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Income Taxes | 12 Months Ended
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Jan. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | F. INCOME TAXES The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Under ASC Topic 740, deferred tax assets and liabilities are recognized based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The accounting standards require current recognition of net deferred tax assets to the extent it is more likely than not such net assets will be realized. To the extent that the Company believes its net deferred tax assets will not be realized, a valuation allowance must be recorded against those assets. At the end of fiscal 2013, the Company entered a three-year cumulative loss and based on all positive and negative evidence at February 1, 2014, the Company established a full valuation allowance against its net deferred tax assets. While the Company has projected it will return to profitability, generate taxable income and ultimately emerge from a three-year cumulative loss, based on operating results for fiscal 2020 and the Company’s forecast for fiscal 2021, the Company believes that a full allowance remains appropriate at this time. Realization of the Company’s deferred tax assets is dependent on generating sufficient taxable income in the near term. As of January 30, 2021, for federal income tax purposes, the Company has net operating loss carryforwards of $158.2 million, which will expire from fiscal 2022 through fiscal 2037 and net operating loss carryforwards of $43.1 million that are not subject to expiration. For state income tax purposes, the Company has $111.3 million of net operating losses that are available to offset future taxable income, the majority of which will expire from fiscal 2021 through fiscal 2041. Additionally, the Company has $5.9 million of net operating loss carryforwards related to the Company’s operations in Canada, which will expire from fiscal 2025 through fiscal 2041. The utilization of net operating loss carryforwards and the realization of tax benefits in future years depends predominantly upon having taxable income. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss carryforwards and tax credit carryforwards, which may be used in future years. In March 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, was signed into law. This law includes several taxpayer favorable provisions which may impact the Company including relaxed interest expense limitations, a carryback of net operating losses, permitted accelerated depreciation on certain store build out costs and allowance for the deferral of employer FICA taxes. The CARES Act also included an Employee Retention Credit, which provided the Company with a $1.3 million refundable tax credit during fiscal 2020. The refundable tax credit allowed eligible employers to receive a 50% tax credit for each employee up to $10,000 in wages and other eligible expenses. This credit only impacted payroll taxes, which are recorded in pre-tax income, and had no impact on the income tax provision. In addition, it provided for the accelerated payment of any refundable alternative minimum tax credit (“AMT”). Accordingly, in fiscal 2020, the Company received $1.1 million for its refundable AMT receivable which was outstanding at February 1, 2020. The components of the net deferred tax assets as of January 30, 2021 and February 1, 2020 were as follows (in thousands):
|  | January 30, 2021 |  |  | February 1, 2020 |
Deferred tax assets, net: |  |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 50,197 |  |  | $ | 40,921 |
Accrued expenses and other |  |  | 2,706 |  |  |  | 1,630 |
Operating lease liabilities |  |  | 45,557 |  |  |  | 57,419 |
Goodwill and intangibles |  |  | 87 |  |  |  | 236 |
Unrecognized loss on pension and pension expense |  |  | 2,067 |  |  |  | 2,156 |
Inventory reserves |  |  | 1,002 |  |  |  | 960 |
Foreign tax credit carryforward |  |  | 486 |  |  |  | 486 |
Federal wage tax credit carryforward |  |  | 824 |  |  |  | 824 |
State tax credits |  |  | 147 |  |  |  | 147 |
Operating lease right-of-use assets |  |  | (34,365 | ) |  |  | (48,018 | )
Property and equipment |  |  | (5,605 | ) |  |  | (9,205 | )
Subtotal |  | $ | 63,103 |  |  | $ | 47,556 |
Valuation allowance |  |  | (63,103 | ) |  |  | (47,556 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
For fiscal 2020, the Company had total deferred tax assets of $103.1 million, total deferred tax liabilities of $40.0 million and a valuation allowance of $63.1 million. The provision (benefit) for income taxes consisted of the following:
|  | FISCAL YEARS ENDED |
|  | January 30, 2021 |  |  | February 1, 2020 |  |  | February 2, 2019 |
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | (151 | )
State |  |  | 99 |  |  |  | 97 |  |  |  | 93 |
Foreign |  |  | 7 |  |  |  | 8 |  |  |  | 8 |
|  |  | 106 |  |  |  | 105 |  |  |  | (50 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | — |  |  |  | — |
Total provision (benefit) |  | $ | 106 |  |  | $ | 105 |  |  | $ | (50 | )
The following is a reconciliation between the statutory and effective income tax rates in dollars for the provision (benefit) for income tax:
|  | FISCAL YEARS ENDED |
|  | January 30, 2021 |  |  | February 1, 2020 |  |  | February 2, 2019 |
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Federal income tax at the statutory rate (1) |  | $ | (13,531 | ) |  | $ | (1,615 | ) |  | $ | (2,852 | )
State income and other taxes, net of federal tax benefit |  |  | 78 |  |  |  | 77 |  |  |  | 66 |
Section 162(m) limitation |  |  | 197 |  |  |  | 541 |  |  |  | 183 |
Permanent items |  |  | 245 |  |  |  | 277 |  |  |  | 170 |
Expiration of capital loss carryforward |  |  | — |  |  |  | — |  |  |  | 1,618 |
Charge for valuation allowance (2) |  |  | 13,167 |  |  |  | 850 |  |  |  | 992 |
Refundable AMT credit |  |  | — |  |  |  | — |  |  |  | (151 | )
Other, net |  |  | (50 | ) |  |  | (25 | ) |  |  | (76 | )
Total provision (benefit) |  | $ | 106 |  |  | $ | 105 |  |  | $ | (50 | )
(1) | The statutory rate is 21%.
(2) | The change in valuation allowance in fiscal 2019 was impacted by the adoption of ASC 842 in the tax-effected amount of $1.4 million.
As discussed in Note A, the Company’s financial statements reflect the expected future tax consequences of uncertain tax positions that the Company has taken or expects to take on a tax return, based solely on the technical merits of the tax position. The liability for unrecognized tax benefits at January 30, 2021 and February 1, 2020 was approximately $2.0 million and was associated with a prior tax position related to exiting the Company’s direct business in Europe during fiscal 2013. The amount of unrecognized tax benefits has been presented as a reduction in the reported amounts of the Company’s federal and state net operating losses carryforwards. No penalties or interest have been accrued on this liability because the carryforwards have not yet been utilized. The reversal of this liability would result in a tax benefit being recognized in the period in which the Company determines the liability is no longer necessary. For fiscal 2020, 2019 and 2018, the Company made tax payments of $0.1 million in each fiscal year.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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