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Leases
 3 Months Ended
May 02, 2020
Leases [Abstract]  
Leases Leases
We lease all 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 May 2, 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.
As discussed in Note 1. "Basis of Presentation", the COVID-19 pandemic impacted us significantly, including causing us to close all of our stores starting in March 2020. We commenced reopening our stores on April 23, 2020, and by June 15, 2020, all of our stores had reopened. During the period of store closures, we were able to negotiate with many of our landlords to defer rent amounts due during the closure period to either a period of month(s) following the reopening of the stores, or in some cases, extending the period of the respective lease term by the amount of time that the stores were closed and paying rent for those future periods. In the case where the lease term was extended, we accounted for this as a lease modification under the current GAAP guidance. We elected the practical expedient to not evaluate whether a deferral of rent within the current term is a lease modification. The total rent that was deferred for lease amendments that have been executed through May 2, 2020 was $4.2 million.
Further, for certain of our stores, the COVID-19 pandemic had a significant impact to the underlying asset values. Based on an impairment analysis performed during the 13 weeks ended May 2, 2020, we recorded asset impairment charges in SG&A of $5.1 million to reduce the carrying value of certain operating lease assets to their respective estimated fair value.
Operating lease assets are considered Level 3 assets in the fair value hierarchy as the inputs for calculating the fair value of these assets are based on the best information available, including market rents for similar assets.
The following table summarizes our classification of lease cost (in thousands):

Statement of Operations Location13 Weeks Ended
May 2, 2020
Operating lease cost (1)
Selling, general and administrative expenses$24,266  
Finance lease cost: 
Amortization of finance lease assets
Selling, general and administrative expenses359  
 Interest on lease liabilitiesInterest expense, net62  
Variable lease costSelling, general and administrative expenses9,692  
Net lease cost $34,379  
_______________
(1) Includes lease costs for short-term leases, which are immaterial.
As of May 2, 2020, the following table summarizes the maturity of our lease liabilities (in thousands):

Operating
Leases		Finance
Leases		Total
Remainder of 2020$99,333  $1,451  $100,784  
202194,171  1,525  95,696  
202280,653  1,259  81,912  
202365,954  489  66,443  
202452,127  1  52,128  
Thereafter77,062  —  77,062  
Total lease payments469,300  4,725  474,025  
Less: Interest(76,100) (433) (76,533) 
Present value of lease liabilities$393,200  $4,292  $397,492  
The following table summarizes our lease term and discount rate:

May 2, 2020
Weighted-average remaining lease term (years):
Operating leases5 years
Finance leases3 years
Weighted-average discount rate:
Operating leases5.1 %
Finance leases7.2 %

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

13 Weeks Ended
May 2, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$19,302  
Operating cash flows from finance leases62  
Financing cash flows from finance leases459  
Leases Leases
We lease all 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 May 2, 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.
As discussed in Note 1. "Basis of Presentation", the COVID-19 pandemic impacted us significantly, including causing us to close all of our stores starting in March 2020. We commenced reopening our stores on April 23, 2020, and by June 15, 2020, all of our stores had reopened. During the period of store closures, we were able to negotiate with many of our landlords to defer rent amounts due during the closure period to either a period of month(s) following the reopening of the stores, or in some cases, extending the period of the respective lease term by the amount of time that the stores were closed and paying rent for those future periods. In the case where the lease term was extended, we accounted for this as a lease modification under the current GAAP guidance. We elected the practical expedient to not evaluate whether a deferral of rent within the current term is a lease modification. The total rent that was deferred for lease amendments that have been executed through May 2, 2020 was $4.2 million.
Further, for certain of our stores, the COVID-19 pandemic had a significant impact to the underlying asset values. Based on an impairment analysis performed during the 13 weeks ended May 2, 2020, we recorded asset impairment charges in SG&A of $5.1 million to reduce the carrying value of certain operating lease assets to their respective estimated fair value.
Operating lease assets are considered Level 3 assets in the fair value hierarchy as the inputs for calculating the fair value of these assets are based on the best information available, including market rents for similar assets.
The following table summarizes our classification of lease cost (in thousands):

Statement of Operations Location13 Weeks Ended
May 2, 2020
Operating lease cost (1)
Selling, general and administrative expenses$24,266  
Finance lease cost: 
Amortization of finance lease assets
Selling, general and administrative expenses359  
 Interest on lease liabilitiesInterest expense, net62  
Variable lease costSelling, general and administrative expenses9,692  
Net lease cost $34,379  
_______________
(1) Includes lease costs for short-term leases, which are immaterial.
As of May 2, 2020, the following table summarizes the maturity of our lease liabilities (in thousands):

Operating
Leases		Finance
Leases		Total
Remainder of 2020$99,333  $1,451  $100,784  
202194,171  1,525  95,696  
202280,653  1,259  81,912  
202365,954  489  66,443  
202452,127  1  52,128  
Thereafter77,062  —  77,062  
Total lease payments469,300  4,725  474,025  
Less: Interest(76,100) (433) (76,533) 
Present value of lease liabilities$393,200  $4,292  $397,492  
The following table summarizes our lease term and discount rate:

May 2, 2020
Weighted-average remaining lease term (years):
Operating leases5 years
Finance leases3 years
Weighted-average discount rate:
Operating leases5.1 %
Finance leases7.2 %

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

13 Weeks Ended
May 2, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$19,302  
Operating cash flows from finance leases62  
Financing cash flows from finance leases459