Leases

9 Months Ended

Oct. 30, 2021

Leases

The Company leases retail stores, office space and equipment under operating leases. As of October 30, 2021, January 30, 2021 and October 31, 2020, right-of-use operating lease assets, which are recorded in operating lease assets in the condensed consolidated balance sheets, totaled $41.2 million, $47.6 million and $40.5 million, respectively, and operating lease liabilities, which are recorded in current portion of operating lease liabilities and operating lease liabilities, totaled $40.7 million, $47.2 million and $40.2 million, respectively.

In determining our operating lease assets and operating lease liabilities, we apply an incremental borrowing rate to the minimum lease payments within each lease agreement. GAAP requires the use of the rate implicit in the lease whenever that rate is readily determinable; furthermore, if the implicit rate is not readily determinable, a lessee may use its incremental borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate our specific incremental borrowing rates that align with applicable lease terms, we utilize a model consistent with the credit quality of our outstanding debt instruments.

Renewal options of five or 10 years exist on the majority of leased properties. The Company has sole discretion in exercising the lease renewal options. We do not recognize operating lease assets or operating lease liabilities at lease inception for renewal periods unless we are reasonably certain of exercising the renewal options. The depreciable life of operating lease assets and related leasehold improvements is limited by the expected lease term.

Contingent rentals on certain leases are based on a percentage of annual sales in excess of specified amounts. Other contingent rentals are based entirely on a percentage of sales. The Company's operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table summarizes the Company's operating and finance leases:


(in thousands of dollars)	Classification - Condensed Consolidated Balance Sheets	October 30, 2021		January 30, 2021		October 31, 2020
Assets
Finance lease assets	Property and equipment, net (a)	$	62	$	247	$	353
Operating lease assets	Operating lease assets	41,189		47,612		40,471
Total leased assets		$	41,251	$	47,859	$	40,824

Liabilities
Current
Finance	Current portion of finance lease liabilities	$	180	$	695	$	849
Operating	Current portion of operating lease liabilities	11,432		13,819		12,775
Noncurrent
Finance	Finance lease liabilities	—		—		180
Operating	Operating lease liabilities	29,293		33,392		27,412
Total lease liabilities		$	40,905	$	47,906	$	41,216

(a) Finance lease assets are recorded net of accumulated amortization of $14.5 million, $14.3 million and $14.2 million as of October 30, 2021, January 30, 2021 and October 31, 2020, respectively.


Lease Cost		Three Months Ended				Nine Months Ended
(in thousands of dollars)	Classification - Condensed Consolidated Statements of Operations	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Operating lease cost (a)	Rentals	$	4,947	$	5,115	$	15,157	$	16,304
Finance lease cost
Amortization of leased assets	Depreciation and amortization	61		106		185		317
Interest on lease liabilities	Interest and debt expense, net	5		44		29		186
Net lease cost		$	5,013	$	5,265	$	15,371	$	16,807

(a) Includes short term lease costs of $0.5 million and $0.5 million for the three months and $1.4 million and $1.5 million for the nine months ended October 30, 2021 and October 31, 2020, respectively, and variable lease costs, including contingent rent, of $0.3 million and $0.4 million for the three months and $1.0 million and $1.1 million for the nine months ended October 30, 2021 and October 31, 2020, respectively.

Maturities of Lease Liabilities


(in thousands of dollars) Fiscal Year	Operating Leases		Finance Leases		Total
2021 (excluding the nine months ended October 30, 2021)	$	3,153	$	181	$	3,334
2022	13,174		—		13,174
2023	9,500		—		9,500
2024	4,830		—		4,830
2025	4,170		—		4,170
After 2025	14,296		—		14,296
Total minimum lease payments	49,123		181		49,304
Less amount representing interest	(8,398)		(1)		(8,399)
Present value of lease liabilities	$	40,725	$	180	$	40,905

Lease Term and Discount Rate


	October 30, 2021
Weighted-average remaining lease term
Operating leases	6.0 years
Finance leases	0.3 years
Weighted-average discount rate
Operating leases	6.2	%
Finance leases	9.5	%

Other Information


	Nine Months Ended
(in thousands of dollars)	October 30, 2021		October 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	12,962	$	14,490
Operating cash flows from finance leases	29		186
Financing cash flows from finance leases	515		885