Income Taxes |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 11. Income Taxes We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and nine months ended September 30, 2026 and 2025 are as follows:
The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and nine months ended September 30, 2026 were due to foreign taxes on our international operations inclusive of return to provision, US federal and state income taxes, the impact of valuation allowance on deferred tax assets, and a discrete tax benefit related to our acquisition of Kenzo. The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and nine months ended September 30, 2025 were due to foreign taxes on our international operations, state income taxes, and the impact of valuation allowance on deferred tax assets. We maintain a substantially full valuation allowance against our U.S. federal, state and certain foreign deferred tax assets. Each quarter we weigh all available positive and negative evidence, including our cumulative results over recent years, our recent profitability and our projections of future taxable income. As of September 30, 2026, we determined that it is more likely than not that these deferred tax assets will not be realized. Given our recent earnings and anticipated future earnings, we believe it is reasonably possible that sufficient positive evidence will become available in the near future, as early as next reporting period, to conclude that all or a significant portion of our valuation allowance is no longer needed. A release would result in the recognition of deferred tax assets and a corresponding decrease in our provision for income taxes in the period of release. The timing and amount of any release will depend on the level of sustained profitability we achieve and positive evidence future profitability that exists.
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