Income Taxes Income Taxes (Notes)

12 Months Ended

Apr. 27, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 13. Income Taxes - Continuing Operations

For Fiscal 2024 and Fiscal 2023, we had no material revenue or expense in jurisdictions outside the United States other than India.

Impact of U.S. Tax Reform

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”) was enacted. We have analyzed the provisions, which provide for a technical correction to allow for full expensing of qualified leasehold improvements, modifications to charitable contribution and net operating loss limitations (“NOLs”), modifications to the deductibility of business interest expense, as well as Alternative Minimum Tax (“AMT”) credit acceleration. The most significant impact of the legislation for the Company was an income tax benefit of $7,164 for the carryback of NOLs to higher

tax rate years, recorded in Fiscal 2021. As of April 29, 2024, we recognized a current income tax receivable for NOL carrybacks in prepaid and other current assets on the consolidated balance sheet. We received a $15,774 refund in Fiscal 2023 and a $7,621 refund in Fiscal 2024 and expect to receive additional refunds of approximately $2,403 in Fiscal 2025.

Income tax benefits for Fiscal 2024 and Fiscal 2023 are as follows:

	52 weeks ended
	April 27, 2024		April 29, 2023
Current:
Federal	$	—	$	—
State	318		301
International	417		252
Total Current	735		553
Deferred:
Federal	(552)		458
State	—		—
International	—		—
Total Deferred	(552)		458
Total US tax provision	$	183	$	1,011

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

	52 weeks ended
	April 27, 2024		April 29, 2023
Federal statutory income tax rate (a)	21.0	%	21.0	%
State income taxes, net of federal income tax benefit	4.0		3.6
Permanent book / tax differences	(1.7)		(1.2)
Changes in valuation allowance	(23.0)		(24.6)
Other, net	(0.6)		0.1
Effective income tax rate	(0.3)	%	(1.1)	%

The effective tax rate for Fiscal 2024 is materially consistent with the prior year.

One percentage point on our Fiscal 2024 effective tax rate is approximately $623. The other permanent book/tax differences are principally comprised of non-deductible officer's compensation, and non-deductible stock compensation.

We account for income taxes using the asset and liability method. Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards.

The significant components of our deferred taxes consisted of the following:

	As of
	April 27, 2024		April 29, 2023
Deferred tax assets:
Estimated accrued liabilities	$	3,279	$	5,840
Inventory	19,402		19,426
Stock-based compensation	979		1,145
Insurance liability	—		347
Operating lease liabilities	53,628		65,471
Tax credits	1,131		886
Goodwill	7,329		8,314
Net operating losses	79,182		70,503
Interest carryforwards	14,897		7,246
Property and equipment	795		—
Other	4,052		2,456
Gross deferred tax assets	184,674		181,634
Valuation allowance	(81,174)		(56,962)
Net deferred tax assets	103,500		124,672
Deferred tax liabilities:
Intangible asset amortization	(19,757)		(23,555)
Operating lease right-of-use assets	(51,640)		(63,201)
LIFO inventory valuation	(33,392)		(33,999)
Property and equipment	—		(5,755)
Gross deferred tax liabilities	(104,789)		(126,510)
Net deferred tax liability	$	(1,289)	$	(1,838)

As of April 27, 2024 and April 29, 2023, we had $0 of unrecognized tax benefits.

Our policy is to recognize interest and penalties related to income tax matters in income tax expense. As of both April 27, 2024 and April 29, 2023, we had accrued $0 for net interest and penalties. 

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating our ability to utilize our deferred tax assets, we considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis. As of April 27, 2024, we recorded a valuation allowance of $81,174 compared to $56,962 as of April 29, 2023.

As of April 27, 2024, we had state net operating loss carryforwards (“NOLs”) of approximately $457,609 which will begin to expire in 2026, state tax credit carryforwards totaling $430 which will begin to expire in 2024, federal tax credit carryforward of $1,131 which will begin to expire in 2040 and federal NOLs of approximately $265,522 which have an indefinite carryforward period.

As of April 27, 2024, we recorded $201 of foreign withholding tax related to repatriations of earnings from certain foreign subsidiaries. If additional earnings in these foreign subsidiaries were repatriated in the future, additional income and withholding tax expense would be incurred. Additional income and withholding tax expense on any future repatriated earnings is estimated to be less than $100.

We are subject to U.S. federal income tax, as well as income tax in jurisdictions of each state having an income tax. The tax years that remain subject to examination are primarily Fiscal 2018 and forward. Some earlier years remain open for a small minority of states.

Potential Limitation to Future Tax Attribute Utilization

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change” (generally defined as a cumulative change in our ownership by “5-percent shareholders” that exceeds 50

percentage points over a rolling three-year period), the corporation’s ability to use its pre-change net operating losses and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. Similar rules may apply under state tax laws. As a result of the rights offering, backstop commitment, private investment, and debt conversion completed on June 10, 2024, we may have experienced an ownership changes as defined by Sections 382 and 383. The Company intends to perform a study to determine if an ownership change has occurred. If it is determined that an ownership change has occurred under Section 382 and 383, we expect any corresponding annual limitations to severely impact the future utilization of our tax attributes including our $265,522 NOL carryforward. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 17. Subsequent Events.