Properties and Leases

12 Months Ended

Feb. 01, 2025

Property Plant and Equipment and Leases of Lessee [Abstract]

Property and Equipment, net

The major classes of property and equipment, net as of February 1, 2025 and February 3, 2024 are as follows:


	February 1, 2025		February 3, 2024
	(millions)
Land	$	1,168	$	1,262
Buildings on owned land	3,134		3,205
Buildings on leased land and leasehold improvements	1,334		1,332
Fixtures and equipment	3,611		3,785
	9,247		9,584
Less accumulated depreciation and amortization	4,177		4,276
	$	5,070	$	5,308

In connection with various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to 15 years. Some of these agreements require that the stores be operated under a particular name.

Leases

The Company leases a portion of the real estate and personal property used in its operations. Most leases require the Company to pay real estate taxes, maintenance, insurance, and other similar costs; some also require additional payments based on percentages of sales and some contain purchase options. Certain of the Company's leases contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions (including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial tests.

ROU assets and lease liabilities consist of:


	Classification	February 1, 2025		February 3, 2024
		(millions)
Assets
Finance lease assets (a)	Right of Use Assets	$	10	$	8
Operating lease assets (b)	Right of Use Assets	2,233		2,297
Total lease assets		$	2,243	$	2,305
Liabilities
Current
Finance (a)	Accounts payable and accrued liabilities	$	2	$	2
Operating (b)	Accounts payable and accrued liabilities	365		356
Noncurrent
Finance (a)	Long-Term Lease Liabilities	13		12
Operating (b)	Long-Term Lease Liabilities	2,914		2,974
Total lease liabilities		$	3,294	$	3,344


(a)			Finance lease assets are recorded net of accumulated amortization of $11 million and $14 million as of February 1, 2025 and February 3, 2024, respectively. As of both February 1, 2025 and February 3, 2024, finance lease assets included $1 million and noncurrent lease liabilities included $1 million of non-lease components.


(b)			As of February 1, 2025, operating lease assets included $317 million of non-lease components and current and noncurrent lease liabilities included $36 million and $356 million, respectively, of non-lease components. As of February 3, 2024, operating lease assets included $322 million of non-lease components and current and noncurrent lease liabilities included $36 million and $356 million, respectively, of non-lease components.

The components of net lease expense, recognized primarily within selling, general and administrative expenses are disclosed below. For 2024, 2023 and 2022, lease expense included $89 million, $84 million and $79 million, respectively, related to non-lease components.


	2024		2023		2022
	(millions)
Real estate
Operating leases (c) –
Minimum rents	$	375	$	372	$	361
Variable rents	63		55		54
	438		427		415
Less income from subleases –
Operating leases (d)	(50)		(46)		(39)
	$	388	$	381	$	376

Personal property – Operating leases	$	5	$	6	$	7


(c)			Certain supply chain operating lease expense amounts are included in cost of sales.
(d)			Represents sublease income from certain corporate office locations.

As of February 1, 2025, the maturity of lease liabilities is as follows:


	Finance Leases		Operating Leases (e and f)		Total
	(millions)
Fiscal year
2025	$	3	$	365	$	368
2026	3		388		391
2027	3		369		372
2028	2		349		351
2029	2		321		323
After 2029	10		4,535		4,545
Total undiscounted lease payments	23		6,327		6,350
Less amount representing interest	8		3,048		3,056
Total lease liabilities	$	15	$	3,279	$	3,294


(e)			Operating lease payments include $2,552 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $40 million of legally binding minimum lease payments for leases signed but not yet commenced.


(f)			Operating lease payments include $955 million related to non-lease component payments, with $659 million of such payments related to options to extend lease terms that are reasonably certain of being exercised.

Additional supplemental information regarding assumptions and cash flows for operating and finance leases is as follows:


Lease Term and Discount Rate	February 1, 2025		February 3, 2024
Weighted-average remaining lease term (years)
Finance leases	10.8		11.2
Operating leases	19.6		20.4
Weighted-average discount rate
Finance leases	7.15	%	6.75	%
Operating leases	6.80	%	6.71	%


Other Information	52 Weeks Ended February 1, 2025		53 Weeks Ended February 3, 2024
	(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used from operating leases	$	362	$	370
Financing cash flows used from financing leases	3		3
Leased assets obtained in exchange for new operating lease liabilities	117		214

The Company is a guarantor with respect to certain lease obligations associated with The May Department Stores Company and previously disposed subsidiaries or businesses. The leases have future minimum lease payments aggregating approximately $158 million and are offset by payments from existing tenants and subtenants. In addition, the Company is contingently liable for other expenses related to the above leases, such as property taxes and common area maintenance, which are also payable by existing tenants and subtenants. Potential liabilities related to these guarantees are subject to certain defenses by the Company. The Company believes that the risk of significant loss from the guarantees of these lease obligations is remote.