Income Taxes

3 Months Ended

Apr. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

In 2021, the provision for income taxes was based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items.

For 2022, the Company's estimated annual effective tax rate has fluctuated with changes in estimated full-year pre-tax earnings due to uncertainty in our forecasted earnings resulting from an unpredictable retail landscape due to macroeconomic pressures, including cost inflation, and a decline in consumer discretionary spending. Differences between pre-tax and taxable income, such as non-deductible executive compensation, cause the effective income rate to vary significantly. Accordingly, the Company does not believe that it can estimate the annual effective tax rate for 2022 with sufficient precision and, as permitted by GAAP, has determined the income tax benefit for the first quarter of 2022 based upon the year-to-date pre-tax loss and the effect of differences between book and taxable loss.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through April 29, 2023, based on (1) expected cash and noncash settlements or payments of uncertain tax positions, and (2) lapses of the applicable statutes of limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is approximately $4.0 million. Actual results may differ materially from this estimate.