Income Taxes

12 Months Ended

Feb. 01, 2020

15. Income Taxes

The components of earnings before income taxes are (in thousands):

	Fiscal Year Ended
	February 1, 2020			February 2, 2019			February 3, 2018
United States	$	93,737		$	68,276		$	54,397
Foreign		(2,744	)		(5,946	)		(5,994	)
Total earnings before income taxes	$	90,993		$	62,330		$	48,403

The components of the provision for income taxes are (in thousands):

	Fiscal Year Ended
	February 1, 2020		February 2, 2019			February 3, 2018
Current:
Federal	$	17,634	$	14,374		$	14,514
State and local		4,376		3,481			2,477
Foreign		1,220		1,079			1,328
Total current		23,230		18,934			18,319
Deferred:
Federal		241		(1,186	)		2,598
State and local		277		(443	)		237
Foreign		364		(180	)		447
Total deferred		882		(1,809	)		3,282
Provision for income taxes	$	24,112	$	17,125		$	21,601

The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax rate is as follows:

	Fiscal Year Ended
	February 1, 2020			February 2, 2019			February 3, 2018
U.S. federal statutory tax rate		21.0	%		21.0	%		33.7	%
State and local income taxes, net of federal effect		4.0			4.1			3.9
Change in valuation allowance		2.1			3.0			7.0
Foreign earnings, net		(0.2	)		(0.3	)		0.6
Other		(0.4	)		(0.3	)		(0.6	)
Effective tax rate		26.5	%		27.5	%		44.6	%

On December 22, 2017, the U.S. Tax Cuts and Jobs Act, a significant modification of existing U.S. federal tax legislation, was enacted which reduced our U.S. federal tax rate from 35.0% to 21.0%, effective January 1, 2018. The statutory tax rate for fiscal 2019 and fiscal 2018 reflects the change in tax rate.

The components of deferred income taxes are (in thousands):

	February 1, 2020			February 2, 2019
Deferred tax assets:
Deferred rent	$	—		$	11,037
Lease Liability	$	69,857		$	—
Net operating losses		13,074			11,480
Employee benefits, including stock-based compensation		2,315			2,050
Accrued liabilities		1,288			1,341
Inventory		1,111			1,148
Other		1,151			1,130
Total deferred tax assets		88,796			28,186
Deferred tax liabilities:
Property and equipment		(7,315	)		(8,328	)
Right of Use Asset		(58,068	)		—
Goodwill and other intangibles		(9,352	)		(8,706	)
Other		(930	)		(708	)
Total deferred tax liabilities		(75,665	)		(17,742	)
Net valuation allowances		(6,828	)		(5,185	)
Net deferred tax assets	$	6,303		$	5,259

At February 1, 2020 and February 2, 2019, we had foreign net operating loss carryovers that could be utilized to reduce future years’ tax liabilities of $53.2 million and $46.1 million, respectively. The tax-effected foreign net operating loss carryovers were $13.1 million and $11.5 million at February 1, 2020 and February 2, 2019, respectively. The net operating loss carryovers have an indefinite carryforward period and currently will not expire.

At February 1, 2020 and February 2, 2019, we had valuation allowances on our deferred tax assets of $6.8 million and $5.2 million, respectively, due to the uncertainty of the realization of certain deferred tax assets related to foreign net operating loss carryovers.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our U.S. federal income tax returns are no longer subject to examination for years before fiscal 2017 and with few exceptions, we are no longer subject to U.S. state examinations for years before fiscal 2014. We are no longer subject to examination for all foreign income tax returns before fiscal 2013.