During the first quarter of fiscal 2019, the Company adopted ASU No. 2016-02: “Leases (Topic 842)” which requires lessees to recognize ROU lease assets and lease liabilities on the balance sheet for those leases that were previously classified as operating leases. The Company adopted the standard on February 3, 2019, the first day of fiscal 2019 instead of the earliest period presented in the financial statements per ASU No. 2018-11: “Leases (Topic 842): Targeted improvements.” The Company recognized a $589 cumulative effect adjustment in retained earnings at the beginning of the period of adoption which resulted from the impairment of select operating lease ROU assets of $416 related to stores whose fixed assets had been previously impaired and for which the initial carrying value of the ROU assets were determined to be above fair market value and $173 of cumulative correction of an immaterial error in prior period rent expense.

The Company elected the package of three practical expedients. As such, the Company did not reassess whether expired or existing contracts are or contain a lease and did not need to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The Company did not elect the hindsight practical expedient in determining the lease term and assessing the impairment of the entity’s right-of-use assets. The land easement practical expedient is not applicable to the Company.

The Company determines if an arrangement is a lease at inception. The Company has operating leases for real estate (primarily retail stores, storage, and office spaces) many 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 our 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 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. The Company did not elect the practical expedient to group lease and non-lease components as a single lease component for the operating leases. Operating lease 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 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. The Company does not have any finance leases. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The weighted-average remaining lease term and weighted-average discount rate for our operating leases are 5.6 years and 6.3% as of January 30, 2021.

As a result of COVID-19, the Company did not initially make certain rent payments in the first, second, third and fourth quarters of fiscal 2020. The Company has recognized any rent payments not made within accounts payable in the accompanying consolidated balance sheet and has continued to recognize rent expense in the consolidated statement of operations and comprehensive earnings (loss). As a result of discussions with landlords and amendments to existing lease terms, the Company has since made rent payments for certain leases. The Company considered the FASB’s recent guidance regarding lease modifications as a result of the effects of COVID-19 and elected to apply the temporary practical expedient to account for lease changes as variable rent unless an amendment results in a substantial change in the Company's lease obligations, which in those circumstances the Company accounted for such lease change as a lease modification. The impact of rent concessions recorded as either reduction in variable rent or lease modifications was $4,200 for the twelve months ended January 30, 2021 to the consolidated statement of operations. In addition to the benefits received from the rent concessions as a result of negotiations with landlords, the Company also recorded $1,119 for the twelve months ended January 30, 2021, related to concessions for other occupancy costs such as common area maintenance, real estate taxes, and lease advertising charges.

Total lease cost is included in cost of sales and SG&A in the accompanying Consolidated Statement 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 our ROU asset and lease liabilities. Short term lease costs were immaterial for fiscal year ended January 30, 2021. The Company’s lease cost is comprised of the following:

	Fiscal Year
(in thousands)	2020			2019
Operating lease cost	$	23,537		$	25,168
Variable operating lease cost		(2,928	)		450
Total lease cost	$	20,609		$	25,618

Supplemental cash flow and non-cash information related to leases is as follows:

	Fiscal Year
(in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	22,154	$	26,416
Right-of-use assets obtained in exchange for operating lease liabilities		22,449		20,932

Subsequent to the date of adoption, during fiscal 2019, the Company had lease modifications which changed the lease payment from fixed to variable or reduced the monthly lease payment which reduced the ROU assets and lease liabilities by $5,510 and $5,526, respectively. During fiscal 2020 and fiscal 2019, the Company recorded right-of-use assets impairment of approximately $8,556 and $177, respectively.

As of January 30, 2021, the future maturity of lease liabilities are as follows:

	January 30,
(in thousands)	2021
Fiscal 2021	$	28,590
Fiscal 2022		27,592
Fiscal 2023		25,368
Fiscal 2024		23,615
Fiscal 2025		14,515
Thereafter		22,023
Total lease payments		141,703
Less: Imputed interest		(22,474	)
Total operating lease liabilities	$	119,229

The operating lease payments do not include any renewal options as such leases are not reasonably certain of being renewed as of January 30, 2021 and does not include $4,205 legally binding minimum lease payments of leases signed but not yet commenced.