Leases (Tables)

9 Months Ended

Oct. 29, 2022


	THREE MONTHS ENDED				NINE MONTHS ENDED
	OCTOBER 29,		OCTOBER 30,		OCTOBER 29,		OCTOBER 30,
	2022		2021		2022		2021

	(in thousands)
Operating lease cost⁽¹⁾	$	25,153	$	25,637	$	75,190	$	74,794
Finance lease costs
Amortization of leased assets⁽¹⁾		13,964		10,860		38,334		32,574
Interest on lease liabilities⁽²⁾		8,564		6,711		23,526		19,468
Variable lease costs⁽³⁾		5,681		9,096		22,015		25,436
Sublease income⁽⁴⁾		(1,085)		(1,189)		(3,298)		(3,507)
Total lease costs—net	$	52,277	$	51,115	$	155,767	$	148,765

(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 $3.4 million and $6.9 million for the three months ended October 29, 2022 and October 30, 2021, respectively, and $15 million and $19 million for the nine months ended October 29, 2022 and October 30, 2021, respectively, as well as charges associated with common area maintenance of $2.3 million and $2.2 million for the three months ended October 29, 2022 and October 30, 2021, respectively, and $6.9 million and $6.6 million for the nine months ended October 29, 2022 and October 30, 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 presented.

(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


		OCTOBER 29,		JANUARY 29,
		2022		2022

		(in thousands)
	Balance Sheet Classification
Assets
Operating leases	Operating lease right-of-use assets	$	536,452	$	551,045
Finance leases⁽¹⁾⁽²⁾	Property and equipment—net		1,092,787		784,327
Total lease right-of-use assets		$	1,629,239	$	1,335,372
Liabilities
Current⁽³⁾
Operating leases	Operating lease liabilities	$	77,858	$	73,834
Finance leases	Other current liabilities		16,557		15,511
Total lease liabilities—current			94,415		89,345
Non-current
Operating leases	Non-current operating lease liabilities		521,093		540,513
Finance leases	Non-current finance lease liabilities		656,643		560,550
Total lease liabilities—non-current			1,177,736		1,101,063
Total lease liabilities		$	1,272,151	$	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 on the condensed consolidated balance sheets upon lease commencement.

(2)	Finance lease right-of-use assets are recorded net of accumulated amortization of $211 million and $174 million as of October 29, 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 October 29, 2022:


	OPERATING		FINANCE
FISCAL YEAR	LEASES		LEASES		TOTAL

	(in thousands)
Remainder of fiscal 2022	$	25,297	$	12,226	$	37,523
2023		98,805		49,454		148,259
2024		92,305		49,824		142,129
2025		89,936		51,259		141,195
2026		86,538		52,032		138,570
2027		81,205		53,214		134,419
Thereafter		241,401		963,165		1,204,566
Total lease payments⁽¹⁾⁽²⁾		715,487		1,231,174		1,946,661
Less—imputed interest⁽³⁾		(116,536)		(557,974)		(674,510)
Present value of lease liabilities	$	598,951	$	673,200	$	1,272,151

(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 $640 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of October 29, 2022, of which $5.0 million, $25 million, $36 million, $39 million, $40 million and $38 million will be paid in the remainder of fiscal 2022, fiscal 2023, fiscal 2024, fiscal 2025, fiscal 2026 and fiscal 2027, respectively, and $457 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


	NINE MONTHS ENDED
	OCTOBER 29,		OCTOBER 30,
	2022		2021
Weighted-average remaining lease term (years)
Operating leases		8.5		9.3
Finance leases		22.1		20.1
Weighted-average discount rate
Operating leases		4.04%		3.84%
Finance leases		5.32%		4.97%

Summary of Other Information Related to Leases


	NINE MONTHS ENDED
	OCTOBER 29,		OCTOBER 30,
	2022		2021

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(75,570)	$	(76,957)
Operating cash flows from finance leases		(23,526)		(19,774)
Financing cash flows from finance leases—net⁽¹⁾		(6,798)		(10,511)
Total cash outflows from leases	$	(105,894)	$	(107,242)
Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash)
Operating leases	$	42,883	$	151,548
Finance leases		108,547		73,855

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