Income Taxes

3 Months Ended

Apr. 29, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For the first quarter of 2023, the Company based the income tax benefit on the estimated annual effective tax rate, adjusted to reflect the effect of discrete items.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through May 4, 2024, 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 $2.0 million. Actual results may differ materially from this estimate.

We regularly evaluate the realizability of our net deferred tax assets based on both positive and negative evidence available. As of April 29, 2023, we have an established valuation allowance on certain state and local deferred tax assets. There is a reasonable possibility that further valuation allowances on our federal, state and local net deferred tax assets may be required in future quarters. If insufficient positive evidence exists in future quarters and if financial conditions do not improve, it could be appropriate to record an increase in non-cash, discrete income tax expense related to changes in the valuation allowance in future quarters.