GENESCO INC Income Taxes Disclosure

Note 11

Income Taxes

Note 11

Income Taxes, Continued

Note 11

Income Taxes, Continued

On July 4, 2025, H.R. 1, a bill to provide for reconciliation pursuant to title II of H. Con. Res. 14, informally known as the One Big Beautiful Bill Act ("OBBBA"), which includes several measures affecting corporations and other business entities, was signed into law. Among these measures, the OBBBA modifies and permanently extends certain expiring provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”), including the restoration of 100% bonus depreciation, which was scheduled to phase out in 2027 under the TCJA. The OBBBA also permits immediate expensing of research and development expenditures previously capitalized under the TCJA and modifies various components of the international tax framework. The legislation has multiple effective dates, with some provisions taking effect in 2025 and others phased in through 2027. In accordance with ASC 740, “Income Taxes,” we recognized effects of the OBBBA during the second quarter of Fiscal 2026 for the provisions enacted at that point in time. For the fiscal year ended January 31, 2026, we had a material decrease in our U.S. jurisdiction to both the current tax liability and the effective income tax rate as a result of the enactment of income tax law changes under the OBBBA and their interaction with our valuation allowance in the U.S. jurisdiction. Including the impact of the OBBBA tax law changes, we recorded an effective income tax rate of (5.4)% in Fiscal 2026.

We are subject to a tax on global intangible low-tax income (“GILTI”). GILTI taxes foreign income in excess of deemed return on tangible assets of a foreign corporation and we elected to treat this tax as a period cost. The impact from GILTI was not material for Fiscal 2026, 2025 or 2024.

Note 11

Income Taxes, Continued

As of January 31, 2026 and February 1, 2025, we had net state net operating loss carryforwards of $11.3 million and $11.2 million, respectively. We provided a valuation allowance against these attributes of $11.3 million as of January 31, 2026 and $11.2 million as of February 1, 2025. Expiration of these attributes will occur in various years through 2046.

As of each of January 31, 2026 and February 1, 2025, we had state tax credits of $0.6 million. We provided a valuation allowance against these attributes of $0.6 million as of each of January 31, 2026 and February 1, 2025 and $0.6 million of these credits have a remaining carryforward period of 5 years or less.

Note 11

Income Taxes, Continued

Based upon evaluation of our worldwide operations and specific plans to remit foreign earnings back to the U.S., we can no longer assert that earnings from certain U.K. subsidiaries will be indefinitely reinvested. As of January 31, 2026, we believe there are no deferred taxes applicable to the accumulated undistributed earnings of those foreign operations beyond the amounts recorded for deemed repatriation of such earnings, as required in the TCJA. The earnings of our remaining foreign operations are indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual U.S. deferred taxes on unremitted international earnings. If our unremitted international earnings were not considered indefinitely reinvested as of January 31, 2026, an immaterial amount of additional deferred taxes would have been provided.

As of January 31, 2026, foreign tax credit carryforwards of approximately $2.3 million were available to reduce possible future U.S. income taxes and expire from 2028 to 2031. As a result of the TCJA, we may no longer utilize certain U.S. foreign tax credit carryforwards. A valuation allowance of $2.3 million has been established against these credits.

As of January 31, 2026 and February 1, 2025, we had gross foreign net operating loss carryforwards of $54.2 million and $40.0 million, respectively, which have a carryforward period of at least 13 years.

We regularly evaluate the need for a valuation allowance against our deferred tax assets. In making this determination, we consider all available evidence, both positive and negative, including but not limited to earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. and foreign deferred tax assets. Based on this assessment, as of January 31, 2026 and February 1, 2025, we provided a total valuation allowance of approximately $71.2 million and $72.4 million, respectively, on U.S. and foreign deferred tax assets for which management has determined it is more likely than not that the deferred tax assets will not be realized.

Note 11

Income Taxes, Continued

The amount of unrecognized tax benefits which would impact the annual effective tax rate if recognized were $0.7 million as of January 31, 2026, $0.7 million as of February 1, 2025 and $0.8 million as of February 3, 2024. The amount of unrecognized tax benefits may change during the next twelve months but we do not believe the change, if any, will be material to our consolidated financial position or results of operations.

We recognize interest expense and penalties related to the above unrecognized tax benefits within income tax expense on the Consolidated Statements of Operations and it was not material for Fiscal 2026, 2025 or 2024. We recorded $0.9 million, $2.9 million and $2.7 million of interest income within income tax expense, net on the Consolidated Statements of Operations for the years ended January 31, 2026, February 1, 2025 and February 3, 2024, respectively, primarily related to our outstanding federal refund request.

We file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. With few exceptions, our state and local income tax returns for fiscal years ended January 28, 2023 and beyond remain subject to examination. In addition, we have subsidiaries in various foreign jurisdictions that have statutes of limitation generally ranging from two to six years. As part of the IRS audit of our federal income tax return for the fiscal year ended January 30, 2021, we have extended the statute of limitations for our fiscal years February 1, 2020, forward through March 31, 2026.

In addition, changes in the tax laws of foreign jurisdictions may arise as a result of the Pillar Two ("Pillar Two") Global Anti-Base Erosion model rules that were released by the Organization for Economic Cooperation and Development ("OECD") in 2021, which proposed a 15% global minimum tax applied on a country-by country basis. Numerous countries have enacted legislation that implemented certain aspects of Pillar Two effective January 1, 2024, or adopted legislation that became effective in 2025, while additional jurisdictions may enact similar legislation in the future. In January 2026, the OECD issued further administrative guidance introducing a side-by-side framework under Pillar Two, largely exempting U.S.-headquartered companies from the application of Pillar Two. The OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional guidance intended to adopt this side-by-side framework into law in each of the member countries. We recorded $0.3 million of additional tax expense under the Pillar Two rules in Fiscal 2026 and do not expect the Pillar Two rules to have a material impact on our tax provision or effective tax rate in future periods.

Note 11

Income Taxes, Continued

For the fiscal year ended January 31, 2026, income taxes paid included a $60.1 million refund, including interest, from the IRS for our Fiscal 2014 to Fiscal 2021 tax periods and $1.1 million for our fiscal 2023 tax period. In addition, income taxes paid included $2.0 million of non-U.S. tax payments and $0.5 million of U.S. state and local income tax payments, for a total net income tax refund of $58.7 million in Fiscal 2026. No income taxes paid to any specific jurisdiction, outside of the IRS refunds, exceeded 5% of the total net income tax refund in Fiscal 2026.