Leases

12 Months Ended

Feb. 01, 2020

Leases [Abstract]

Leases

Leases

We lease all of our retail store locations, support facilities and certain equipment under operating leases. Our store leases have varying terms and are generally for 10 years with options to extend the lease term for two or more 5-year periods. Annual store rent is generally comprised of a fixed minimum amount plus an insignificant contingent amount based on a percentage of sales in excess of specified levels. Most store leases also require additional payments covering real estate taxes, common area costs and insurance. Certain lease agreements contain rent holidays, and/or rent escalation clauses. Except for contingent rent, we recognize rent expense on a straight-line basis over the lease term. Contingent rent, determined based on a percentage of sales in excess of specified levels, is recognized as rent expense when achievement of the specified sales that triggers the contingent rent is probable. Construction allowances and other such lease incentives are recorded on the Consolidated Balance Sheets and are amortized on a straight-line basis as a reduction of rent expense. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement or modification date in determining the present value of lease payments.

In addition to the operating lease assets presented on the Consolidated Balance Sheets, assets under finance leases of $6.9 million are included in property and equipment, net on the Consolidated Balance Sheets as of February 1, 2020. The remaining finance lease obligation is split between accrued expenses and other current liabilities for the short-term portion and other liabilities for the long-term portion on the Consolidated Balance Sheets.

The following table summarizes our classification of lease cost (in thousands):

	Statement of Operations Location	Year Ended February 1, 2020
Operating lease cost (1)	Selling, general and administrative expenses	$	96,745
Finance lease cost:
Amortization of finance lease assets	Selling, general and administrative expenses	972
Interest on lease liabilities	Interest expense, net	193
Variable lease cost	Selling, general and administrative expenses	38,438
Net lease cost		$	136,348

_______________

⁽¹⁾Includes lease costs for short-term leases, which are immaterial.

As of February 1, 2020, the following table summarizes the maturity of our lease liabilities (in thousands):

	Operating Leases		Finance Leases		Total
2020	$	100,428	$	1,973	$	102,401
2021	91,656		1,525		93,181
2022	77,337		1,259		78,596
2023	62,319		489		62,808
2024	48,523		1		48,524
After 2024	72,157		—		72,157
Total lease payments	452,420		5,247		457,667
Less: Interest	(60,004)		(496)		(60,500)
Present value of lease liabilities	$	392,416	$	4,751	$	397,167

The following table summarizes our lease term and discount rate:

	February 1, 2020
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	3
Weighted-average discount rate:
Operating leases	5.2	%
Finance leases	6.9	%

The following table summarizes the other information related to our lease liabilities (in thousands):

	Year Ended February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	100,791
Operating cash flows from finance leases	192
Financing cash flows from finance leases	1,349

As of February 2, 2019, the aggregate minimum non-cancelable lease payments under operating leases were as follows (in thousands):

	Operating Leases		Finance Leases
2019	$	101,139	$	738
2020	93,190		574
2021	82,324		1
2022	66,820		—
2023	50,697		—
Thereafter	102,550		—
Total minimum lease payments	$	496,720	1,313
Amount representing interest			(67)
Present value of minimum lease payments			1,246
Less: current portion			(685)
Long-term capital lease obligations			$	561

Leases

Leases

We lease all of our retail store locations, support facilities and certain equipment under operating leases. Our store leases have varying terms and are generally for 10 years with options to extend the lease term for two or more 5-year periods. Annual store rent is generally comprised of a fixed minimum amount plus an insignificant contingent amount based on a percentage of sales in excess of specified levels. Most store leases also require additional payments covering real estate taxes, common area costs and insurance. Certain lease agreements contain rent holidays, and/or rent escalation clauses. Except for contingent rent, we recognize rent expense on a straight-line basis over the lease term. Contingent rent, determined based on a percentage of sales in excess of specified levels, is recognized as rent expense when achievement of the specified sales that triggers the contingent rent is probable. Construction allowances and other such lease incentives are recorded on the Consolidated Balance Sheets and are amortized on a straight-line basis as a reduction of rent expense. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement or modification date in determining the present value of lease payments.

In addition to the operating lease assets presented on the Consolidated Balance Sheets, assets under finance leases of $6.9 million are included in property and equipment, net on the Consolidated Balance Sheets as of February 1, 2020. The remaining finance lease obligation is split between accrued expenses and other current liabilities for the short-term portion and other liabilities for the long-term portion on the Consolidated Balance Sheets.

The following table summarizes our classification of lease cost (in thousands):

	Statement of Operations Location	Year Ended February 1, 2020
Operating lease cost (1)	Selling, general and administrative expenses	$	96,745
Finance lease cost:
Amortization of finance lease assets	Selling, general and administrative expenses	972
Interest on lease liabilities	Interest expense, net	193
Variable lease cost	Selling, general and administrative expenses	38,438
Net lease cost		$	136,348

_______________

⁽¹⁾Includes lease costs for short-term leases, which are immaterial.

