Leases - Notes to the Financial Statements

6 Months Ended

Jul. 31, 2021

Leases [Abstract]

Operating Lease Dislcosure Leasee [Text Block]

NOTE 12 – LEASES:

The Company determines whether an arrangement is a lease at inception. The Company has operating leases for stores, offices and equipment. Its leases have remaining lease terms of up to 10 years based on the estimated likelihood of renewal. Some include options to extend the lease term for up to five years, and some of which include options to terminate the lease within one year. The Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date of the lease in determining the present value of lease payments.

The components of lease cost are shown below (in thousands):

	Three Months Ended
		July 31, 2021		August 1, 2020
Operating lease cost (a)	$	17,334	$	17,082
Variable lease cost (b)	$	700	$	439
(a) Includes right-of-use asset amortization of ($0.5) million and ($1.0) million for the three months ended July 31, 2021 and August 1, 2020, respectively.
(b) Primarily related to monthly percentage rent for stores not presented on the balance sheet.

	Six Months Ended
		July 31, 2021		August 1, 2020
Operating lease cost (a)	$	34,060	$	34,075
Variable lease cost (b)	$	1,493	$	519
(a) Includes right-of-use asset amortization of ($1.6) million and ($2.7) million for the six months ended July 31, 2021 and August 1, 2020, respectively.
(b) Primarily related to monthly percentage rent for stores not presented on the balance sheet.

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands):

Operating cash flow information:
	Three Months Ended
	July 31, 2021		August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities	$	15,726	$	15,946
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	(26,157)	$	3,287

	Six Months Ended
	July 31, 2021		August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities	$	31,673	$	31,445
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	(25,423)	$	31,484

During the second quarter of 2021, the Company reassessed its initial accounting term for approximately 80 stores for the likelihood of renewal. After evaluation, the Company now believes it is no longer probable that these stores will be renewed for a second lease term. The remeasurement resulted in a $25.8 million reduction of the Company’s Right-of-Use assets on the Condensed Consolidated Balance Sheets.Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:

	As of
	July 31, 2021	August 1, 2020
Weighted-average remaining lease term	2.4 years	2.9 years
Weighted-average discount rate	3.47%	4.29%

Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):

Fiscal Year
2021 (a)	$	33,731
2022		48,846
2023		36,107
2024		22,633
2025		12,386
Thereafter		4,892
Total lease payments		158,595
Less: Imputed interest		8,946
Present value of lease liabilities	$	149,649
(a) Excluding the 6 months ended July 31, 2021.