INCOME AND OTHER TAXES |
3 Months Ended |
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May 01, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME AND OTHER TAXES | INCOME AND OTHER TAXES For the three months ended May 1, 2026, the Company’s effective income tax rate was 12.9% on pre-tax income of $3.9 billion compared to 10.9% on pre-tax income of $1.1 billion for the three months ended May 2, 2025. The changes in the Company’s effective income tax rate were primarily driven by discrete tax items. For the three months ended May 1, 2026 and May 2, 2025, the Company recorded discrete tax benefits of $0.2 billion and $0.1 billion, respectively, related to stock-based compensation. The differences between the estimated effective income tax rates and the U.S. federal statutory rate of 21% is primarily due to foreign earnings taxed at different rates, as well as to discrete tax items. In June 2023, the Company received a Revenue Agent’s Report for the federal income tax examination by the Internal Revenue Service (“IRS”) of fiscal years 2018 through 2019. The IRS proposed significant adjustments primarily relating to certain transactions the Company completed as part of its business integration efforts. In August 2023, the Company submitted a written protest to the IRS relating to certain assessments. The Company received a rebuttal from the IRS to its written protest in April 2024. The Company disagrees with the IRS’s proposed adjustments and will contest them through the IRS administrative appeals procedures. The Company expects to continue discussions with the IRS Independent Office of Appeals throughout the fiscal year and anticipates that the appeals process for the resolution of these matters will extend beyond the next twelve months. The IRS is also currently conducting a federal income tax examination of the Company for fiscal years 2020 through 2022. The Company is also currently under income tax audits in various U.S. state and foreign taxing jurisdictions. The Company is undergoing negotiations, and in some cases contested proceedings, relating to tax matters with the taxing authorities in these jurisdictions. With respect to major U.S. state and foreign taxing jurisdictions, the Company is generally not subject to tax examinations for years prior to the fiscal year ended February 2, 2018. The Company believes that it has provided adequate reserves related to all income tax matters contained in tax periods open to examination, including the IRS audits described above. Although the Company believes it has made adequate provisions for the uncertainties with respect to these audits, should the Company experience unfavorable outcomes, such outcomes could have a material impact on its results of operations, financial position, and cash flows. Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. Net unrecognized tax benefits were $1.1 billion as of both May 1, 2026 and January 30, 2026, and are included in other non-current liabilities in the Condensed Consolidated Statements of Financial Position.
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