As of February 1, 2020, the following table summarizes the maturity of our lease liabilities (in thousands):

	Operating Leases		Finance Leases		Total
2020	$	100,428	$	1,973	$	102,401
2021	91,656		1,525		93,181
2022	77,337		1,259		78,596
2023	62,319		489		62,808
2024	48,523		1		48,524
After 2024	72,157		—		72,157
Total lease payments	452,420		5,247		457,667
Less: Interest	(60,004)		(496)		(60,500)
Present value of lease liabilities	$	392,416	$	4,751	$	397,167

The following table summarizes our lease term and discount rate:

	February 1, 2020
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	3
Weighted-average discount rate:
Operating leases	5.2	%
Finance leases	6.9	%

The following table summarizes the other information related to our lease liabilities (in thousands):

	Year Ended February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	100,791
Operating cash flows from finance leases	192
Financing cash flows from finance leases	1,349

As of February 2, 2019, the aggregate minimum non-cancelable lease payments under operating leases were as follows (in thousands):

	Operating Leases		Finance Leases
2019	$	101,139	$	738
2020	93,190		574
2021	82,324		1
2022	66,820		—
2023	50,697		—
Thereafter	102,550		—
Total minimum lease payments	$	496,720	1,313
Amount representing interest			(67)
Present value of minimum lease payments			1,246
Less: current portion			(685)
Long-term capital lease obligations			$	561

Leases

Leases

We lease all of our retail store locations, support facilities and certain equipment under operating leases. Our store leases have varying terms and are generally for 10 years with options to extend the lease term for two or more 5-year periods. Annual store rent is generally comprised of a fixed minimum amount plus an insignificant contingent amount based on a percentage of sales in excess of specified levels. Most store leases also require additional payments covering real estate taxes, common area costs and insurance. Certain lease agreements contain rent holidays, and/or rent escalation clauses. Except for contingent rent, we recognize rent expense on a straight-line basis over the lease term. Contingent rent, determined based on a percentage of sales in excess of specified levels, is recognized as rent expense when achievement of the specified sales that triggers the contingent rent is probable. Construction allowances and other such lease incentives are recorded on the Consolidated Balance Sheets and are amortized on a straight-line basis as a reduction of rent expense. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement or modification date in determining the present value of lease payments.

In addition to the operating lease assets presented on the Consolidated Balance Sheets, assets under finance leases of $6.9 million are included in property and equipment, net on the Consolidated Balance Sheets as of February 1, 2020. The remaining finance lease obligation is split between accrued expenses and other current liabilities for the short-term portion and other liabilities for the long-term portion on the Consolidated Balance Sheets.

The following table summarizes our classification of lease cost (in thousands):

	Statement of Operations Location	Year Ended February 1, 2020
Operating lease cost (1)	Selling, general and administrative expenses	$	96,745
Finance lease cost:
Amortization of finance lease assets	Selling, general and administrative expenses	972
Interest on lease liabilities	Interest expense, net	193
Variable lease cost	Selling, general and administrative expenses	38,438
Net lease cost		$	136,348

_______________

⁽¹⁾Includes lease costs for short-term leases, which are immaterial.

As of February 1, 2020, the following table summarizes the maturity of our lease liabilities (in thousands):

	Operating Leases		Finance Leases		Total
2020	$	100,428	$	1,973	$	102,401
2021	91,656		1,525		93,181
2022	77,337		1,259		78,596
2023	62,319		489		62,808
2024	48,523		1		48,524
After 2024	72,157		—		72,157
Total lease payments	452,420		5,247		457,667
Less: Interest	(60,004)		(496)		(60,500)
Present value of lease liabilities	$	392,416	$	4,751	$	397,167

The following table summarizes our lease term and discount rate:

	February 1, 2020
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	3
Weighted-average discount rate:
Operating leases	5.2	%
Finance leases	6.9	%

The following table summarizes the other information related to our lease liabilities (in thousands):

	Year Ended February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	100,791
Operating cash flows from finance leases	192
Financing cash flows from finance leases	1,349

As of February 2, 2019, the aggregate minimum non-cancelable lease payments under operating leases were as follows (in thousands):

	Operating Leases		Finance Leases
2019	$	101,139	$	738
2020	93,190		574
2021	82,324		1
2022	66,820		—
2023	50,697		—
Thereafter	102,550		—
Total minimum lease payments	$	496,720	1,313
Amount representing interest			(67)
Present value of minimum lease payments			1,246
Less: current portion			(685)
Long-term capital lease obligations			$	561