v3.26.1
Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the provision for income taxes from continuing operations:
Fiscal Year ended
202520242023
Current tax expense (benefit):
Federal$22.2 $1.9 $(0.7)
State9.3 3.6 1.2 
Foreign0.8 2.2 6.0 
32.3 7.7 6.5 
Deferred tax (benefit) expense:
Federal(48.4)— — 
State(21.7)— — 
Foreign3.4 (1.8)(0.1)
(66.7)(1.8)(0.1)
Total income tax (benefit) expense$(34.4)$5.9 $6.4 
The following table presents the components of income/(loss) from continuing operations before income taxes:
Fiscal Year ended
202520242023
United States$432.9 $194.2 $48.6 
Foreign(48.9)(57.0)(35.5)
Total$384.0 $137.2 $13.1 

The following table reconciles the U.S. federal statutory tax rate to our effective income tax rate on income from continuing operations, presenting both dollar amounts and percentages in accordance with ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This disclosure reflects the disaggregation of specific tax categories for the current reporting period:
Fiscal Year Ended 2025
AmountPercent
Federal statutory tax rate$80.7 21.1 %
Domestic federal
  Tax credits(1.0)(0.3)
  Nontaxable or nondeductible items:
  Non-deductible interest from warrant distribution8.9 2.3 
  Other(0.4)(0.1)
  Cross-border tax laws(0.3)(0.1)
  Other reconciling items:
  Capital loss carryforward(4.8)(1.3)
  Other1.6 0.4 
  Change in valuation allowance(117.5)(30.6)
State income taxes, net of federal effect (1)
(14.3)(3.7)
Foreign tax effects
Canada
  Impairment loss5.0 1.3 
  Tax effect on net operating losses for which no benefit is recognized9.3 2.4 
  Change in valuation allowance(8.6)(2.2)
France
  Tax effect on net operating losses for which no benefit is recognized(2.3)(0.6)
  Change in valuation allowance13.0 3.4 
Ireland
  Tax effect on net operating losses for which no benefit is recognized19.1 5.0 
  Change in valuation allowance(22.6)(5.9)
Luxembourg
  Tax effect on net operating losses for which no benefit is recognized(266.4)(69.3)
  Change in valuation allowance266.1 69.3 
Other foreign jurisdictions1.9 0.4 
Change in unrecognized tax benefits(1.8)(0.5)
Effective tax rate$(34.4)(9.0)%
(1) State and local taxes in Arizona, Illinois, New Jersey, New York, and New York City accounted for more than 50% of the tax effect in this category.
The following table provides the disclosures required before adopting ASU 2023-09 and reconciles our effective tax rate with the U.S. federal tax rate:
Fiscal Year Ended
20242023
Federal statutory tax rate21.0 %21.0 %
State income taxes, net of federal effect5.6 151.5 
Foreign income tax rate differential(6.4)(35.0)
Change in valuation allowance(28.3)(133.4)
Change in unrecognized tax benefits0.9 (20.2)
Withholding tax expense1.7 5.0 
Stock-based compensation(0.1)30.5 
Other (including permanent differences)(1)
9.9 29.5 
4.3 %48.9 %
__________________
(1) Other is comprised of numerous items, none of which is individually or in the aggregate greater than 5% of income tax expense calculated at the statutory rate.
Upon adoption of ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, cash paid for income taxes, net of refunds, disaggregated by jurisdiction, was as follows:
 
 Fiscal Year Ended 2025
Federal$28.4 
State2.6 
Foreign2.8 
Total cash paid for income taxes, net of refunds$33.8 

Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities which are presented in the table below.
January 31, 2026February 1, 2025
Deferred tax asset:
Inventory$7.6 $7.7 
Deferred rents0.2 0.9 
Property and equipment1.8 1.2 
Operating lease liabilities73.1 87.5 
Stock-based compensation1.6 2.2 
Net operating losses and other loss carryforwards383.7 227.7 
Customer liabilities21.1 25.0 
Credits2.2 4.2 
Accrued compensation4.2 3.5 
Intangible assets0.8 1.9 
Goodwill0.1 0.3 
Digital assets and related receivables29.1 — 
Other25.6 29.5 
Total deferred tax assets551.1 391.6 
Valuation allowance(403.2)(291.3)
Total deferred tax assets, net147.9 100.3 
Deferred tax liabilities:
Prepaid expenses(0.2)(0.2)
Operating lease right-of-use assets(60.9)(82.0)
Total deferred tax liabilities(61.1)(82.2)
Net deferred tax assets$86.8 $18.1 
The above amounts are reflected in the consolidated financial statements as:
Deferred income taxes - assets$86.8 $18.1 
Deferred income taxes - liabilities$— $— 
During fiscal 2025, we increased our valuation allowances by a net $111.9 million. This net change reflects increases of approximately $253.0 million of increases in certain international jurisdictions where additional losses were generated and the related deferred tax assets are not expected to be realizable, partially offset by approximately $141.1 million of releases in jurisdictions that returned to profitability after previously being in cumulative loss positions. As of January 31, 2026, we maintain full valuation allowances on all international deferred tax assets except those in Australia, and we maintain valuation allowances on only certain deferred tax assets in the United States, rather than a full valuation allowance. We will continue to assess the realizability of our gross and net deferred tax assets in all tax jurisdictions in future reporting periods.
With respect to state and local jurisdictions and countries outside of the United States, we and our subsidiaries are typically subject to examination for 3 to 6 years after the relevant income tax returns have been filed. Although the outcome of tax audits is inherently uncertain, we believe that adequate provisions for tax, interest and penalties have been recorded in the accompanying consolidated financial statements for any adjustments that may arise from state, local or foreign tax examinations.
As of January 31, 2026, we had approximately $30.9 million of U.S. federal net operating loss ("NOL") carryforwards acquired through the ThinkGeek acquisition, which will expire in years 2031 through 2036, We also had $275.5 million of state NOL carryforwards, of which $239.0 million will expire between 2025 to 2044, $26.9 million have no expiration date, and $9.5 million, acquired through the ThinkGeek acquisition, will expire between 2029 through 2036.
Section 382 under the Internal Revenue Code imposes limitations on the utilization of tax attributes following an ownership change. The federal and state NOL carryforwards acquired through the ThinkGeek acquisition experienced an ownership change on July 17, 2015, and we have determined that these NOLs will be subject to future utilization limitations.
We have approximately $2.2 million of foreign tax credit carryforwards that expire between 2025 through 2027, and approximately $1,366.4 million of foreign NOL carryforwards in various jurisdictions that have no expiration period, substantially all of which relate to Luxembourg and were generated primarily from impairments of international subsidiaries that we have divested or are currently held for sale.
As of January 31, 2026, the gross amount of unrecognized tax benefits was approximately $5.0 million. If we were to prevail on all uncertain tax positions, the net effect would result in approximately a $5.0 million benefit to our effective tax rate, excluding any related to interest and penalties.
The following table presents a reconciliation of the changes in the gross balances of unrecognized tax benefits:
Fiscal Year ended
202520242023
Beginning balance of unrecognized tax benefits$7.5 $6.8 $9.5 
Increases related to current period tax positions0.3 0.8 0.6 
Increase (decrease) related to prior period tax positions(0.2)0.1 0.8 
Reductions as a result of a lapse of the applicable statute of limitations(0.4)(0.2)(1.1)
Reductions as a result of settlements with taxing authorities(2.2)— (3.0)
Ending balance of unrecognized tax benefits$5.0 $7.5 $6.8 
We recognize accrued interest and penalties related to unrecognized tax benefits within income tax expense in our Consolidated Statement of Operations. As of January 31, 2026, February 1, 2025, and February 3, 2024, we had approximately $2.0 million, $2.2 million and $1.6 million, respectively, of accrued interest and penalties. During fiscal 2025, 2024 and 2023, we recognized approximately $0.2 million of benefit, $0.6 million of expense and $2.1 million of benefit, respectively, in income tax expense related to those items. If we were to prevail on all uncertain tax positions, the reversal of these accrued interest and penalties would result in a corresponding benefit to our effective tax rate.
It is reasonably possible that the amount of the unrecognized benefits with respect to certain positions could significantly increase or decrease within the next 12 months as a result of resolving ongoing audits. However, because audit outcomes and timing are inherently uncertain, and given the complexity of the issues involved, we are unable to reasonably estimate the potential change, if any, in unrecognized tax benefits during that period. Nevertheless, we believe our reserves for uncertain tax positions are adequate as of January 31, 2026.
We do not assert indefinite reinvestment with respect to the undistributed earnings of our foreign subsidiaries. Income taxes and/or withholding taxes associated with amounts available for distribution as of January 31, 2026 are not expected to be material to our financial statements.
The Organization for Economic Co-operation and Development ("OECD"), supported by more than 140 member countries, has agreed to implement a global minimum tax rate of 15% tax on certain multinational enterprises under the Pillar Two framework. These rules began taking effect across various jurisdictions in 2024 as countries enacted legislation aligned with the OECD model. In fiscal 2025, the Company did not incur any Pillar Two top-up taxes and therefore recorded no related impact to the fiscal 2025 effective tax rate. The Company will continue to evaluate additional OECD guidance, as well as pending and enacted legislation in the jurisdictions in which we operate.