Zumiez Inc Income Taxes Disclosure
15. Income Taxes
The components of earnings (loss) before income taxes are (in thousands):
|
|
Fiscal Year Ended |
|
|||||||||
|
|
January 31, 2026 |
|
|
February 1, 2025 |
|
|
February 3, 2024 |
|
|||
United States |
|
$ |
42,901 |
|
|
$ |
21,562 |
|
|
$ |
(4,269 |
) |
Foreign |
|
|
(18,838 |
) |
|
|
(17,485 |
) |
|
|
(57,609 |
) |
Total earnings (loss) before income taxes |
|
$ |
24,063 |
|
|
$ |
4,077 |
|
|
$ |
(61,878 |
) |
The components of the provision for income taxes are (in thousands):
|
|
Fiscal Year Ended |
|
|||||||||
|
|
January 31, 2026 |
|
|
February 1, 2025 |
|
|
February 3, 2024 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
6,764 |
|
|
$ |
4,833 |
|
|
$ |
(270 |
) |
State and local |
|
|
1,622 |
|
|
|
256 |
|
|
|
242 |
|
Foreign |
|
|
(96 |
) |
|
|
1,277 |
|
|
|
1,810 |
|
Total current |
|
|
8,290 |
|
|
|
6,366 |
|
|
|
1,782 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
2,230 |
|
|
|
(50 |
) |
|
|
(1,485 |
) |
State and local |
|
|
564 |
|
|
|
(246 |
) |
|
|
(413 |
) |
Foreign |
|
|
(398 |
) |
|
|
(280 |
) |
|
|
848 |
|
Total deferred |
|
|
2,396 |
|
|
|
(576 |
) |
|
|
(1,050 |
) |
Provision for income taxes |
|
$ |
10,686 |
|
|
$ |
5,790 |
|
|
$ |
732 |
|
The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax rate is as follows (in thousands, except percentages):
|
Fiscal Year Ended |
|||||||
|
January 31, 2026 |
|||||||
U.S. federal statutory tax rate |
$ |
|
5,053 |
|
|
21.0 |
|
% |
State and local income taxes, net of federal effect (1) |
|
|
1,529 |
|
|
6.4 |
|
|
Foreign tax effects |
|
|
|
|
|
|
||
Austria |
|
|
|
|
|
|
||
Rate differential between Austria and the United States |
|
|
(422 |
) |
|
(1.8 |
) |
|
Changes in valuation allowance |
|
|
4,853 |
|
|
20.2 |
|
|
Other, net |
|
|
1 |
|
|
0.1 |
|
|
Switzerland |
|
|
|
|
|
|
||
GAAP to stat adjustment |
|
|
(4,147 |
) |
|
(17.2 |
) |
|
Changes in valuation allowance |
|
|
2,382 |
|
|
9.9 |
|
|
Discrete impact of loss carryforwards |
|
|
(1,304 |
) |
|
(5.4 |
) |
|
Other, net |
|
|
47 |
|
|
0.2 |
|
|
Australia |
|
|
|
|
|
|
||
Rate differential between Australia and the United States |
|
|
(253 |
) |
|
(1.1 |
) |
|
Changes in valuation allowance |
|
|
1,792 |
|
|
7.4 |
|
|
Other, net |
|
|
(210 |
) |
|
(0.9 |
) |
|
Other Foreign Jurisdictions |
|
|
|
|
|
|
||
Other, net |
|
|
445 |
|
|
1.9 |
|
|
Tax Credits |
|
|
|
|
|
|
||
WOTC |
|
|
(265 |
) |
|
(1.1 |
) |
|
FTC |
|
|
(434 |
) |
|
(1.8 |
) |
|
Stock-based Compensation |
|
|
252 |
|
|
1.0 |
|
|
Nontaxable or Nondeductible Items |
|
|
|
|
|
|
||
Other nontaxable or nondeductible items |
|
|
412 |
|
|
1.7 |
|
|
Changes in unrecognized tax benefits |
|
|
(448 |
) |
|
(1.9 |
) |
|
Other Adjustments |
|
|
|
|
|
|
||
Tax account roll forward adjustment |
|
|
935 |
|
|
3.9 |
|
|
Other |
|
|
468 |
|
|
1.9 |
|
|
Provision for income taxes |
$ |
|
10,686 |
|
|
44.4 |
|
% |
(1) State taxes in California, New York, New York City, Oregon, and Texas, made up a majority (greater than 50%) of the tax effect in this category.
