Leases (Tables)

3 Months Ended

May 02, 2020

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


	Three Months Ended
	May 2,		May 4,
	2020		2019
Operating lease cost⁽¹⁾	$	20,726	$	19,117

Finance lease costs
Amortization of leased assets⁽¹⁾		9,588		8,852
Interest on lease liabilities⁽²⁾		5,781		5,514

Variable lease costs ⁽³⁾		3,560		5,607
Sublease income⁽⁴⁾		(2,575)		(3,282)
Total lease costs—net	$	37,080	$	35,808

(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 operations based on our accounting policy. Refer to Note 3—Significant Accounting Policies in the 2019 Form 10-K.

(2)	Included in interest expense—net on the condensed consolidated statements of operations.

(3)

Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $2.0 million and $3.3 million for the three months ended May 2, 2020 and May 4, 2019, respectively. Other variable costs, such as single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset, were not material for the three months ended May 2, 2020 and May 4, 2019.

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

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

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


		May 2,		February 1,
		2020		2020
	Balance Sheet Classification
Assets
Operating leases	Operating lease right-of-use assets	$	392,934	$	410,904
Finance leases ⁽¹⁾⁽²⁾	Property and equipment—net		630,781		642,117
Total lease right-of-use assets		$	1,023,715	$	1,053,021

Liabilities
Current⁽³⁾
Operating leases	Operating lease liabilities	$	61,997	$	58,924
Finance leases	Other current liabilities		11,752		9,188
Total lease liabilities—current			73,749		68,112

Non-current
Operating leases	Non-current operating lease liabilities		395,641		409,930
Finance leases	Non-current finance lease liabilities		439,470		442,988
Total lease liabilities—non-current			835,111		852,918
Total lease liabilities		$	908,860	$	921,030

(1)	Finance lease right-of-use assets include capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement.

(2)	Finance lease right-of-use assets are recorded net of accumulated amortization of $101.7 million and $92.3 million as of May 2, 2020 and February 1, 2020, respectively.

(3)	Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months.

Summary of Maturities of Lease Liabilities

The maturities of lease liabilities are as follows as of May 2, 2020 (in thousands):


Fiscal year	Operating Leases		Finance Leases		Total
Remainder of fiscal 2020	$	59,698	$	25,738	$	85,436
2021		69,968		35,311		105,279
2022		60,642		35,729		96,371
2023		56,210		36,143		92,353
2024		52,407		36,630		89,037
2025		52,396		37,791		90,187
Thereafter		193,769		530,520		724,289
Total lease payments⁽¹⁾⁽²⁾		545,090		737,862		1,282,952
Less—imputed interest ⁽³⁾		(87,452)		(286,640)		(374,092)
Present value of lease liabilities	$	457,638	$	451,222	$	908,860

(1)

Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $381.9 million of legally binding payments under the noncancellable term for leases signed but not yet commenced as of May 2, 2020.

(2)	Excludes future commitments under short-term lease agreements of $0.5 million as of May 2, 2020.

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

Summary of Supplemental Information Related to Leases


	Three Months Ended
	May 2,		May 4,
	2020		2019
Weighted-average remaining lease term (years)
Operating leases		8.7		9.1
Finance leases		18.4		19.1

Weighted-average discount rate
Operating leases		3.82%		3.80%
Finance leases		5.25%		5.26%

Summary of Other Information Related to Leases

Other information related to leases consists of the following (in thousands):


	Three Months Ended
	May 2,		May 4,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(10,786)	$	(31,780)
Operating cash flows from finance leases		(2,437)		(5,514)
Financing cash flows from finance leases		(2,068)		(2,129)
Total cash outflows from leases	$	(15,291)	$	(39,423)

Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash)
Operating leases	$	1,198	$	8,173
Finance leases		58		17,984