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Note 16 - Leases

12 Months Ended

Feb. 01, 2025

16. Leases

The majority of our leases are operating leases for our company-operated retail store locations. We also lease, among other things, distribution and warehouse facilities, and office space for corporate administrative purposes. Operating lease periods typically range from 5 to 10 years and generally contain rent escalation provisions. Some of the store leases contain renewal options with varying terms and conditions.

Amounts recognized in the Consolidated Balance Sheet were as follows:

	*February 1,*		February 3,
($ in millions)	*2025*		2024
Operating leases:
Operating lease right-of-use assets ⁽¹⁾	$	2,061	$	2,188

Operating lease liabilities classified as current	$	507	$	492
Operating lease liabilities classified as long-term		1,831		2,004
Total operating lease liabilities ⁽²⁾	$	2,338	$	2,496

⁽¹⁾	Excludes $5 million of right-of-use assets held for sale as of February 1, 2025, see Note 7, Assets and Liabilities Held-for-Sale.

⁽²⁾	Excludes $5 million of operating lease liabilities held for sale as of February 1, 2025, see Note 7, Assets and Liabilities Held-for-Sale.

	*February 1,*		February 3,
($ in millions)	*2025*		2024
Finance leases:
Property and equipment, net	$	45	$	47

Finance lease obligations classified as current	$	5	$	5
Finance lease obligations classified as long-term		45		47
Total finance lease obligations	$	50	$	52

Other information related to our leases as of February 1, 2025 and February 3, 2024 consisted of the following:

	*February 1,*			February 3,
	*2025*			2024
Weighted-average remaining lease term (years):
Operating leases		6.2			6.5
Finance leases		13.8			14.5
Weighted-average discount rate:
Operating leases		5.6	%		5.5	%
Finance leases		4.4	%		4.3	%

Total lease costs include fixed operating lease costs, variable lease costs, and short-term lease costs. Most of our real estate leases require us to pay certain expenses, such as CAM costs, real estate taxes, and other executory costs, of which the fixed portion is included in operating lease costs. Variable lease costs include non-lease components which are not fixed and are not included in determining the present value of our lease liability. Variable lease costs also include amounts based on a percentage of gross sales in excess of specified levels that are recognized when probable.

Lease costs which relate to retail stores and distribution centers are classified within cost of sales, while non-store lease costs are included in SG&A. Amortization of leased equipment assets is classified in depreciation and amortization. The components of lease cost for 2024, 2023, and 2022 were as follows:

($ in millions)	*2024*		2023			2022
Operating lease costs	$	643	$	613		$	657
Variable lease costs		272		304			308
Short-term lease costs		16		48			19
Sublease income		—		(1	)		(1	)
Total operating lease costs		931		964			983
Finance lease costs:
Amortization of leased assets		6		6			6
Interest on lease liabilities		2		2			3
Total finance lease costs		8		8			9
Total lease cost	$	939	$	972		$	992

Maturities of lease liabilities as of February 1, 2025 are as follows:

($ in millions)	*Operating leases*		*Finance leases*		*Total*
2025	$	624	$	7	$	631
2026		501		6		507
2027		396		5		401
2028		320		4		324
2029		269		4		273
Thereafter		676		40		716
Total lease payments		2,786		66		2,852
Less: Interest		443		16		459
Less: Lease liabilities held for sale		5		—		5
Total lease liabilities	$	2,338	$	50	$	2,388

As of February 1, 2025, we have signed operating leases for retail stores that have not yet commenced and the total future undiscounted lease payments under these leases are $41 million.