The Company determines if a contract contains a lease at inception. The Company has operating leases for real estate (primarily retail stores, storage and office spaces) some of which have initial terms of 10 years, and in many instances can be extended for an additional term, while the Company's more recent leases are subject to shorter terms as a result of the implementation of the strategy to pursue shorter lease terms. The Company will not include renewal options in the underlying lease term unless the Company is reasonably certain to exercise the renewal option. Substantially all of the Company's leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount. These percentage rent expenses are considered as variable lease costs and are recognized in the consolidated financial statements when incurred. In addition, the Company's real estate leases may also require additional payments for real estate taxes and other occupancy-related costs which it considers as non-lease components.

ROU assets and operating lease liabilities are recognized based upon the present value of the future lease payments over the lease term. As the Company's leases do not provide an implicit borrowing rate, the Company uses an estimated incremental borrowing rate based upon a combination of market-based factors, such as market quoted forward yield curves and company specific factors, such as the Company's credit rating, lease size and duration to calculate the present value.

Total lease cost is included in SG&A expense in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and is recorded net of immaterial sublease income. Some leases have a non-cancelable lease term of less than one year and therefore, the Company has elected to exclude these short-term leases from its ROU asset and lease liabilities. Short term lease costs were immaterial for the six months ended August 3, 2024 and July 29, 2023. The Company's lease cost is comprised of the following:


	Three Months Ended				Six Months Ended
	August 3,		July 29,		August 3,		July 29,
(in thousands)	2024		2023		2024		2023
Operating lease cost	$	5,479	$	4,307	$	10,951	$	8,104
Variable operating lease cost		54		57		152		85
Total lease cost	$	5,533	$	4,364	$	11,103	$	8,189

The operating lease cost for the six months ended July 29, 2023, included a benefit of $779 for the correction of an error recorded within SG&A expenses related to a lease modification that occurred during fiscal 2022 for a Vince retail store, leading to an overstatement of the ROU assets and an overstatement of the lease obligations in fiscal 2022.

As of August 3, 2024, the future maturity of lease liabilities are as follows:


	August 3,
(in thousands)	2024
Fiscal 2024		10,164
Fiscal 2025		20,757
Fiscal 2026		17,788
Fiscal 2027		14,271
Fiscal 2028		13,360
Thereafter		37,458
Total lease payments		113,798
Less: Imputed interest		(23,307	)
Total operating lease liabilities	$	90,491

The operating lease payments do not include any renewal options as such leases are not reasonably certain of being renewed as of August 3, 2024, and do not include $20,705 of legally binding minimum lease payments for leases signed but not yet commenced.