Leases

12 Months Ended

Jan. 28, 2023

The following table provides the components of lease cost for operating leases for 2022, 2021 and 2020:


	2022		2021		2020
	(in millions)
Operating Lease Costs	$	385	$	399	$	521
Variable Lease Costs	76		63		6
Short-term Lease Costs	13		6		5
Total Lease Cost	$	474	$	468	$	532

In 2020, for many stores and select office locations, beginning in April 2020, rent was not paid, or was only partially paid, due to the COVID-19 pandemic. The Financial Accounting Standards Board issued guidance in April 2020 which allows certain COVID-19-related concessions to be recognized as a reduction of lease costs in the period an amendment is executed. Negotiations were completed with nearly all landlords to determine potential rent credits or payment deferrals related to COVID-19. The Company fully accrued rent to the original contractual rent due unless an executed amendment was in place. As a result of the COVID-19-related concessions, the Company recognized a $31 million and $90 million reduction to occupancy expenses in 2021 and 2020, respectively, as a result of executed amendments with landlords. The amount recognized for COVID-19-related concessions in 2022 was not significant.

The following table provides future maturities of operating lease liabilities as of January 28, 2023:


Fiscal Year	(in millions)
2023	$	390
2024	327
2025	273
2026	213
2027	158
Thereafter	500
Total Lease Payments	$	1,861
Less: Interest	(350)
Present Value of Operating Lease Liabilities	$	1,511

As of January 28, 2023, the Company had additional operating lease commitments that have not yet commenced of approximately $87 million.

The following table provides the weighted-average remaining lease term and discount rate for operating leases with lease liabilities as of January 28, 2023 and January 29, 2022:


	January 28, 2023	January 29, 2022
Weighted-Average Remaining Lease Term (years)	6.6	6.4
Weighted-Average Discount Rate	6.1%	6.0%

The Company paid $423 million in 2022, $497 million in 2021 and $348 million in 2020 for operating lease liabilities recorded on the Consolidated Balance Sheets. These payments are included within the Operating Activities section of the Consolidated and Combined Statement of Cash Flows.

In 2022 and 2021, the Company obtained $160 million and $120 million, respectively, of additional lease assets as a result of new operating lease obligations. During 2020, the Company reduced its lease assets by $32 million as a result of permanent store closures due to the fleet rationalization and lease term reductions that also reduced its operating lease obligations.

Victoria's Secret Hong Kong

During the second quarter of 2020, the Company closed its unprofitable Victoria's Secret flagship store in Hong Kong. As a result of the store closure, the Company recognized a non-cash pre-tax gain of $39 million, primarily due to terminating the store lease and the related write-off of the operating lease liability in excess of the operating lease asset, which was partially impaired in fiscal 2019. This gain is included in Costs of Goods Sold, Buying and Occupancy in the 2020 Consolidated and Combined Statement of Loss. The Company also recorded $3 million of severance and related costs, included in General, Administrative and Store Operating Expenses in the 2020 Consolidated and Combined Statement of Loss.

Asset Retirement Obligations

The Company has asset retirement obligations related to certain Company-operated international stores that contractually obligate the Company to remove leasehold improvements at the end of a lease. The Company's liabilities for asset retirement obligations totaled $12 million as of January 28, 2023 and $13 million as of January 29, 2022. These liabilities are included in Other Long-term Liabilities on the Consolidated Balance Sheets.

Leases