Leases (Tables)

6 Months Ended

Jul. 30, 2022


	THREE MONTHS ENDED				SIX MONTHS ENDED
	JULY 30,		JULY 31,		JULY 30,		JULY 31,
	2022		2021		2022		2021

	(in thousands)
Operating lease cost⁽¹⁾	$	24,904	$	25,590	$	50,037	$	49,157
Finance lease costs
Amortization of leased assets⁽¹⁾		12,872		10,796		24,370		21,714
Interest on lease liabilities⁽²⁾		7,891		6,607		14,962		12,757
Variable lease costs⁽³⁾		7,247		7,913		16,334		16,340
Sublease income⁽⁴⁾		(1,085)		(1,136)		(2,213)		(2,318)
Total lease costs—net	$	51,829	$	49,770	$	103,490	$	97,650

(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 our accounting policy. Refer to Note 3—Significant Accounting Policies in the 2021 Form 10-K.

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

(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 $5.0 million and $5.6 million for the three months ended July 30, 2022 and July 31, 2021, respectively, and $12 million for each of the six months ended July 30, 2022 and July 31, 2021, and charges associated with common area maintenance of $2.2 million and $2.3 million for the three months ended July 30, 2022 and July 31, 2021, respectively, and $4.6 million and $4.4 million for the six months ended July 30, 2022 and July 31, 2021, respectively. Other variable costs, which include 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 in any period.

(4)	Included as an offset to 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:


		JULY 30,		JANUARY 29,
		2022		2022

		(in thousands)
	Balance Sheet Classification
Assets
Operating leases	Operating lease right-of-use assets	$	540,396	$	551,045
Finance leases⁽¹⁾⁽²⁾	Property and equipment—net		1,102,144		784,327
Total lease right-of-use assets		$	1,642,540	$	1,335,372
Liabilities
Current⁽³⁾
Operating leases	Operating lease liabilities	$	75,289	$	73,834
Finance leases	Other current liabilities		16,248		15,511
Total lease liabilities—current			91,537		89,345
Non-current
Operating leases	Non-current operating lease liabilities		527,445		540,513
Finance leases	Non-current finance lease liabilities		661,001		560,550
Total lease liabilities—non-current			1,188,446		1,101,063
Total lease liabilities		$	1,279,983	$	1,190,408

(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 $198 million and $174 million as of July 30, 2022 and January 29, 2022, 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 July 30, 2022:


	OPERATING		FINANCE
FISCAL YEAR	LEASES		LEASES		TOTAL

	(in thousands)
Remainder of fiscal 2022	$	49,028	$	24,470	$	73,498
2023		95,117		49,485		144,602
2024		88,831		49,855		138,686
2025		86,712		51,289		138,001
2026		83,198		52,062		135,260
2027		78,689		53,245		131,934
Thereafter		241,647		963,631		1,205,278
Total lease payments⁽¹⁾⁽²⁾		723,222		1,244,037		1,967,259
Less—imputed interest⁽³⁾		(120,488)		(566,788)		(687,276)
Present value of lease liabilities	$	602,734	$	677,249	$	1,279,983

(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 $598 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of July 30, 2022, of which $12 million, $27 million, $36 million, $38 million, $36 million and $35 million will be paid in the remainder of fiscal 2022, fiscal 2023, fiscal 2024, fiscal 2025, fiscal 2026 and fiscal 2027, respectively, and $414 million will be paid subsequent to fiscal 2027.

(2)	Excludes an immaterial amount of future commitments under short-term lease agreements.

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

Summary of Supplemental Information Related to Leases


	SIX MONTHS ENDED
	JULY 30,		JULY 31,
	2022		2021

	(in thousands)
Weighted-average remaining lease term (years)
Operating leases		8.7		9.4
Finance leases		22.3		20.0
Weighted-average discount rate
Operating leases		4.00%		3.98%
Finance leases		5.32%		5.04%

Summary of Other Information Related to Leases


	SIX MONTHS ENDED
	JULY 30,		JULY 31,
	2022		2021

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(50,838)	$	(50,914)
Operating cash flows from finance leases		(14,962)		(12,943)
Financing cash flows from finance leases—net⁽¹⁾		(3,132)		(7,108)
Total cash outflows from leases	$	(68,932)	$	(70,965)
Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash)
Operating leases	$	27,538	$	134,763
Finance leases		108,547		44,432

(1)	Represents the principal portion of lease payments offset by tenant allowances received subsequent to lease commencement.