Income Taxes |
6 Months Ended |
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Aug. 02, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 10. Income Taxes On July 4, 2025, the U.S. government enacted tax legislation in H.R.1 Reconciliation Act, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA includes significant provisions including modifications to U.S. taxation on foreign earnings, the reinstating of one hundred percent bonus depreciation and the repeal of capitalization of U.S. research and development expenditures, reinstating full expensing. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented in subsequent years. The Company has accounted for the estimated tax implications of the OBBBA in the second quarter of FY2025. The impact to our effective tax rate for both the 13 and 26 weeks ended August 2, 2025 is immaterial. As our assessment is based on current estimates, we will continue to refine our calculations and evaluate the full impact of the OBBBA on our consolidated financial statements. Our estimates may be adjusted as more guidance is released around OBBBA and as additional information become available. The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended August 2, 2025 was 23.4% compared to 25.4% for the 13 weeks ended August 3, 2024. The change in the effective tax rate, as compared to the prior period, is primarily due to tax audit adjustments and foreign currency adjustments. The effective income tax rate for the 26 weeks ended August 2, 2025 was 23.9% compared to 22.1% for the 26 weeks ended August 3, 2024. The change in the effective tax rate, as compared to the prior period, is primarily due to share-based payments and tax audit adjustments.
The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense, which were insignificant for both the 13 weeks and 26 weeks ended August 2, 2025 and August 3, 2024. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended August 2, 2025 and August 3, 2024. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $6.8 million due to settlements, expiration of statute of limitations, or other changes in unrecognized tax benefits, which is expected to have an immaterial impact on the annual effective tax rate.
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