Leases

The Company has leases related to its Company-operated retail stores as well as for certain of its distribution centers, office space, information technology and equipment.

A summary of the Company’s operating lease costs from continuing operations is as follows:



	Three Months Ended			Six Months Ended
	February 1, 2020			February 1, 2020
	(millions)
Single lease costs ^(a)	$	94.7		$	189.9
Variable lease costs ^(b)	51.6			104.6
Total lease expenses	146.3			294.5
Less rental income ^(c)	(1.1		)	(2.1		)
Total net rental expense ^(d)	$	145.2		$	292.4

________


^(a)	Includes amortization and interest expense associated with operating lease right-of-use assets and liabilities.


^(b)	Includes variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs, as well as month-to-month rent payments while expired store lease contracts are renegotiated.

^(c) Substantially reflects rental income received related to Company-owned space in Duluth, MN.

^(d) Total occupancy costs included in discontinued operations related to Dressbarn were $5.8 million and $32.3 million for the three and six months ended February 1, 2020.

The following table provides a summary of the Company’s operating lease costs from continuing operations for the three and six months ended February 2, 2019, which was accounted for in accordance with Accounting Standards Codification (“ASC”) 840, “Leases” (“ASC 840”). Prior periods have not been adjusted for the adoption of ASU 2016-02.



	Three Months Ended		Six Months Ended
	February 2, 2019		February 2, 2019
	(millions)
Base rentals	$	99.1	$	197.3
Percentage rentals	6.8		14.6
Other occupancy costs, primarily CAM and real estate taxes	41.8		82.9
Total ^(a)	$	147.7	$	294.8

________


^(a)	Total occupancy costs included in discontinued operations related to Dressbarn and maurices were $53.6 million and $110.6 million for the three and six months ended February 2, 2019.

The weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rates used to calculate the Company’s operating lease liabilities are as follows:



		February 1, 2020
Weighted-average remaining lease term (years)		5.7
Weighted-average discount rate		26.1%

The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of February 1, 2020:



Fiscal Years	Minimum Operating Lease Payments ^(a) (b)
	(millions)
2020 (excluding the six months ended February 1, 2020)	$	158.9
2021	350.4
2022	287.6
2023	214.2
2024	151.6
Thereafter	529.0
Total undiscounted operating lease liabilities	1,691.7
Less imputed interest	(850.0		)
Present value of operating lease liabilities	841.7
Less current portion of lease liabilities	(161.8		)
Total long-term lease liabilities	$	679.9

^(a) Net of sublease income, which is not expected to be significant in any period.

^(b)Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under such leases have been included in the above table.

As of February 1, 2020, the Company had minimum commitments related to additional operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $18.7 million.

As reported under the previous accounting standard, the following table provides a summary of total consolidated operating lease commitments, including leasehold financing obligations, under non-cancelable leases as of August 3, 2019:



Fiscal Years	Minimum Operating Lease Payments ^(a) (b)
	(millions)
2020	$	462.0
2021	402.3
2022	325.4
2023	242.7
2024	172.6
Thereafter	563.3
Total future minimum rentals	$	2,168.3

^(a) Net of sublease income, which is not expected to be significant in any period.

Supplemental disclosures related to leases are as follows:



	Three Months Ended		Six Months Ended
	February 1, 2020		February 1, 2020
	(millions)
Cash payments arising from operating lease liabilities (included in cash flows from operating activities)	$	100.7	$	202.7
Non-cash operating lease liabilities from obtaining right-of-use assets	0.3		1.4