INCOME TAXES (Tables)

12 Months Ended

Jan. 28, 2023

Schedule of Income before Income Tax, Domestic and Foreign

Components of Income Taxes

Income (loss) before income taxes consisted of:


(in thousands)	Fiscal 2022		Fiscal 2021		Fiscal 2020
Domestic (1)	$	152,608	$	283,793	$	(33,417)
Foreign	(85,592)		25,181		(15,326)
Income (loss) before income taxes	$	67,016	$	308,974	$	(48,743)

(1) Includes intercompany charges to foreign affiliates for management fees, cost-sharing, royalties and interest and excludes a portion of foreign income that is currently includable on the U.S. federal income tax return.

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) consisted of:


(in thousands)	Fiscal 2022		Fiscal 2021		Fiscal 2020
Current:
Federal	$	25,577	$	51,321	$	9,434
State	10,371		14,061		3,750
Foreign	9,183		5,448		23,041
Total current	$	45,131	$	70,830	$	36,225

Deferred:
Federal (1)	$	4,586	$	(15,401)	$	(73,104)
State	122		(8,995)		8,829
Foreign (1)	6,792		(7,526)		88,261
Total deferred	11,500		(31,922)		23,986
Income tax expense	$	56,631	$	38,908	$	60,211

Schedule of Effective Income Tax Rate Reconciliation

Reconciliation between the statutory federal income tax rate and the effective tax rate is as follows:


	Fiscal 2022		Fiscal 2021		Fiscal 2020
U.S. Federal income tax rate	21.0	%	21.0	%	21.0	%
Net change in valuation allowances	30.7		(19.7)		(177.2)
Foreign taxation of non-U.S. operations (1)	16.2		3.5		32.7
State income tax, net of U.S. federal income tax effect	12.4		4.4		2.6
Audit and other adjustments to prior years' accruals, net	5.9		4.7		2.6
Internal Revenue Code Section 162(m)	4.6		1.6		(5.5)
Additional U.S. taxation of non-U.S.operations	1.3		0.6		(0.2)
Tax expense (benefit) recognized on share-based compensation expense (2)	(2.6)		(1.3)		(7.5)
Credit for increasing research activities	(2.5)		(0.6)		2.6
Net income attributable to noncontrolling interests	(2.4)		(0.5)		2.2
Other items, net	(0.1)		0.1		0.9
Other statutory tax rate and law changes	—		(1.2)		2.3







Total	84.5	%	12.6	%	(123.5)	%

(1)U.S. branch operations in Puerto Rico were subject to tax at the full U.S. tax rates. As a result, income from these operations do not create reconciling items..

(2)Refer to Note 13, “SHARE-BASED COMPENSATION,” for details on discrete income tax benefits and charges related to share-based compensation awards during Fiscal 2022, Fiscal 2021, and Fiscal 2020.

Schedule of Deferred Tax Assets and Liabilities

The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:


(in thousands)	January 28, 2023		January 29, 2022
Deferred income tax assets:
Operating lease liabilities	$	237,699	$	242,290
Intangibles, foreign step-up in basis (1)	61,030		64,281
Net operating losses (NOL), tax credit and other carryforwards	68,874		52,970
Accrued expenses and reserves	27,435		30,026
Deferred compensation	16,023		16,050
Inventory	5,475		3,578
Rent	1,502		—


Other	946		45
Valuation allowances	(130,622)		(110,057)
Total deferred income tax assets	$	288,362	$	299,183

Deferred income tax liabilities:
Operating lease right-of-use assets	$	(205,827)	$	(202,916)
Property and equipment and intangibles	(14,273)		(10,150)
Prepaid expenses	(1,634)		(2,451)
Store supplies	(1,933)		(1,811)
Undistributed profits of non-U.S. subsidiaries	(1,111)		(1,082)
Rent	—		(360)


U.S. offset to foreign deferred tax assets, excluding intangibles, foreign step-up in basis (2)	(175)		—

Other	(428)		(30)
Total deferred income tax liabilities	$	(225,381)	$	(218,800)
Net deferred income tax assets (2)	$	62,981	$	80,383

Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible

The amount of uncertain tax positions as of January 28, 2023, January 29, 2022 and January 30, 2021, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:


(in thousands)	Fiscal 2022		Fiscal 2021		Fiscal 2020
Uncertain tax positions, beginning of the year	$	1,114	$	995	$	1,794
Gross addition for tax positions of the current year	339		490		235
Gross addition (reduction) for tax positions of prior years	907		(136)		395
Reductions of tax positions of prior years for:
Lapses of applicable statutes of limitations	(66)		(81)		(48)
Settlements during the period	(1)		(154)		(1,381)

Uncertain tax positions, end of year	$	2,293	$	1,114	$	995