Leases

6 Months Ended

Aug. 01, 2020

Leases [Abstract]

Leases

Leases

In April 2020, the Financial Accounting Standards Board (FASB) issued interpretive guidance to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments that are not stipulated in the original lease are generally accounted for as lease modifications under ASC Topic 842, Leases. The interpretive guidance grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications.

We elected not to utilize this exception and accounted for COVID-19 related lease concessions as modifications triggering lease remeasurement. The majority of the lease modifications during the 13-weeks ended August 1, 2020, were in the form of deferred rent payments totaling $1.0 million which will generally be repaid by us over the next six to eighteen months. Other modifications included rent abatements with lease term extensions which resulted in $5.7 million of additional rent considered in our remeasurement. For the 26-weeks ended August 1, 2020, there were $1.4 million in deferred rent lease modifications and $5.8 million in rent abatements with lease term extensions.

ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. An asset group impairment charge of approximately $0.5 million and $0.1 million was recognized in the 13-weeks ended August 1, 2020 and August 3, 2019, respectively. An asset group impairment charge of approximately $4.6 million and $0.9 million was recognized in the 26-weeks ended August 1, 2020 and August 3, 2019, respectively.

Lease costs are as follows (in thousands):

	13-Weeks Ended				26-Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Operating lease cost	$	16,629	$	18,404	$	33,769	$	35,542
Finance lease cost:
Amortization of assets	244		223		479		460
Interest on lease liabilities	46		58		94		123
Variable lease cost	1,555		(281)		347		104
	$	18,474	$	18,404	$	34,689	$	36,229

Finance ROU assets on the unaudited condensed consolidated balance sheet at August 1, 2020, February 1, 2020 and August 3, 2019 are shown net of accumulated amortization of $1.0 million, 0.8 million and $0.4 million, respectively.

The following table provides supplemental balance sheet information related to leases:

	August 1, 2020		February 1, 2020		August 3, 2019
Weighted-average remaining lease term (in years):
Operating leases	5		5		5
Finance leases	4		4		3
Weighted-average discount rate:
Operating leases	3.8	%	4.1	%	4.2	%
Finance leases	7.4	%	8.8	%	13.5	%

The following table provides supplemental cash flow and other information related to leases (in thousands):

	26-Weeks Ended
	August 1, 2020		August 3, 2019
Operating cash flows from operating leases	$	37,827	$	35,225
Operating cash flows from finance leases	$	94	$	123
Financing cash flows from finance leases	$	517	$	481
ROU assets obtained in exchange for lease liabilities, net
Operating leases	$	29,158	$	19,416
Finance leases	$	789	$	—

Maturities of lease liabilities as of August 1, 2020 (in thousands):

	Operating		Finance		Total
Remainder of Fiscal 2021	$	33,154	$	580	$	33,734
Fiscal 2022	70,079		876		70,955
Fiscal 2023	54,525		825		55,350
Fiscal 2024	39,805		660		40,465
Fiscal 2025	29,061		156		29,217
Thereafter	48,630		100		48,730
Total minimum lease payments	275,254		3,197		278,451
Less amount representing interest	25,198		336		25,534
	$	250,056	$	2,861	$	252,917

As of August 1, 2020, we have entered into operating leases of approximately $0.7 million related to future store locations that have not yet commenced.

Leases

Leases

In April 2020, the Financial Accounting Standards Board (FASB) issued interpretive guidance to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments that are not stipulated in the original lease are generally accounted for as lease modifications under ASC Topic 842, Leases. The interpretive guidance grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications.

We elected not to utilize this exception and accounted for COVID-19 related lease concessions as modifications triggering lease remeasurement. The majority of the lease modifications during the 13-weeks ended August 1, 2020, were in the form of deferred rent payments totaling $1.0 million which will generally be repaid by us over the next six to eighteen months. Other modifications included rent abatements with lease term extensions which resulted in $5.7 million of additional rent considered in our remeasurement. For the 26-weeks ended August 1, 2020, there were $1.4 million in deferred rent lease modifications and $5.8 million in rent abatements with lease term extensions.

ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. An asset group impairment charge of approximately $0.5 million and $0.1 million was recognized in the 13-weeks ended August 1, 2020 and August 3, 2019, respectively. An asset group impairment charge of approximately $4.6 million and $0.9 million was recognized in the 26-weeks ended August 1, 2020 and August 3, 2019, respectively.

Lease costs are as follows (in thousands):

	13-Weeks Ended				26-Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Operating lease cost	$	16,629	$	18,404	$	33,769	$	35,542
Finance lease cost:
Amortization of assets	244		223		479		460
Interest on lease liabilities	46		58		94		123
Variable lease cost	1,555		(281)		347		104
	$	18,474	$	18,404	$	34,689	$	36,229

Finance ROU assets on the unaudited condensed consolidated balance sheet at August 1, 2020, February 1, 2020 and August 3, 2019 are shown net of accumulated amortization of $1.0 million, 0.8 million and $0.4 million, respectively.

The following table provides supplemental balance sheet information related to leases:

	August 1, 2020		February 1, 2020		August 3, 2019
Weighted-average remaining lease term (in years):
Operating leases	5		5		5
Finance leases	4		4		3
Weighted-average discount rate:
Operating leases	3.8	%	4.1	%	4.2	%
Finance leases	7.4	%	8.8	%	13.5	%

The following table provides supplemental cash flow and other information related to leases (in thousands):

	26-Weeks Ended
	August 1, 2020		August 3, 2019
Operating cash flows from operating leases	$	37,827	$	35,225
Operating cash flows from finance leases	$	94	$	123
Financing cash flows from finance leases	$	517	$	481
ROU assets obtained in exchange for lease liabilities, net
Operating leases	$	29,158	$	19,416
Finance leases	$	789	$	—

Maturities of lease liabilities as of August 1, 2020 (in thousands):

	Operating		Finance		Total
Remainder of Fiscal 2021	$	33,154	$	580	$	33,734
Fiscal 2022	70,079		876		70,955
Fiscal 2023	54,525		825		55,350
Fiscal 2024	39,805		660		40,465
Fiscal 2025	29,061		156		29,217
Thereafter	48,630		100		48,730
Total minimum lease payments	275,254		3,197		278,451
Less amount representing interest	25,198		336		25,534
	$	250,056	$	2,861	$	252,917

As of August 1, 2020, we have entered into operating leases of approximately $0.7 million related to future store locations that have not yet commenced.