Income Taxes |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 01, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 8. Income Taxes For the three months ended August 1, 2026, the Company utilized the discrete effective tax rate method, treating the year-to-date period as if it was the annual period to calculate its interim income tax provision. The Company concluded it could not use the estimated annual effective tax rate method as it could not calculate a reliable estimate of the annual effective tax rate due to it being highly sensitive to minor changes in the forecasted amounts, thus generating significant variability in the estimated annual effective tax rate and distorting the customary relationship between income tax expense and pre-tax loss in interim periods. The Company’s income tax expense and effective tax rate for the three months ended August 1, 2026 and August 2, 2025 were as follows:
The effective tax rate for the three months ended August 1, 2026 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for U.S. deferred tax assets of $2.4 million and an unfavorable effect from Net Controlled Foreign Corporation (CFC) Tested Income (“NCTI”), non-deductible interest and Pillar 2 top-up tax partially offset by the effect of income derived from foreign operations with lower statutory tax rates. The valuation allowance is recorded based on the evaluation of all available evidence that the recovery of some of its deferred tax assets was not more likely than not. The effective tax rate for the three months ended August 2, 2025 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets of $1.7 million, an unfavorable impact from global intangible low-tax income (“GILTI”) and non-deductible interest, partially offset by the impact of income derived from foreign operations with lower statutory tax rates. The Company’s gross unrecognized income tax benefits were $0.9 and $0.8 million as of August 1, 2026 and May 2, 2026, respectively. If any portion of the Company’s unrecognized tax benefits is recognized, it would affect the Company’s effective tax rate. The unrecognized tax benefits are reviewed periodically and adjusted for changing facts and circumstances, such as tax audits, the lapsing of applicable statutes of limitations, and changes in tax law. The Company recognizes interest and penalties related to income tax uncertainties in income tax expense. Accrued interest and penalties were $0.1 million and $0.1 million as of August 1, 2026 and May 2, 2026, respectively. |
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