Leases

The Company currently leases all but two of its store locations with original, non-cancelable terms that in general range from three to ten years. Store leases typically contain provisions for three to four renewal options of five years each. The exercise of lease renewal options is at the sole discretion of the Company. Most store leases also provide for minimum annual rentals and for payment of variable lease costs. In addition, some store leases also have provisions for additional rent based on a percentage of sales (“percentage rent”) and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company does not have any financing leases.

The Company leases five warehouses, and has four third-party warehousing arrangements. All of these contain renewal provisions. The following table summarizes the location and expiration date of the Company’s leased warehouses:



Location		Lease Expiration Date
Leased Warehouses
Carlisle, Pennsylvania		2020
Carlisle, Pennsylvania		2021
Fort Mill, South Carolina		2024
Rock Hill, South Carolina		2028
Shafter, California		2029

Third-Party Warehouses
Fort Mill, South Carolina		2020
Moreno Valley, California		2023
Moreno Valley, California		2029
Shafter, California		2020

The Company leases approximately 103,000 and 5,000 square feet of office space for its Los Angeles and Boston buying offices, respectively. The lease term for these facilities expire in 2022 and 2020, respectively, and contain renewal provisions. In addition, the Company has a ground lease related to its New York buying office.

The following table presents operating lease costs included in the Condensed Consolidated Statement of Earnings for the three months ended May 4, 2019:



	Three Months Ended
($000)	May 4, 2019
Operating lease cost ¹	$	155,566
Variable lease costs ²	42,914
Net lease cost ³	$	198,480

¹Net of sublease income which was immaterial.
²Includes property and rent taxes, insurance, common area maintenance, and percentage rent.
³Excludes short-term lease costs which were immaterial.

The maturity of operating lease liabilities, including the ground lease related to the New York buying office as of May 4, 2019, are as follows:



($000)	Operating Leases ¹
2020	$	581,014
2021	604,295
2022	523,113
2023	443,164
2024	349,525
Thereafter	1,633,681
Total lease payments	4,134,792
Less: interest	1,083,362
Present value of lease liabilities	$	3,051,430
Less: current operating lease liabilities	536,900
Non-current operating lease liabilities	$	2,514,530

¹ Operating lease payments exclude $258.4 million of minimum lease payments for leases signed that have not yet commenced.

At May 4, 2019, the weighted-average remaining lease term and the weighted average discount rate for operating leases is 10.9 years and 3.6%, respectively. The weighted-average remaining lease term and the weighted average discount rate, excluding the long-term ground lease related to the New York buying office, were 6.1 years and 3.3%, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $148.2 million for the three months ended May 4, 2019 and is included in Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

Operating lease assets obtained in exchange for new operating lease liabilities (includes new leases and remeasurements or modifications of existing leases) during the three months ended May 4, 2019 was $207.8 million.

In accordance with ASC 840, the aggregate undiscounted future minimum annual lease payments under leases, including the ground lease related to the New York buying office, in effect at February 2, 2019 were as follows:



($000)	Total operating leases
2019	$	555,812
2020	580,712
2021	499,678
2022	424,695
2023	339,340
Thereafter	1,575,673
Total minimum lease payments	$	3,975,910