The following table presents required disclosures prior to the adoption of ASU 2023-09 and displays the reconciliation between the income tax provision at the U.S. federal statutory tax rate to our effective income tax rate.
|
|
February 1, 2025 |
|
February 3, 2024 |
|
U.S. federal statutory tax rate |
|
21.0 |
% |
21.0 |
% |
State and local income taxes, net of federal effect |
|
13.3 |
|
0.3 |
|
Change in valuation allowance |
|
124.5 |
|
(19.8) |
|
Foreign earnings, net |
|
(5.4) |
|
2.9 |
|
Stock-based compensation |
|
12.2 |
|
(0.8) |
|
Tax credits |
|
(9.5) |
|
1.0 |
|
Uncertain Tax Positions |
|
(9.9) |
|
(0.2) |
|
Goodwill impairment |
|
— |
|
(4.3) |
|
Foreign tax audit |
|
— |
|
(1.2) |
|
Permanent Taxable Differences |
|
6.0 |
|
(0.3) |
|
Adjustments to Prior Year Taxes |
|
(10.3) |
|
0.3 |
|
Effective tax rate |
|
142.0 |
% |
(1.2) |
% |
The components of deferred income taxes are (in thousands):
|
|
|
January 31, 2026 |
|
|
February 1, 2025 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
|
||
Operating lease liability |
|
|
$ |
51,686 |
|
|
$ |
50,075 |
|
Net operating losses |
|
|
|
44,965 |
|
|
|
30,256 |
|
Employee benefits, including stock-based compensation |
|
|
|
3,158 |
|
|
|
2,783 |
|
Accrued liabilities |
|
|
|
1,491 |
|
|
|
448 |
|
Deferred losses |
|
|
|
1,351 |
|
|
|
1,531 |
|
Property and equipment |
|
|
|
— |
|
|
|
1,107 |
|
Inventories |
|
|
|
785 |
|
|
|
386 |
|
Other |
|
|
|
1,138 |
|
|
|
1,195 |
|
Total deferred tax assets |
|
|
|
104,574 |
|
|
|
87,781 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
||
Operating lease right-of-use-assets |
|
|
|
(47,415 |
) |
|
|
(44,436 |
) |
Goodwill and intangible assets |
|
|
|
(5,640 |
) |
|
|
(4,807 |
) |
Property and equipment |
|
|
|
(1,185 |
) |
|
|
— |
|
Prepaid expenses |
|
|
|
(793 |
) |
|
|
(473 |
) |
Other |
|
|
|
(640 |
) |
|
|
(603 |
) |
Total deferred tax liabilities |
|
|
|
(55,673 |
) |
|
|
(50,319 |
) |
Net valuation allowances |
|
|
|
(42,552 |
) |
|
|
(28,778 |
) |
Net deferred tax assets |
|
|
$ |
6,349 |
|
|
$ |
8,684 |
|
At January 31, 2026 and February 1, 2025, we had foreign net operating loss carryovers that could be utilized to reduce future years’ tax liabilities of $210.8 million and $130.8 million, respectively. Net operating loss carryovers for the year ended January 31, 2026 included a $24.6 million increase due to change in foreign exchange rates, which consisted of increases in Europe and Australia amounting to $22.0 million and $2.6 million, respectively. Net operating loss carryovers for the year ended February 1, 2025 included a $5.7 million decrease due to change in foreign exchange rates in Europe. The tax-effected foreign net operating loss carryovers were $44.7 million and $30.0 million at January 31, 2026 and February 1, 2025, respectively. The net operating loss carryovers have an indefinite carryforward period and currently will not expire.
