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Income Tax (Tables) | 12 Months Ended
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Jan. 02, 2021
Income Tax Disclosure [Abstract] |
Summary of Income Tax Provision for Continuing Operations | The income tax provision for continuing operations is made up of the following components:
| 2020 |  |  | 2019 |  |  | 2018 |
(In thousands) | (53 Weeks) |  |  | (52 Weeks) |  |  | (52 Weeks) |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ |  | 1,844 |  |  | $ |  | (899 | ) |  | $ |  | (1,607 | )
State |  |  | 5,149 |  |  |  |  | 817 |  |  |  |  | 1,107 |
Total current income tax expense (benefit) |  |  | 6,993 |  |  |  |  | (82 | ) |  |  |  | (500 | )
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 5,637 |  |  |  |  | 126 |  |  |  |  | 8,370 |
State |  |  | (3,180 | ) |  |  |  | (2,386 | ) |  |  |  | (963 | )
Total deferred income tax expense (benefit) |  |  | 2,457 |  |  |  |  | (2,260 | ) |  |  |  | 7,407 |
Total income tax expense (benefit) | $ |  | 9,450 |  |  | $ |  | (2,342 | ) |  | $ |  | 6,907 |
Reconciliation of Statutory Federal Rate to Effective Rate | A reconciliation of the statutory federal rate to the effective rate is as follows:
| 2020 |  | 2019 |  | 2018
| (53 Weeks) |  | (52 Weeks) |  | (52 Weeks)
Federal statutory income tax rate |  | 21.0 |  | % |  |  | 21.0 |  | % |  |  | 21.0 |  | %
Stock compensation |  | 0.7 |  |  |  |  | 7.2 |  |  |  |  | 0.7 |  |
Non-deductible expenses |  | 1.9 |  |  |  |  | 0.8 |  |  |  |  | 0.6 |  |
Federal rate change effect on deferred taxes |  | — |  |  |  |  | — |  |  |  |  | (1.2 | ) |
Change in tax contingencies |  | 0.9 |  |  |  |  | — |  |  |  |  | (2.5 | ) |
Charitable product donations |  | (0.2 | ) |  |  |  | (5.6 | ) |  |  |  | (0.6 | ) |
Other, net |  | (1.0 | ) |  |  |  | (2.4 | ) |  |  |  | (0.9 | ) |
Federal loss carryback (a) |  | (11.9 | ) |  |  |  | — |  |  |  |  | — |  |
State taxes, net of federal income tax benefit |  | 1.7 |  |  |  |  | (36.1 | ) |  |  |  | 1.7 |  |
Tax credits |  | (2.0 | ) |  |  |  | (50.4 | ) |  |  |  | (1.8 | ) |
Effective income tax rate |  | 11.1 |  | % |  |  | (65.5 | ) | % |  |  | 17.0 |  | %
| (a) | On March 27, 2020, the U.S. government enacted tax legislation to provide economic stimulus and support businesses and individuals during the COVID-19 pandemic, referred to as the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. In connection with the CARES Act, the Company recorded net discrete income tax benefits of $10.1 million in 2020 associated with the additional deductibility of certain expenses combined with provisions which enable companies to carry back tax losses to years prior to the enactment of the Tax Cuts and Jobs Act (“Tax Reform”), where the federal statutory income tax rate was 35%. As a result of carrying back losses to previous tax years, the Company recorded $0.8 million in expense to reinstate tax contingencies which had previously expired, included in the “Change in tax contingencies” line in the table above.
Summary of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities resulting from temporary differences as of January 2, 2021 and December 28, 2019 are as follows:
|  |  |  | January 2, |  |  | December 28, |
(In thousands) |  |  |  | 2021 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Employee benefits |  |  |  | $ |  | 33,115 |  |  | $ |  | 17,087 |
Accrued workers' compensation |  |  |  |  |  | 1,834 |  |  |  |  | 1,632 |
Allowance for doubtful accounts |  |  |  |  |  | 1,688 |  |  |  |  | 10,870 |
Intangible assets |  |  |  |  |  | 2,203 |  |  |  |  | 1,319 |
Restructuring |  |  |  |  |  | 377 |  |  |  |  | 472 |
Deferred revenue |  |  |  |  |  | 1,679 |  |  |  |  | 1,678 |
Stock warrants |  |  |  |  |  | 1,896 |  |  |  |  | — |
Lease liabilities |  |  |  |  |  | 87,606 |  |  |  |  | 85,005 |
Accrued insurance |  |  |  |  |  | 964 |  |  |  |  | 1,007 |
Federal net operating loss carryforwards (a) |  |  |  |  |  | — |  |  |  |  | 2,332 |
Federal credits |  |  |  |  |  | — |  |  |  |  | 851 |
State net operating loss carryforwards (a) |  |  |  |  |  | 6,175 |  |  |  |  | 4,498 |
All other |  |  |  |  |  | 2,481 |  |  |  |  | 4,472 |
Total deferred tax assets |  |  |  |  |  | 140,018 |  |  |  |  | 131,223 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment |  |  |  |  |  | 47,472 |  |  |  |  | 45,136 |
Lease assets |  |  |  |  |  | 77,673 |  |  |  |  | 73,191 |
Inventory |  |  |  |  |  | 33,531 |  |  |  |  | 33,739 |
Goodwill |  |  |  |  |  | 26,025 |  |  |  |  | 21,404 |
All other |  |  |  |  |  | 1,045 |  |  |  |  | 864 |
Total deferred tax liabilities |  |  |  |  |  | 185,746 |  |  |  |  | 174,334 |
Net deferred tax liability |  |  |  | $ |  | 45,728 |  |  | $ |  | 43,111 |
| (a) | As of January 2, 2021, the Company’s state net operating loss carryforwards in various taxing jurisdictions expire in tax years 2021 through 2040 if not utilized.
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In thousands) |  |  |  | 2020 |  |  | 2019 |
Balance at beginning of year |  |  |  | $ |  | 1,425 |  |  | $ |  | 1,477 |
Gross increases - tax positions taken in prior years |  |  |  |  |  | 910 |  |  |  |  | 71 |
Gross decreases - tax positions taken in prior years |  |  |  |  |  | (1,000 | ) |  |  |  | (125 | )
Gross increases - tax positions taken in current year |  |  |  |  |  | — |  |  |  |  | 850 |
Lapsed statutes of limitations |  |  |  |  |  | (18 | ) |  |  |  | (848 | )
Balance at end of year |  |  |  | $ |  | 1,317 |  |  | $ |  | 1,425 |

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