Income Taxes

9 Months Ended

Oct. 29, 2022

Income Taxes

Income Taxes

Note 15  Income Taxes

The Company’s consolidated effective tax rate can vary considerably from period to period, depending on a number of factors.  The Company’s consolidated effective tax rates were 26.2% and 24.9% for the thirteen weeks ended October 29, 2022 and October 30, 2021, respectively.  The higher effective tax rate for the thirteen weeks ended October 29, 2022 was driven by an increase in permanent adjustments, primarily due to the non-deductible portion of executive compensation.

The Company’s consolidated effective tax rate was 25.7% for the thirty-nine weeks ended October 29, 2022, compared to 27.7% for the nine months ended October 30, 2021.  The higher effective tax rate for the thirty-nine weeks ended October 30, 2021 primarily reflects the incremental valuation allowances for the Company’s deferred tax assets for certain jurisdictions recorded in the thirty-nine weeks ended October 30, 2021, as well as the non-deductibility of losses at the Company’s Canadian division, which were driven by exit-related costs associated with Naturalizer retail stores in the first quarter of 2021.  

As of October 29, 2022, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, as required by the Tax Cuts and Jobs Act.  The Company periodically evaluates its international investment opportunities and plans, as well as its international working capital needs, to determine the level of investment required and, accordingly, determines the level of international earnings that is considered indefinitely reinvested.  Based upon that evaluation, earnings of the Company’s international subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided.  If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted international earnings.