At January 31, 2026 and February 1, 2025, we had state net operating loss carryovers that could be utilized to reduce future years' tax liabilities of $21.5 million and $21.4 million, respectively, which, if unused will expire in 2044. The tax-effected state net operating loss carryovers were $0.3 million at January 31, 2026 and February 1, 2025.
At January 31, 2026 and February 1, 2025, we had tax credit carryovers that could be utilized to reduce future years' tax liabilities of $0.3 million, which if unused will expire in years 2028 through 2044.
At January 31, 2026 and February 1, 2025, we had capital loss limitation carryovers that could be utilized to reduce future years' tax liabilities of $0.4 million, which if unused will expire in years 2026 through 2030.
At January 31, 2026 and February 1, 2025, we had valuation allowances on our deferred tax assets of $42.6 million and $28.8 million, respectively, primarily due to the uncertainty of the realization of certain deferred tax assets related to foreign net operating loss carryovers.
The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
|
|
Fiscal Year Ended |
|
|||||||||
|
|
January 31, 2026 |
|
|
February 1, 2025 |
|
|
February 3, 2024 |
|
|||
Beginning unrecognized tax benefits |
|
$ |
1,930 |
|
|
$ |
2,586 |
|
|
$ |
2,522 |
|
Increase related to prior year tax positions |
|
|
85 |
|
|
|
— |
|
|
|
17 |
|
Decrease in tax positions of prior periods |
|
|
— |
|
|
|
(316 |
) |
|
|
— |
|
Increase related to current year tax positions |
|
|
332 |
|
|
|
229 |
|
|
|
721 |
|
Decrease related to lapsing of statute of limitations |
|
|
(471 |
) |
|
|
(569 |
) |
|
|
(674 |
) |
Ending unrecognized tax benefits |
|
$ |
1,876 |
|
|
$ |
1,930 |
|
|
$ |
2,586 |
|
At January 31, 2026 we had $1.9 million of gross unrecognized tax benefits of which $1.0 million, if recognized, would affect our effective tax rate. We recognized a benefit of $0.07 million, a benefit of $0.07 million, an expense of $0.01 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2025, 2024 and 2023, respectively. As of January 31, 2026 and February 1, 2025, we had accrued interest and penalties of $0.2 million, within our consolidated balance sheets.
Net cash paid (refunds received) for income taxes consisted of the following (in thousands):
|
Fiscal Year Ended |
|
|
|
January 31, 2026 |
|
|
Federal |
$ |
4,050 |
|
Aggregated state and Local |
|
748 |
|
Disaggregated State and local |
|
|
|
California |
|
495 |
|
Foreign |
|
(209 |
) |
Canada |
|
792 |
|
Net cash paid (refunds received) for income taxes |
$ |
5,876 |
|
The income taxes paid for the years ended February 1, 2025 and February 3, 2024 were $2.5 million and $2.1 million, respectively.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our U.S. federal income tax returns are no longer subject to examination for years before fiscal 2021, and we are no longer subject to U.S. state and local examinations for years before fiscal 2021.We are no longer subject to examination for all foreign income tax returns before fiscal 2019.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 12, 2026 | Showing above |
| 2025 | Mar 13, 2025 | |
| 2024 | Mar 14, 2024 | |
| 2023 | Mar 20, 2023 | |
| 2022 | Mar 14, 2022 | |
| 2021 | Mar 15, 2021 | |
| 2020 | Mar 16, 2020 | |
| 2019 | Mar 18, 2019 | |
| 2018 | Mar 19, 2018 | |
| 2017 | Mar 13, 2017 | |
| 2016 | Mar 14, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.