INCOME TAXES |
3 Months Ended |
|---|---|
May 02, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES The Company utilizes the asset and liability method of accounting for income taxes as set forth in FASB ASC 740 — Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities, as well as for net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates applied to taxable income in effect for the years in which the basis differences and tax assets are expected to be realized. The Company’s provision for income taxes was $1.3 million during the First Quarter 2026 and the First Quarter 2025. The Company’s effective tax rate was (2.5)% in the First Quarter 2026, compared to (4.1)% in the First Quarter 2025. The change in the effective tax rate is primarily due to a higher pretax loss during the First Quarter 2026 compared to the First Quarter 2025. The Company continues to adjust its valuation allowance based upon its ongoing operating results. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100% of taxable income and to generate a refund of previously paid income taxes. Pursuant to the CARES Act, the Company carried back the taxable year 2020 tax loss of $150.0 million to prior years. As of May 2, 2026, the remaining income tax receivable of $19.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets. During the First Quarter 2026, the Company entered into an agreement with TRMEF to monetize its income tax receivable claim. Refer to “Note 6. Debt” for more information. The Company accrues interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. The total amount of unrecognized tax benefits was $5.0 million, $4.9 million, and $6.6 million as of May 2, 2026, January 31, 2026, and May 3, 2025, respectively, and is included within Long-term liabilities. Additional interest expense recognized in the First Quarter 2026 and First Quarter 2025 related to unrecognized tax benefits was not significant. The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company files a consolidated U.S. income tax return for federal income tax purposes. The Company is no longer subject to income tax examinations by U.S. federal, state and local or foreign tax authorities for tax years 2015 and prior. The Internal Revenue Service is currently conducting an examination of the Company’s tax return for fiscal year 2020 in conjunction with its review of the CARES Act NOL carryback to earlier fiscal years. The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues arise as a result of a tax audit, and are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
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