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Income Taxes
 12 Months Ended
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.