Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes ROU assets and lease liabilities related to leases on the Company’s consolidated balance sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease.

The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2036. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from five years to fifteen years with renewal options and rent escalation provisions. At the commencement of a lease, the Company includes only the initial lease term as the option to extend is not reasonably certain. The Company does not record leases with a lease term of 12 months or less on the Company’s consolidated balance sheets.

When calculating the lease liability on a discounted basis, the Company applies its estimated discount. The Company bases this discount on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.

In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable payments and does not include such costs as a lease component.

Due to the adverse impacts of COVID-19, the Company has negotiated rent deferral and payback periods with a number of the Company’s store landlords for the months of April and May 2020. Based on the guidance set forth in the Financial Accounting Standards Board (“FASB”) issued Staff Q&A “Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic” the Company has accounted for these deferrals as if no changes to the lease contract were made and will not elect to apply the lease modification guidance under ASC 842. As of August 2, 2020 the Company has deferred rent of approximately $1.1 million which was recorded within accrued expenses and other current liabilities and will be paid in accordance with the concession arrangements.

The expense components of the Company’s leases reflected on the Company’s consolidated statement of operations were as follows:


	Consolidated Statement	Three Months Ended				Six Months Ended
	of Operations	August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019
(in thousands)
Finance lease expenses
Amortization of right-of-use ‎assets	Selling, general and ‎administrative expenses	$	908	$	451	$	1,565	$	626
Interest on lease liabilities	Interest expense		435		309		873		434
Total finance lease expense		$	1,343	$	760	$	2,438	$	1,060
Operating lease expense	Selling, general and ‎administrative expenses	$	4,495	$	3,609	$	8,631	$	7,159
Amortization of build-to-suit ‎leases capital contribution	Selling, general and ‎administrative expenses		3,624		265		3,948		479
Variable lease expense	Selling, general and ‎administrative expenses		2,277		2,040		4,038		3,652
Total lease expense		$	11,739	$	6,674	$	19,055	$	12,350

Other information related to leases were as follows:


	Six Months Ended		Six Months Ended
	August 2, 2020		August 4, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	793	$	273
Operating cash flows from finance leases	$	873	$	434
Operating cash flows from operating leases	$	7,607	$	6,384

Right-of-use assets obtained in exchange for lease liabilities:
Finance leases	$	—	$	26,559
Operating leases	$	358	$	5,939

Weighted-average remaining lease term (in years):
Finance leases		14		15
Operating leases		10		10

Weighted-average discount rate:
Finance leases		4.5%		4.5%
Operating leases		4.3%		4.3%

‎

Future minimum lease payments under the non-cancellable leases are as follows as of August 2, 2020:


Fiscal year	Finance		Operating
(in thousands)
2020 (remainder of fiscal year)	$	1,670	$	7,501
2021		3,368		14,881
2022		3,340		15,092
2023		3,362		15,283
2024		3,542		14,206
Thereafter		37,519		70,828
Total future minimum lease payments	$	52,801	$	137,791
Less – Discount		14,203		25,874
Lease liability	$	38,598	$	111,917