Leases

12 Months Ended

Jul. 31, 2021

On August 4, 2019, we adopted ASU 2016-02. Upon adoption, we recognized operating lease right-of-use assets and operating lease liabilities of $133.0 million and $158.7 million, respectively. As part of this adoption, we elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. We also elected to combine lease and non-lease components on all new or modified leases into a single lease component.

Our leasing portfolio includes lease arrangements for our corporate offices, fulfillment centers, and, to a lesser extent, equipment. Such leases generally have original lease terms between five and eight years, and often include one or more options to renew. We include options to extend in the lease term if they are reasonably certain of being exercised. We do not currently consider our renewal options reasonably certain to be exercised. We do not have residual value guarantees associated with our leases.

The following table includes the components of our rent expense recorded in selling, general, and administrative expense:


	For the Fiscal Year Ended
(in thousands)	July 31, 2021		August 1, 2020
Operating lease cost	$	31,231	$	29,232
Variable lease costs	6,236		6,061
Short-term lease costs	2,016		1,031
Sublease income	(876)		(1,657)
Total	$	38,607	$	34,667

Certain leases contain variable payments, which are expensed as incurred and not included in our operating lease right-of-use assets and operating lease liabilities. These amounts primarily include payments for maintenance, utilities, taxes, and insurance on our office and fulfillment center leases. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments at lease commencement. Certain adjustments to our operating lease right-of-use assets may be required for items such as initial direct costs paid or incentives received. The Company calculates the present value of its leases using an estimated incremental borrowing rate, which requires judgment. Our incremental borrowing rate is determined for each lease using a peer group of companies with similar credit profiles, adjusted for the impact of collateralization and lease term.

The following is a schedule by year of the maturities of operating lease liabilities with original terms in excess of one year, as of July 31, 2021:


(in thousands)	July 31, 2021
2022	$	32,280
2023	30,202
2024	26,270
2025	23,681
2026	22,524
Thereafter	37,204
Total undiscounted future minimum lease payments	172,161
Less imputed interest	(24,836)
Total discounted future minimum lease payments	$	147,325

The weighted average remaining term for our leases as of July 31, 2021 and August 1, 2020 was 6.0 years and 6.7 years, respectively. The weighted average discount rate for our leases as of July 31, 2021 and August 1, 2020 was 4.9% and 4.8%, respectively.

Supplemental cash flow information related to our leases is as follows:


	For the Fiscal Year Ended
(in thousands)	July 31, 2021		August 1, 2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	33,061	$	28,922
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	8,766		153,522