Leases (Tables)

9 Months Ended

Nov. 02, 2019

Leases

Summary of Lease Costs

Lease costs—net consist of the following (in thousands):

	Three Months Ended				Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Operating lease cost (1)(2)	$	21,115	$	21,912	$	63,491	$	66,001
Finance lease costs
Amortization of leased assets (1)		9,471		7,911		27,558		20,251
Interest on lease liabilities (3)		5,678		4,843		16,864		11,254
Sublease income (4)		(2,493)		(2,262)		(7,282)		(5,533)
Total lease costs—net	$	33,771	$	32,404	$	100,631	$	91,973

(1) Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on the Company’s policy. Refer to Note 3—Significant Accounting Policies in the 2018 Form 10-K.

(2) Includes short-term leases and variable lease costs.

(3) Included in interest expense—net on the condensed consolidated statements of income.

(4) Included in selling, general and administrative expenses on the condensed consolidated statements of income.

Summary of Lease Right-of-use Assets and Lease Liabilities

Lease right-of-use assets and lease liabilities consist of the following (in thousands):

		November 2,		February 2,
		2019		2019
	Balance Sheet Classification
Assets
Operating leases	Operating lease right-of-use assets	$	415,912	$	440,504
Finance leases (1)(2)	Property and equipment—net		644,023		646,875
Total lease right-of-use assets			1,059,935		1,087,379
Liabilities
Current
Operating leases	Operating lease liabilities	$	55,753	$	66,249
Finance leases	Other current liabilities		8,755		9,184
Total lease liabilities—current			64,508		75,433
Non-current
Operating leases	Non-current operating lease liabilities	$	412,247	$	437,557
Finance leases	Non-current finance lease liabilities		431,379		421,245
Total lease liabilities—non-current			843,626		858,802
Total lease liabilities		$	908,134	$	934,235

(1) Finance lease right-of-use assets include capitalized amounts related to the Company’s construction activities to design and build leased assets, as well as rent payments made to landlords for which the respective Galleries are not yet opened.

(2) Finance lease right-of-use assets are recorded net of accumulated amortization of $83.3 million and $55.5 million as of November 2, 2019 and February 2, 2019, respectively.

Summary of Maturities of Lease Liabilities

The maturities of lease liabilities are as follows as of November 2, 2019 (in thousands):

Fiscal year	Operating Leases		Finance Leases		Total
Remainder of fiscal 2019	$	11,850	$	5,782	$	17,632
2020		79,843		33,837		113,680
2021		65,919		34,223		100,142
2022		58,076		34,650		92,726
2023		54,730		35,213		89,943
2024		50,927		35,692		86,619
Thereafter		239,696		548,348		788,044
Total lease payments (1)		561,041		727,745		1,288,786
Less—imputed interest (2)		(93,041)		(287,611)		(380,652)
Present value of lease liabilities (3)	$	468,000	$	440,134	$	908,134

(1) Total lease payments exclude $406.9 million of legally binding payments for leases signed but not yet commenced as of November 2, 2019.

(2) Calculated using the incremental borrowing rate for each lease at lease commencement.

(3) Excludes future commitments under short-term lease agreements of $1.0 million as of November 2, 2019.

Summary of Supplemental Information Related to Leases

	Nine Months Ended
	November 2,		November 3,
	2019		2018
Weighted-average remaining lease term (years)
Operating leases		9.0	9.4
Finance leases		18.7	19.9
Weighted-average discount rate
Operating leases		3.82%	3.76%
Finance leases		5.25%	5.29%

	Nine Months Ended
	November 2,			November 3,
	2019			2018
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(75,011)	$	(74,186)
Operating cash flows from finance leases		(16,864)		(11,254)
Financing cash flows from finance leases		(7,136)		(4,937)
Total cash outflows from leases	$	(99,011)	$	(90,377)
Lease right-of-use assets obtained in exchange for lease obligations (non-cash)
Finance leases	$	18,892	$	174,920
Operating leases		26,241		25,843