earnings is zero and state income taxes on such earnings are considered immaterial. Therefore, the Company has not provided deferred U.S. income taxes on approximately $ 21.3 million of cumulative earnings from non-U.S. subsidiaries. The reconciliation of the Company’s effective income tax rate with the statutory rate is as follows: ` February 1, 2025 February 3, 2024 January 28, 2023 Fiscal Year Ended Federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes 4.4 4.5 (36.4) Global intangible low-taxed income (24.6) (33.4) 333.0 Foreign tax credit - 0.3 (11.2) Foreign rate differential 5.5 7.8 (74.4) Offshore claim 11.0 15.2 (141.2) Limitation on officer compensation (2.7) (3.1) 27.2 Work opportunity credit 1.9 1.5 (63.7) Addback on wage related credits (0.4) (0.3) 13.4 Tax credits - Other 0.6 0.5 (14.4) Insurance - - (8.1) Charitable contribution of inventory - (0.6) - Uncertain tax positions 4.5 7.4 (18.7) Deferred rate change - - 1.1 Valuation allowance (31.0) (96.0) 70.9 Other (2.3) 1.7 (0.1) Effective income tax rate (12.1) % (73.5) % 98.4 % The largest driver for the difference between the Company’s effective income tax rate for the year ended February 1, 2025 and the U.S. federal income tax rate is the valuation allowance (discussed above) recorded against the Company’s net deferred tax assets attributable to U.S. federal net operating loss carryforwards, other credit carryforwards and all other deferred tax assets net of deferred tax liabilities.

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