Income Taxes

6 Months Ended

Jul. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings across jurisdictions.

For the thirteen weeks ended July 31, 2021 and August 1, 2020, the Company's effective tax rate was 22.7% and 25.7%, respectively. The effective tax rate of 22.7% for the thirteen weeks ended July 31, 2021 primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021. The 25.7% effective tax rate for the thirteen weeks ended August 1, 2020 includes the annual benefit of the fiscal 2020 pre-tax loss due the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, partially offset by the impact of nondeductible book goodwill impairment charges. In addition, during the thirteen weeks ended August 1, 2020, the Company recognized a small valuation allowance against certain state tax credit carryforwards that are expected to expire unutilized in the future.

For the twenty-six weeks ended July 31, 2021 and August 1, 2020, the Company's effective tax rate was 30.0% and 29.2%, respectively. The effective tax rate of 30.0% for the twenty-six weeks ended July 31, 2021 primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021 and favorable state audit settlements. The 29.2% effective tax rate for the twenty-six weeks ended August 1, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense.

As of July 31, 2021, our unaudited condensed consolidated balance sheet reflected a $38.9 million income tax receivable related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.