Income Taxes

12 Months Ended

Jan. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 9 — INCOME TAXES

The income tax provision is comprised of the following:

	Year Ended January 31,
	2022		2021		2020
	(In thousands)
Current
Federal	$	39,283	$	(15,828)	$	22,471
State and city		4,484		(491)		4,856
Foreign		5,991		3,803		10,615
		49,758		(12,516)		37,942
Deferred
Federal		17,090		22,770		8,250
State and city		2,116		3,364		315
Foreign		1,911		(1,415)		(8,246)
		21,117		24,719		319
Income tax expense	$	70,875	$	12,203	$	38,261
Income before income taxes
United States	$	234,034	$	37,727	$	138,292
Non-United States		36,942		(2,001)		43,806
	$	270,976	$	35,726	$	182,098

The United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which includes various income tax provisions aimed at providing economic relief. One of those provisions allows any loss generated in fiscal 2021 to be carried back to each of the 5 taxable years preceding the taxable year of such a loss. The Company has elected to use this relief and carried back the fiscal 2021 tax loss to a tax year with a 35% federal rate. Additionally, the CARES Act permits Qualified Improvement Property to qualify for 15-year depreciation and therefore be also eligible for 100 percent first-year bonus depreciation. The Company has elected to take 100% bonus depreciation for all qualified improvement property.

Effective January 1, 2018, TCJA subjects a U.S. parent company to current tax on its global intangible low-taxed income (“GILTI”). For fiscal 2022, the Company has elected to treat the tax effect of GILTI as a current period expense.

The significant components of the Company’s net deferred tax asset at January 31, 2022 and 2021 are summarized as follows:

	2022		2021
	(In thousands)
Deferred income tax assets:
Compensation	$	1,807	$	2,673
Inventory		7,918		6,780
Provision for bad debts and sales allowances		15,972		18,531
Supplemental employee retirement plan		710		584
Net operating loss		10,949		12,703
Operating lease liability		32,721		35,658
Foreign tax credit carryforward		2,805		4,962
Other		782		3,792
Gross deferred income tax assets		73,664		85,683
Less: valuation allowance		(14,481)		(13,272)
Net deferred income tax assets		59,183		72,411
Deferred income tax liabilities:
Depreciation and amortization		(56,901)		(41,185)
Intangibles		(9,576)		(14,271)
Operating lease asset		(27,272)		(30,182)
Accrued expenses		(59)		—
Prepaid expenses and other		(1,826)		(2,028)
Total deferred income tax liabilities		(95,634)		(87,666)
Net deferred tax liabilities	$	(36,451)	$	(15,255)

The total undistributed earnings of the Company’s foreign subsidiaries are approximately $131.0 million for the fiscal year ended January 31, 2022. Upon distribution of those earnings in the form of dividends, the Company does not anticipate any material tax costs. As such, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of undistributed foreign earnings. Those earnings are considered indefinitely reinvested. Even though the undistributed earnings could have been distributed back generally without U.S. federal income tax as a result of the one-time transition tax under the TCJA regime, the Company does not expect to change its indefinite reinvestment categorization with respect to those earnings.

The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements for the years ended January 31:

	2022		2021		2020
Provision for Federal income taxes at the statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of Federal tax benefit	2.0		(0.6)		1.9
Permanent differences resulting in Federal taxable income	4.3		12.8		5.9
Foreign tax rate differential	—		(0.3)		(3.8)
Share-based payments	—		12.5		(0.8)
Foreign tax credit	(3.4)		(7.3)		(3.5)
Valuation allowance	0.8		13.7		0.9
Net operating loss carryback	—		(18.6)		—
Other, net	1.5		1.0		(0.6)
Actual provision for income taxes	26.2	%	34.2	%	21.0	%

The Company’s effective tax rate decreased 8.0% percent in fiscal 2022 compared to fiscal 2021. This decrease in the Company’s effective tax rate is primarily the result of the Company’s significant increase in pretax book income in relation

to its tax expense. The Company’s effective tax rate increased 13.2% percent in fiscal 2021 as compared to fiscal 2020. The increase in the Company’s fiscal 2021 effective tax rate compared to the fiscal 2020 effective tax rate is primarily the result of the Company’s significant reduction in pretax book income in relation to its tax expense.

Valuation allowances represent deferred tax benefits where management is uncertain if the Company will have the ability to recognize those benefits in the future. During the year ended January 31, 2022, the Company recorded an additional valuation allowance of $1.2 million against its deferred tax assets for its standalone state tax losses and foreign retail losses.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows:

	2022		2021		2020
	(In thousands)
Balance at February 1,	$	2,293	$	2,111	$	—
Additions for tax positions of prior years		595		182		2,111
Lapses of statues of limitations		(446)		—		—
Balance at January 31,	$	2,442	$	2,293	$	2,111

The Company accounts for uncertain income tax positions in accordance with ASC 740 — Income Taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of January 31, 2022, there was an increase in the unrecognized tax position reserve of $0.2 million related to recent state and local tax return filings.

The Company’s policy on classification is to include interest in interest and financing charges, net and penalties in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income. The Company and certain of its subsidiaries are subject to U.S. Federal income tax as well as the income tax of multiple state, local, and foreign jurisdictions.

Of the major jurisdictions, the Company and its subsidiaries are subject to examination in the United States and various foreign jurisdictions for fiscal year 2014 and forward. The Company is currently under audit examination by New York, New Jersey and Canada for fiscal years 2016 through 2019. The Company believes that it is reasonably possible there will be no change to its unrecognized income tax position reserves during the next twelve months due to the applicable statues of limitations.