v3.26.1
Income Taxes
 6 Months Ended
Jul. 04, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages):
13 Weeks Ended26 Weeks Ended
July 4,
2026		June 28,
2025		July 4,
2026		June 28,
2025
Income tax expense (benefit)
$3,568 $1,267 $(493)$(4,444)
Effective income tax rate38.8 %20.3 %0.3 %19.5 %
Our tax provision for interim periods was historically determined using an estimated annual effective tax rate ("estimated AETR"), adjusted for discrete events arising in each respective fiscal quarter. When forecasted ordinary annual pre‑tax income is near breakeven, small changes in estimated annual results may result in significant volatility in the annual effective income tax rate that is not considered reliable and meaningful. In such circumstances, the income tax effects are recognized discretely in the interim period ("discrete ETR"). During the second quarter and first half of fiscal 2026, we utilized the discrete ETR method to compute our income tax provision as the estimated AETR method would not provide a reliable and meaningful estimate of our tax provision.
Our effective income tax rate for the second quarter of fiscal 2026 was higher than the combined U.S. federal and state statutory income tax rates primarily due to shortfalls from share-based compensation and deduction limitations under Section 162(m) of the Internal Revenue Code. Our effective income tax rate for the first half of fiscal 2026 was lower than the combined U.S. federal and state statutory income tax rates primarily due to non-deductible goodwill impairment.
The change in our effective income tax rate for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 was primarily attributable to changes in our levels of earnings. The change in our effective income tax rate for the first half of fiscal 2026 compared to the first half of fiscal 2025 was primarily attributable to non-deductible goodwill impairment recognized during the first half of fiscal 2026.
Our policy is to recognize interest and penalties associated with uncertain tax positions as part of the income tax provision in our condensed consolidated statements of operations and comprehensive income (loss) and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties, nor have we accrued for or made payments for interest and penalties. We had no uncertain tax positions as of July 4, 2026 and January 3, 2026, respectively.