Leases

12 Months Ended

Feb. 01, 2020

LEASES:

We lease retail stores, a limited amount of office space and certain office equipment under operating leases expiring in various years through the fiscal year ending 2030. All of our leases have been classified as operating leases and are recognized and measured as such.

Certain operating leases provide for renewal options that are at a pre-determined period and rental value. Furthermore, certain leases provide that we may cancel the lease if our retail sales at that location fall below an established level. Within the first few years of the initial lease term, a majority of our store operating leases contain cancellation clauses that allow the leases to be terminated at our discretion, if certain minimum sales levels are not met. In the normal course of business, operating leases are typically renewed or replaced by other leases.

Escalation of operating lease payments of certain leases depend on an existing index or rate, such as the consumer price index or the market interest rate. These are considered variable lease payments and are included in lease payments when the escalation is known.

Operating lease expense was as follows:



	Fiscal 2019 ⁽¹⁾		Fiscal 2018		Fiscal 2017

	(in thousands)
Operating lease cost	$	250,767	$	261,285	$	263,654

⁽¹⁾Includes approximately $22.6 million in variable lease costs for fiscal 2019.

Supplemental balance sheet information related to operating leases was as follows:



	Fiscal 2019

	(in thousands)
Right of Use Assets	$	648,397

Current lease liabilities	$	157,043
Long-term lease liabilities	555,922
Total operating lease liabilities	$	712,965

Weighted Average Remaining Lease Term (years)	4.8

Weighted Average Discount Rate ⁽¹⁾	5.6		%

⁽¹⁾ The incremental borrowing rate used by the Company is based on the rate at which the Company could borrow funds using its credit rating for a collateralized loan of similar term to the lease. The weighted average discount rate represents a weighted average of the incremental borrowing rate for each lease, weighted based on the remaining fixed lease obligations.

Supplemental cash flow information related to operating leases was as follows:



	Fiscal 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows	$	228,121
Right of use assets obtained in exchange for lease obligations, non-cash	51,204

Minimum future rental payments under non-cancelable operating leases (including leases with certain minimum sales cancellation clauses described below and exclusive of variable common area maintenance charges and/or contingent rental payments based on sales) as of February 1, 2020, are approximately as follows:



FISCAL YEAR ENDING:
(in thousands)
January 30, 2021	$	194,655
January 29, 2022	189,148
January 28, 2023	151,548
February 3, 2024	104,366
February 1, 2025	75,409
Thereafter	103,670
Total future minimum lease payments	$	818,796
Less imputed interest	(105,831		)
Total	$	712,965

Certain leases provide that we may cancel the lease if our retail sales at that location fall below an established level. A majority of our store operating leases contain cancellation clauses that allow the leases to be terminated at our discretion, if certain minimum sales levels are not met within the first few years of the lease term. We have not historically met or exercised a significant number of these cancellation clauses and, therefore, have included commitments for the full lease terms of such leases in the above table. For fiscal 2019, 2018 and 2017, total rent expense under operating leases was approximately $250.8 million, $261.3 million and $263.7 million, respectively, including common area maintenance charges of approximately $45.7 million, $48.0 million and $47.9 million, respectively, other rental charges of approximately $38.4 million, $40.9 million and $40.3 million, respectively, and contingent rental expense, based on sales, of approximately $4.9 million, $3.6 million and $4.3 million, respectively.