Income Taxes |
3 Months Ended |
|---|---|
Apr. 04, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 9. Income taxes The Company is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its allocable share of any taxable income or loss of EWC Ventures. The remaining share of EWC Ventures income or loss is non-taxable to the Company and is not reflected in current or deferred income taxes.
EWC Ventures is a limited liability company that is treated as a partnership for U.S. federal income tax purposes and for most applicable state and local income tax purposes. As a partnership, EWC Ventures is not subject to U.S. federal and certain state and local income taxes. For U.S. federal and certain state and local income taxes, taxable income or loss generated by EWC Ventures is passed through to its members and included in the taxable income or loss of its members on a pro rata basis, subject to applicable tax regulations.
We recorded income tax expense of $877 and $1,381 for the 13 weeks ended April 4, 2026 and April 5, 2025, respectively. The effective tax rate was 35.2% and 35.0% for the 13 weeks ended April 4, 2026 and April 5, 2025, respectively. The effective tax rate for the 13 weeks ended April 4, 2026 differs from the U.S. federal statutory rate primarily due to nondeductible officer compensation, non-taxable income attributable to noncontrolling interest, state taxes and the tax effects of stock compensation. The effective tax rate for the 13 weeks ended April 5, 2025 differs from the U.S. federal statutory rate primarily due to nondeductible officer compensation, non-taxable income attributable to noncontrolling interest, state taxes and the tax effects of stock compensation.
Tax Receivable Agreement
As of April 4, 2026, future payments under the TRA are expected to be $201,980. Payments made under the TRA represent payments that otherwise would have been made to taxing authorities in the absence of attributes obtained by us as a result of exchanges by our pre-IPO members. Such amounts will be paid only when a cash tax savings is realized as a result of attributes subject to the TRA. That is, payments under the TRA are only expected to be made in periods following the filing of a tax return in which we are able to utilize certain tax benefits to reduce our cash taxes paid to a taxing authority. The impact of any changes in the projected obligations under the TRA as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Company’s tax savings will be reflected in other expense on the condensed consolidated statement of operations in the period in which the change occurs. |