Income Tax |
3 Months Ended |
|---|---|
May 02, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Tax | Income Tax The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in accurately predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in tax laws, the applicability of special tax regimes, changes in how the Company does business, discrete items, and acquisitions or divestitures, as well as the integration of acquisitions. The Company recorded income tax expense of $48.8 million and $38.0 million for the three months ended May 2, 2026 and May 3, 2025, respectively. The increase in the Company’s effective tax rate was primarily driven by non-deductible adjustments to contingent consideration liability, net of the tax impacts of the Company’s forward stock purchase contract. The Company’s estimated effective tax rate for the year differs from the U.S. statutory rate of 21% primarily due to a substantial portion of its earnings, or in some cases, losses being taxed or benefited at rates lower than the U.S. statutory rate, net of the impact of U.S. taxation of foreign operations, benefits from tax credits, non-deductible adjustments to contingent consideration liability, net of the tax impacts of the Company’s forward stock purchase contract, valuation allowance releases as well as discrete tax benefits and expenses for excess deductions and deficiencies on stock-based compensation. The Company is subject to legislation based on the Organization for Economic Cooperation and Development’s 15% global minimum tax regime which applies to the majority of countries in which the Company operates. As a result of this legislation, the Company’s foreign earnings are generally subject to a minimum tax rate of 15%. On January 5, 2026, the OECD released a comprehensive package of administrative guidance, including the “side-by-side system” that exempts U.S. parented multinational businesses from certain provisions of Pillar Two, specifically the Income Inclusion Rule and the Undertaxed Profits Rule. The OECD guidance provides that the side-by-side system will be effective for fiscal years beginning on or after January 1, 2026. In certain jurisdictions, local legislative action is needed to effectuate “side by side system” and cannot be considered in the Company’s accounting estimates until enactment. The effects of any future legislation in this area are not yet reasonably estimable, but if such legislation is enacted in the future could have a significant effect on the Company’s provision for income taxes, the Company’s financial results, and the Company’s earnings and cash flows. The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025. The 2025 Tax Act makes permanent key elements of the 2017 Tax Cuts and Jobs Act and modifies certain provisions of the U.S. International tax framework. Certain provisions of the 2025 Tax Act become effective in fiscal year 2027. The Company’s tax provision for the May 2, 2026 period includes the impact of the 2025 Tax Act. The Company will continue to evaluate the impact of the 2025 Tax Act on its income taxes.
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